Trade and Industry Minister Rob Davies. Picture: SOWETAN
Trade and Industry Minister Rob Davies. Picture: SOWETAN

THE Department of Trade and Industry has created a special automotive incentive scheme for mini- and midi-bus taxis in a bid to incentivise local assembly and production.

The People-carrier Automotive Investment Scheme has a different duty tariff structure to the existing Automotive Investment Scheme, which applies only to passenger and light commercial vehicles.

Henry Pretorius, head of the incentive committee of the National Association of Automotive Manufacturers of South Africa, said on Wednesday that mini-bus taxis had a smaller local market and had to be catered for separately with a different duty structure.

The size of the South African market for mini-and midi-bus taxis is estimated at between about 20,000 and 22,000 vehicles a year.

Trade and Industry Minister Rob Davies’ announcement of the People-carrier Automotive Investment Scheme may affect manufacturers assembling imported mini-bus taxis. Market leader Toyota began local assembly of the Ses’fikile taxi model this year, with production volumes estimated at about 12,000 units a year.

Nissan South Africa indicated that it would introduce a minibus taxi assembly operation at the end of next year. Further, Chinese minibus taxi assembler Beijing Automobile Works announced last month that it would be assembling an Inyathi minibus, which would be much cheaper than its rivals.

Mr Davies said the new incentive scheme was "one of the key action programmes" of the Industrial Policy Action Plan. The scheme would provide investment support to people-carrier manufacturers and assemblers and automotive component manufacturers.

"The People-carrier Automotive Investment Scheme is … designed to stimulate a growth path for the people carrier vehicles industry through investment in new and/or replacement models and components that will result in new or retention of employment and strengthen the automotive vehicles value chain," Mr Davies said in a statement.

Projects eligible for the new scheme include semi-knockdown investments, which will qualify for a grant percentage of 20% with an additional 5% for meeting certain economic benefit criteria. These include job creation, research and development.

Further, the special automotive incentive scheme will apply to completely knocked-down investments for which the grant percentage is 25% with an additional 10% for meeting the economic benefit criteria.

Component manufacturers can get a grant of 20% with an additional 10% for meeting the economic benefit criteria. But they will have to prove the existence of a contract for the manufacture of components to supply into the people-carrier manufacturer supply chain locally or internationally.

In addition, the manufacturers will have to prove that their production of components for the people carriers and light motor vehicles supply chain, locally or internationally, will generate at least 25% of total entity turnover — or R10m a year. The targeted turnover has to be achieved by the end of the first full year of commercial production.