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South Africa and its automotive clusters UAE National Pavilion from 3 to 5 June 2014 The 2014 national automotive event is the South African Automotive Week
ACKNOWLEDGEMENTS, The information and analysis in this report were produced and compiled by Dr Norman Lamprecht. on behalf of the Automotive Industry Export Council The contributions and assistance by NAAMSA. NAACAM and the Department of Trade and Industry are hereby gratefully acknowledged The. data processing and editing by Dr Alet Tolmay design and outlay of the publication by Dr Selma. Schiller and photography by Mr Paul Parsons are also acknowledged with appreciation. P O Box 40611,Tel 27 12 807 0086,Fax 27 12 807 0054. Website www aiec co za,Foreword 4,The Automotive Industry Export Council AIEC 5. The South African automotive industry operating environment 7. South Africa and its automotive clusters 9,South Africa s automotive policy regime 13. South African new vehicle market features 17,Automotive exports and imports methodology 23. Exports to regions 24,Exports to countries 42,Exports of vehicles 46. Automotive components exports by country 48,Automotive components exports by product 59. Imports by country of origin 68,Imports of vehicles 71. Automotive parts and components imports 73,Main automotive trading partners 75. Automotive industry trade balance 79, Potential opportunities via trade and co operation arrangements 82. General information 87, South African automotive industry prospects and imperatives to grow 88. Key motor industry addresses 91,ABBREVIATIONS,AGOA African Growth and Opportunity Act. AIEC Automotive Industry Export Council,AIS Automotive Investment Scheme. APDP Automotive Production Development Programme,BLNS Botswana Lesotho Namibia and Swaziland. BRICS Brazil Russia India China and South Africa,CBU Completely Built Up. CKD Completely Knocked Down, COMESA Common Market for Southern and Eastern Africa. CPI Consumer Price Index,DTI The Department of Trade and Industry. EAC East African Community,EU European Union,FDI Foreign Direct Investment. FTA Free Trade Agreement,GDP Gross Domestic Product. IDZ Industrial Development Zone, MERCOSUR Mercado Com n del Sur Common Market of South America. MIDP Motor Industry Development Programme, NAACAM National Association of Automotive Component and Allied Manufacturers. NAAMSA National Association of Automobile Manufacturers of South Africa. NAFTA North American Free Trade Area, OEM Original Equipment Manufacturer Vehicle Manufacturer. SADC Southern African Development Community,SARS South African Revenue Service. WTO World Trade Organisation, The Automotive Export Manual 2014 South Africa publication is an annual publication. produced and compiled by the Automotive Industry Export Council AIEC the key source of. South African automotive trade data The 2014 publication as well as the previous publications. since 2006 represent a comprehensive guide on the export and import performance of the South. African automotive industry under the previous Motor Industry Development Programme MIDP. and current Automotive Production Development Programme APDP The aim of the manual is. to identify and prioritise the major automotive export destinations the major countries of origin. the main automotive export trade blocs the most important automotive products exported and. imported the top growth markets and products as well as the impact of the trade arrangements. enjoyed by South Africa, Over the past two decades the South African automotive industry has been transformed into an. internationally more competitive globally integrated industry supplying high quality automotive. products to the domestic and global markets The South African vehicle manufacturing and. associated industries have grown to become the major contributors to manufacturing output. in South Africa and currently accounts for about one third of all manufacturing activity in the. country The APDP which commenced 1st January 2013 is designed to take the industry to the. next level by doubling vehicle production in the country to 1 2 million units per annum by 2020. The value and insight which data has to offer and the role that data plays is absolutely key. and integral in formulating policy and defining business strategies Market intelligence provides. companies with a competitive edge Accurate and timeous data gives insight into current trading. conditions acts as an indicator as to where the market is headed and assists companies to. develop better and appropriate strategies A recent development relating to South African trade. statistics is that the Minister of Finance during 2013 approved that South Africa s trade statistics. should include data in respect of Botswana Lesotho Namibia and Swaziland BLNS in order. to provide a more accurate reflection