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When one has to evaluate the impact of the new programme one year after its implementation, the question is: Is the programme positively contributing to the government’s goal of producing 1,2 million vehicles locally by 2020?
The APDP was of course not only designed as an incentive for automotive manufacturers but also to align the South African support programme with World Trade Organisation (WTO) rules and guidelines. The government’s goal of 1,2 million vehicles can also be viewed as a wider policy indicator and not necessarily a target. In 2013, approximately 550,000 vehicles were manufactured in South Africa, with only six years left to reach the 1,2 million target, the industry is approximately 30 to 40 percent behind the 2020 target.
Global competitiveness is the main survival strategy for South African companies and it would appear in the early stages of the programme that vehicle manufacturers are enjoying enough support to promote new export programmes. This was illustrated in the recent new investment announcements by Mercedes Benz and Toyota. Unfortunately, it is a well-published fact that the catalytic converter industry does not currently receive the same level of support as under the MIDP.
APDP not PerfectComponent manufacturers are required to, under the APDP, roll up all its value add to the Original Equipment Manufacturers (OEM’s) and only benefit through export programmes and aftermarket sales. This is however only available to a few component manufacturers with a global footprint and the majority of component manufacturers will not receive incentives other than Automotive Investment Scheme (AIS) support for capital investment.
Concerns were also raised that the APDP is not focused enough on localisation.
It is interesting to note that the government has announced a very early review of the programme. All stakeholders in the industry will eagerly await the outcome of the review. It is important to determine what the actual support levels are in real terms for all automotive companies. Policy changes might be required to improve localisation initiatives and tweak the 1,2 million 2020 target.
APDP benefits will be a critical part of all automotive companies’ strategies and growth plans. Careful consideration should be given to product development and expanding into export markets. BCE Consulting is focused on assisting all automotive companies with a value-based approach to maximizing APDP benefits.
GooD news for mAnufActurersWe have assisted several companies to extract all available benefits as well as improve compliance. BCE is a 100% dedicated automotive industry service provider and is able to provide industry and APDP specific solutions.
With offices in Gauteng, North West and Kwazulu Natal, it is present in the major automotive hubs. Its national footprint allows it the opportunity to deliver a more personal value add service.
During 2013, international markets were showing upward trends, with North America reaching 15 million vehicles for the first time since 2007. This year will be an exciting year for the automotive industry in South Africa. Greater global demand will have a positive impact on local manufacturers.
The automotive industry is looking forward to the publishing of the revised Automotive
APDP tAx rulinG SARS has issued Binding Class ruling: BCR 043 on 20 February 2014. This ruling deals with the tax treatment of the antecedent cession of rights to future Production Rebate Credit Certificates (PRCC’s) issued in terms of the Automotive Production and Development Programme (APDP). Contact BCE to discuss the impact of this legislation on your business.
Brian Verwey: [email protected] or call 082 877 7263.
recorD BreAkinG Golf cArtBCE Consulting has embarked on a project to build the world’s fastest golf cart. This cart was unveiled on 26 March 2014 at the BCE annual golf day at the Woodhill Country Club in Pretoria. Photos of the Guinness World Record cart and the launch will be published on the BCE Consulting website as well as in the July 2014 issue of aBr.
Investment Scheme (AIS) guidelines. It is widely expected to provide additional incentives for local investment.
chAllenGesUnfortunately, 2014 will also pose several challenges; the automotive industry has to deal with changes in the BBBEE policy, review of the APDP and persistent labour volatility. In BCE your business will have a partner that can advise and assist with APDP implementation strategies, allowing you to focus on core manufacturing activities.
A Value Based Approach to incentives, Tax, and APdP
for the automotive industrywww.bceconsulting.co.za office: 012 361 1485