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Stimulating investment in vehicle production

Auto Industry

Trade and Industry Minister Dr Rob Davies has approved the new Medium and Heavy Commercial Vehicles-Automotive Investment Scheme (MHCV-AIS) guidelines to stimulate investment in the production of vehicles in the country.

The MHCV-AIS is a sub-component of the Automotive Investment Scheme, an incentive designed to grow and develop the automotive sector in South Africa.

“The broadening of the scope of the AIS to include medium and heavy commercial vehicle manufacturers is in line with the broader objectives of the AIS programme…

“The medium and heavy commercial vehicles sector value chains are highly under-developed and there are opportunities to deepen their value addition and potential for employment creation,” said Minister Davies on Sunday.

The MHCV-AIS will be made available to investment projects with a production start date of 1 April 2014. The commissioning period for these projects may not exceed 18 months prior to the start of the production date.

Minister Davies said the extension of the programme to these manufacturers is required to achieve the developmental objectives that are set to increase market size, investment, deepen supply chain, encourage technology transfer and create and sustain jobs in the automotive sector.

The MHCV-AIS provides a non-taxable cash grant of 20% of the value of qualifying investment in productive assets by medium and heavy commercial vehicles manufacturers and 25% of the value of qualifying investment in productive assets by component manufacturers and tooling companies for MHCVs as approved by the Department of Trade and Industry (the dti).

An additional non-taxable cash grant of 5% of the value of qualifying investment in productive assets may be available to projects that meet two of the following economic benefit criteria:

  •  Tooling;
  • Research and Development in South African-related components of the project;
  • Employment creation;
  • Strengthening the automotive supply chain;
  • Value-addition and
  • Empowerment.

“It is envisaged that these guidelines, whose main theme is to stimulate investment in the production of medium and heavy commercial vehicles, will result in increased support and will lead to growth and development of the automotive sector in South Africa,” said Minister Davies. – SAnews.gov.za