of South Africa s trade BLNS country trade statistics have. previously not been included in South Africa s trade statistics because of the free flow of trade. from a customs point of view within the Southern African Customs Union SACU The automotive. industry s trade performance has subsequently been revised with BLNS country data in the 2014. publication and where applicable with retrospective effect. The South African automotive industry has enjoyed sustained growth in both domestic sales and. exports since the downturn in 2009 despite the uncertain international climate During 2013. total automotive industry exports increased by R7 8 billion or 8 2 to R102 7 billion from the. revised R94 9 billion in 2012 The economic challenges in Europe and the US are forcing South. African companies to look at alternative markets and partners to diversify risk and create new. avenues for growth Indicative of this trend the export value to 21 of the 152 country export. destinations more than doubled from 2012 to 2013, The performance of exports remains a function of the performance and direction of global. markets There are however increasing positive signs that economic conditions are improving. in important regions for the domestic automotive industry including Europe and North America. The accelerating recovery in the world s major developed economies which together with a. weaker exchange rate should enhance South Africa s manufacturing and exports during 2014. The domestic automotive sector s significance is premised on its contribution to export earnings. employment and GDP growth In recognition of the importance of the automotive sector to the. country s economy the South African government remains committed to fast track the growth. and development of the domestic automotive industry which it regards as strategically significant. THE AUTOMOTIVE INDUSTRY EXPORT COUNCIL, Export Councils are the prime delivery vehicles that stimulate export growth and deepen the. export base This format was initiated by Trade and Investment South Africa in a number of key. sectors and is also aimed at assisting Small Medium and Micro Enterprises SMMEs and Black. Economic Empowerment BEE companies to enter the export market successfully. The Automotive Industry Export Council AIEC was established at the end of 1999 and serves as. the umbrella body for the South African automotive industry s export promotion and development. activities The purpose was to provide a cost effective administered central body to assist. companies in the automotive sector that are currently exporting may be interested in exporting. in the future or may become capable of exporting in the future The AIEC represents the interests. of seven motor vehicle manufacturers exporters namely BMW Ford General Motors Mercedes. Benz Nissan Toyota and Volkswagen as well as manufacturers exporters of trucks and buses. and over 500 component suppliers in South Africa, The AIEC is operated from the NAAMSA offices in Pretoria and the activities and administration. are coordinated by the AIEC Board The AIEC Board of Directors consists of Mr Robert Houdet. Executive Director NAACAM Chairperson Mr Nico Vermeulen Director NAAMSA Dr. Norman Lamprecht Executive Manager NAAMSA as well as two ex officio members from the. Department of Trade and Industry Mr Mzwakhe Mbatha and Mr Jacob Moatshe. Mr Robert Houdet Dr Norman Lamprecht Mr Nico Vermeulen. Executive Director Executive Manager Director,NAACAM NAAMSA NAAMSA. The domestic automotive industry is a vital contributing element to the success of the national. economy and the sustainable growth of the country at large Manufacturing output accounts for. 15 of the country s GDP and the automotive industry accounts for about 30 of manufacturing. output Continuous efforts to grow the South African automotive industry s export business are. imperative especially in view of the vision of doubling vehicle production in the country to 1 2. million units per annum by 2020 The focus of the South African automotive industry is to build on. existing exports and to explore and exploit new opportunities The domestic market is generally. not large enough to generate sufficient economies of scale for world class competitiveness. production consequently exporting needs to be viewed as a necessary step towards international. competitiveness Failure to rise to the challenge by finding new markets and products could. result in stagnation of exports The current global economic environment is dominated by intense. competition for export markets investment and technology This makes it important to gain and. maintain access to these markets, The Dti plays an important role in the promotion of economic development and meaningful. participation in the global economic and trade environment The Export Promotion Directorate of. the Dti is responsible for developing and promoting South African goods and services including. specific technical interventions in the form of Export Marketing and Investment Assistance EMIA. financial support matchmaking market intelligence trade lead facilitation and in market support. For the automotive industry a flagship tool and successful platform to showcase and promote the. South African automotive industry s world class capabilities is participation by means of National. Pavilions at major world events, During 2013 financial assistance under the EMIA scheme was provided to automotive. manufacturing company exhibitors to participate in the Automechanika Middle East United Arab. Emirates UAE National Pavilion from 11 to 13 June 2013 the Johannesburg International Motor. Show National Pavilion from 16 to 27 October 2013 as well as the South African National. Pavilion at Midest France from 19 to 23 November 2013. The two automotive National Pavilions approved for 2014 include the Automechanika Middle. East UAE National Pavilion from 3 to 5 June 2014 www automechanikadubai com and the. Automechanika Frankfurt Germany National Pavilion from 16 to 20 September 2014 www. automechanika messefrankfurt com Automotive manufacturing companies will also be invited. to participate in the Midest France South African National Pavilion from 4 to 7 November 2014. www midest com The 2014 national automotive event is the South African Automotive Week. SAAW scheduled to take place from 13 to 17 October 2014 in Midrand Johannesburg www. saaw co za, The customers and stakeholders of the AIEC are all the domestic automotive industry stakeholders. as well as the Dti Head Office Dti foreign economic representatives and global players abroad. The needs of members are primarily twofold namely i research and information and ii. practical assistance with exhibitions and missions These needs form the basis for the assistance. More information on the Automotive Industry Export Council can be accessed at www aiec co za. THE SOUTH AFRICAN AUTOMOTIVE INDUSTRY,OPERATING ENVIRONMENT. Globally major automotive manufacturing regions include the North American Free Trade Area. NAFTA Western Europe Japan Asia Pacific Eastern Europe South America and South Africa. 2009 was a pivotal year for the global motor industry It marked the parting of ways between. mature and emerging countries The latter continued to grow while the global financial crisis hit. Europe and the US particularly hard The next two years saw an improvement in production and. sales especially in Asia where China became the sector s driver The situation again changed. in 2012 when the EU car market once more went into crisis while the US market experienced a. In 2013 the automotive industry reached its fourth production record since 2009 with 87 3. million vehicles produced The year on year vehicle production growth of 3 7 was supported for. the most part by strong growth in developing countries and the continued recovery of the North. American market The gloomy climate in Western Europe continued with year on year vehicle. production remaining stagnant The Triad economies of North America Europe and Japan. although declining still comprised 42 3 million or 48 5 of global vehicle production in 2013. Developing countries and regions providing lower cost manufacturing and huge growth potential. for both the global automotive supply and demand sides are increasingly becoming important. focus areas A case in point is the BRICS coalition which increased its global market share from. 35 2 in 2012 to 37 2 in 2013 The year on year increases could mainly be attributed to. production gains of 14 8 in the case of China and 9 9 in the case of Brazil China accounted. for 25 3 of global vehicle production in 2013 and since 2012 has become the global number. 1 both in terms of sales and vehicles produced, Developing countries have to cope and incorporate not only the direct impact of the major global. trends on their automotive operations but also have to compete with each other for sourcing. and outsourcing opportunities It is within this fast changing environment that many developing. countries such as South Africa are seeking to create for themselves a role as producer of vehicles. and automotive components When the domestic market is not large enough to absorb the. production the focus is on exports The South Africa automotive industry possesses unique qualities. and a natural ability to add value to global strategies of parent companies and multinationals. The industry has capitalised on the wealth of experience brought about by the presence of all. the major European American Japanese and other Asian motor vehicle manufacturers in the. country South Africa s attractiveness as an investment destination of choice and production base. for products to be exported to global markets is increasing. The South African automotive industry as in many other countries in the world is strongly. influenced by the OEMs The industry s structure and evolutionary path are therefore closely. aligned with OEMs strategies in both domestic and global markets Key decisions about South. Africa s automotive business are made in Europe the USA and Japan South Africa s participation. in the World Trade Organisation WTO its competitive advantages and its special relationships. with the EU and other trading regions have facilitated the industry s integration into the global. sourcing strategies of the multinational automotive corporations. On a global stage an automotive industry must be able to handle industry wide factors such as. social contributions taxes currency volatility market competition and difficulties in passing raw. material costs increases to the end consumer amongst others As in the other leading automotive. manufacturing countries public authorities are important partners in South Africa At a national. level the National Association of Automobile Manufacturers of South Africa NAAMSA and. the National Association of Automotive Component and Allied Manufacturers NAACAM are. regularly involved in discussions with government on issues affecting the automotive industry. In this regard a recent development is the introduction of the Automotive Supply Chain. Competitiveness Initiative ASCCI a joint initiative between the major national stakeholders. namely NAAMSA NAACAM the National Union of Metalworkers of South Africa NUMSA and. the Department of Trade and Industry Dti One main objective is to implement the national. strategic imperative of sustained and progressive competitiveness improvement Other key focus. areas of the initiative include improving component supplier operational capabilities increasing. levels of localisation achieving increased manufacturing value addition in South Africa as well. as other strategic issues affecting local supply chain competitiveness in support of the vision. to manufacture 1 2 million vehicles per annum by 2020 The initiative should have a positive. impact on employment creation enabling domestic supplier capabilities and an increase in value. addition thus ensuring the long term sustainability of the South African automotive industry. SOUTH AFRICA AND ITS AUTOMOTIVE CLUSTERS, South Africa is an open and globally integrated market oriented economy with a Gross Domestic. Product GDP of R3 385 billion at current prices in 2013 As the continent s most sophisticated. economy South Africa is regarded as one of the most diversified exporting countries in the world. and its increasing trade liberalisation is contributing significantly to the country s growth and. future prosperity South Africa has a substantial mineral resource base to support an economy. that generates a third of sub Saharan Africa GDP The country has an abundance of natural. resources well developed financial legal and transport sectors as well as modern infrastructure. supporting the distribution of goods throughout the fast developing southern African region. South Africa is one of the world s richest countries in mineral reserves and production With access. to large aluminium and steel resources and the world s largest deposits of platinum group metals. PGMs the country s vehicle and parts industry has plenty of growth potential The Columbus. stainless steel facility is the largest in the world as is the Alusaf aluminium smelting facility at. Richards Bay New manganese smelters are scheduled to be built at Coega South Africa currently. supplies in the order of 10 of the global demand for catalytic converters The country is also. home to over 70 of the world s chromium which is an essential ingredient in the stainless steel. used to house the catalyst and to produce modern auto exhausts. The improving and modernisation of various border systems and processes to facilitate increased. trade with South Africa and the sustained investments in refining its infrastructure will no doubt. have a significant positive impact on the region s trade as a whole The country s ports provide a. natural stopover for shipping to and from Europe the Americas Asia Australia and both coasts. of Africa South Africa is not only an attractive investment destination in its own right but also. provides entry to investments in other African countries The country is ideally positioned for easy. access to the countries of the Southern African Development Community SADC a free trade. area which consists of 15 countries with a total population of about 280 million The country s. inclusion in the BRICS economies substantiates its reputation as a globally competitive destination. for foreign investment, South Africa consists of nine provinces namely Western Cape Eastern Cape Northern Cape. North West Free State KwaZulu Natal Gauteng Mpumalanga and Limpopo each with its own. premier executive council and legislature Cape Town is the legislative capital and is where. parliament sits Pretoria is the executive capital where the government administration is housed. while the Constitutional Court of South Africa is based in Bloemfontein the judicial capital The. country has a population of 52 98 million people with 11 official languages While most South. Africans can communicate in more than one language English is the most commonly spoken and. is the official language in business and commerce The country occupies the southernmost part of. the African continent and shares boundaries with Namibia Botswana Zimbabwe Mozambique. Swaziland and Lesotho, South Africa s vehicle manufacturing industry is concentrated in three of the country s nine. provinces namely Gauteng the Eastern Cape and KwaZulu Natal and in close proximity to. its suppliers However increasingly some automotive development is also taking place in the. Western Cape and North West provinces Provincial and local governments have trade investment. and tourism offices to promote economic activity in their regions many of which have their own. Industrial Development Zones IDZs and development programmes. Gauteng home of both Pretoria and Johannesburg is the economic epicentre of the South African. nation and accounts for approximately 10 of the GDP of the entire continent of Africa It is the. smallest of the country s nine provinces but is the country s financial and industrial economic. centre It produces about one third of the national GDP generates the highest per capita income. and accounts for 40 of South Africa s manufacturing output construction and financial services. Main contributors to provincial GDP are finance manufacturing and trade although agriculture. and food processing are also important in the country s most densely populated province. Gauteng houses three OEMs and the majority of automotive suppliers The Gauteng Growth. and Development Agency GGDA via its two automotive specific subsidiaries the Automotive. Industry Development Centre AIDC and the Automotive Supplier Park ASP provides support. to the automotive industry and is charged with promotion of trade and investment and project. implementation to bolster certain specific areas of economic activity A recent development in. the province managed by the GGDA is the Gauteng Investment Centre GIC a one stop. business services facility housed in Sandton offering to domestic and foreign investors access. to investment services and support from various tiers and agencies of government The province. also hosts the various National Government Departments the Council for Scientific and Industrial. Research CSIR one of the largest scientific and technology research and development R D. and implementation organizations in Africa as well as the City Deep logistics hub the premier. container depot in the country the largest inland port in Africa and the fifth largest in the world. Gauteng key features 2013,Capital Johannesburg, Population of SA total of 52 98 million 12 73 million 24 0. GDP contribution as of SA total GDP of R3 385 billion 33 5. OEMs manufacturing plants Nissan SA Renault SA,Ford Motor Company of Southern Africa. Associated Motor Holdings AMH Babcock Fiat Group Iveco SA JMC. Medium heavy extra heavy commercial vehicle and bus SA MAN Truck Bus NC 2 Trucks Southern Africa Peugeot Citroen SA. companies Powerstar SA Renault Trucks Scania Tata Motors UD Trucks VDL Bus. Coach and Volvo Trucks Buses,Number of automotive component companies 150. Motor vehicle parc as of SA total vehicle parc of 11 01. million vehicles, Passenger car sales as of total 2013 passenger car. sales of 450 561 units, LCV sales as of total 2013 LCV sales of 169 262 units 33 2. MCV HCV sales as of total 2013 MCV HCV sales,30 922 units. Light vehicle exports by OEMs in the province as of. total 2013 exports of 276 378 units, Source NAAMSA Lightstone Auto NAACAM Statistics SA. Eastern Cape, The Eastern Cape has a sound manufacturing base primarily in the automotive sector Finance. government services and manufacturing are the leading sectors in the Eastern Cape economy. The province is well served logistically with airports situated in Port Elizabeth East London. Mthatha and Bisho and with ports in Port Elizabeth Coega and East London The allocation of. two of South Africa s five industrial development zones IDZs to the province is confirmation of. the potential generated by the shipping traffic that operates between Europe Asia and the Far. East The Coega IDZ is the largest IDZ in the country and is the main catalyst for Eastern Cape. socio economic development and the gateway to global markets The East London IDZ has also. established an Automotive Supplier Park, The Automotive Industry Development Centre the Eastern Cape Development Corporation the. Nelson Mandela Bay Metropolitan Municipality and the Cacadu District Municipality are among. the several organisations promoting the Eastern Cape as a preferred destination for trade and. investment Three Spatial Development Initiatives SDIs Fish River Wild Coast and East London. Coega are also located in the Eastern Cape,Eastern Cape key features 2013. Automotive clusters Eastern Cape,Capital Bisho, Population of SA total of 52 98 million 6 62 million 12 5. GDP contribution as of SA total GDP of R3 385 billion 7 6. Volkswagen Group SA,Mercedes Benz SA,OEMs manufacturing plants. General Motors Southern Africa, Ford Motor Company of Southern Africa engine plant. Medium heavy extra heavy commercial vehicle and bus FAW Trucks General Motors Isuzu Mercedes Benz SA and. companies Volkswagen Group SA,Number of automotive component companies 100. Motor vehicle parc as of SA total vehicle parc of 11 01. million vehicles, Passenger car sales as of total 2013 passenger car. sales of 450 561 units, LCV sales as of total 2013 LCV sales of 169 262 units 5 1. MCV HCV sales as of total 2013 MCV HCV sales of,30 922 units. Light vehicle exports by OEMs in the province as of. total 2013 exports of 276 378 units, Source NAAMSA Lightstone Auto NAACAM Statistics SA. KwaZulu Natal, KwaZulu Natal represents the second largest economy in the country after Gauteng With two of. Africa s busiest ports supported by world class road and rail infrastructure the province enjoys. the strategic and competitive advantage of being a global gateway for trade into Africa and to. the world Durban is South Africa s second largest city and busiest port Richards Bay originally. developed as a coal exporting port is now South Africa s busiest bulk port and the centrepiece. of the Richards Bay IDZ and Spatial Development Initiative SDI Richards Bay and Durban ports. handle about 75 of the country s tonnage Manufacturing dominated by pulp and paper. chemicals and food and beverages is the largest sector in the province followed by finance. trade tourism and agriculture The new King Shaka international airport at La Mercy provides. easy access to Durban, Trade and Investment KwaZulu Natal Tourism KwaZulu Natal the Durban Investment and. Promotion Agency and the Durban Automotive Cluster promote the province s trade and. investment opportunities These institutions have been supplemented by the new Durban. KwaZulu Natal Convention Bureau which has been established to promote the city and province. as top conference destinations in Africa,KwaZulu Natal key features 2013. Automotive clusters KwaZulu Natal,Capital Mzunduzi Pietermaritzburg. Population of SA total of 52 98 million 10 46 million 19 7. GDP contribution as of SA total GDP of R3 385 billion 16 1. OEMs manufacturing plants Toyota SA Motors, Medium heavy extra heavy commercial vehicle and bus Bell Equipment Co SA Hino MAN Truck Bus SA and. companies Toyota SA Motors,Number of automotive component companies 80. Motor vehicle parc as of SA total vehicle parc of 11 01. million vehicles, Passenger car sales as of total 2013 passenger car. sales of 450 561 units, LCV sales as of total 2013 LCV sales of 169 262 units 12 5. MCV HCV sales as of total 2013 MCV HCV sales of,30 922 units. Light vehicle exports by OEMs in the province as of. total 2013 exports of 276 378 units, Source NAAMSA Lightstone Auto NAACAM Statistics SA. SOUTH AFRICA S AUTOMOTIVE POLICY REGIME, Most countries with vehicle markets similar to or larger than South Africa protect their automotive. industries with significantly higher tariffs and governments provide substantial support to their. industries recognizing the benefits of the sector to a country s economy Each job in manufacturing. normally supports a multiple of jobs elsewhere in the economy. The automotive industry in South Africa is regarded as a strategic asset The Motor Industry. Development Programme MIDP was implemented with effect from 1 September 1995 to. reshape the future direction of the South African automotive and associated industries The MIDP. was established to entrench the outward orientation of the industry thereby restructuring it to. achieve global competitiveness whilst at the same time maintaining its employment level and. output contributions to the South African economy, Since the introduction of the MIDP significant structural changes have taken place in the South. African automotive industry The sector has grown in stature to become the leading manufacturing. sector in the country s economy Other industries due to their strong linkages with the automotive. industry have also benefited from the growth in the automotive sector Input industries include. aluminium chemicals electronics leather and textiles platinum group metals plastics rubber. steel machinery and equipment as well as service industries such as engineering logistics. tooling and others such as financial wholesale retail and advertising. The MIDP has to a large extent achieved its stated objectives and in general its contribution to. the domestic automotive industry has been regarded as positive Key achievements under the. MIDP between 1995 and 2012 may be summarised as follows. Total nominal export value of vehicles and automotive components R772 2 billion. Total number of vehicles exported 2 411 376 units, Total nominal capital expenditure by the OEMs R48 6 billion. Total nominal expenditure on training by the OEMs R1 85 billion. A compounded annual growth rate of 19 5 in nominal Rand value terms for completely. built up vehicles CBUs and automotive component exports has been achieved since 1995. through to 2012, Total automotive industry exports CBUs and components in Rand value terms increased. more than twenty fold from the R4 2 billion in 1995 to R86 9 billion excluding BLNS. countries in 2012, The MIDP ended on 31 December 2012 and was succeeded by the Automotive Production. Development Programme APDP with effect from 1st January 2013. The vision is to double vehicle production in South Africa by 2020 to 1 2 million vehicles per. annum pushing the country s automotive industry up to an anticipated global market share. of over 1 The increase in market share will trigger additional interest and investment and. generate additional export business The APDP will seek to shift the emphasis away from an. export focus to one that emphasises value addition and scale in the production of vehicles In. addition the programme is intended to be supportive of the further development of world class. automotive component manufacturing The APDP will incentivise automotive related production. investment and large scale vehicle manufacturing while the investment incentive will also be. accessible to more companies than was the case under the MIDP The programme should generate. a quantum leap in terms of processes technologies and the scale on which the domestic industry. has operated The APDP focus is to ensure the sector has a greater impact on the economy and. on national employment levels by increasing local component manufacturing and sourcing more. semi finished goods in the domestic market, The APDP consists of four pillars that will drive the programme. 1 Import Duty,2 Vehicle Assembly Allowance VAA rebate mechanism. 3 Production Incentive PI rebate mechanism,4 Automotive Investment Scheme AIS cash grant. The four key elements of the APDP may be described as follows. Tariffs Import duties on vehicles and automotive components will remain at 2012 levels 25. on light vehicles and 20 on original equipment components through to 2020 A preferential. agreement will result in imported vehicles from the EU paying only 18 duty These tariffs are. meant to provide just enough protection to justify continued local vehicle manufacturing. Vehicle Assembly Allowance VAA This support will be in the form of duty free import credits. issued to vehicle manufacturers based on 20 of the ex factory vehicle price in 2013 reducing. to 19 in 2014 and in 2015 to 18 of the value of light motor vehicles produced domestically. The equivalent value of this to the OEMs will be the allowance multiplied by the duty rate so. this represents 4 of the ex factory vehicle price in 2013 and will reduce to 3 6 in 2015 This. support is effectively providing a lower duty rate for local vehicle manufacturers and should. provide enough encouragement for high volume vehicle production in line with the target of. doubling production, Production Incentive PI From 2013 this support will start at 55 reducing progressively by. 1 annually to 50 of value added in the form of duty free import credits The equivalent value. will be the incentive multiplied by the component duty rate so this represents 11 of value added. in 2013 and will reduce to 10 by 2018 There will be an additional amount for vulnerable. products which will earn a PI of 80 in 2013 and 2014 reducing thereafter by 5 annually to. 50 in 2020 Value added has been defined in simple terms as the manufacturer s selling price. less the value of non qualifying material and components The incentive will flow through the. supply chain to the end producer which will be the OEM or in the case of component exports or. replacement parts the component manufacturer The value add support is planned to encourage. increasing levels of local value addition along the automotive value chain with positive spin. offs for employment creation A 25 Standard Value is regarded as local value added on the. following qualifying raw materials originating in the Southern African Customs Union SACU. which have been beneficiated to suit automotive specifications.