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Wednesday 06 May 2020 , 9:27 am

South Africa’s Auto Industry Ambitions Threatened by Coronavirus

South Africa has put its so-called automotive master plan at the heart of attempts to revive growth through industrialization after years of stagnation and to bring unemployment down from almost 30%.
By SIN Bureau
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The expansion of South Africa’s auto industry is central to the government’s economic development strategy but the coronavirus crisis has forced carmakers into survival mode and could push ambitious growth plans out of reach.

Industry officials said to Reuters that the government needs to defer some tax payments for the auto industry and relax the criteria for investment incentives and allowances, or the pandemic could deal the sector a permanent blow.

Before the crisis, the government had crafted a plan to supercharge the sector to help revive the country’s struggling economy and form a beachhead for expansion within Africa, the world’s last major untapped market for new cars.

But a five-week lockdown has brought a manufacturing and retail industry that accounts for almost 7% of South Africa’s gross domestic product and 30% of its manufacturing output to a virtual standstill.

South Africa has put its so-called automotive master plan at the heart of attempts to revive growth through industrialization after years of stagnation and to bring unemployment down from almost 30%.

The plan aims to boost growth and create jobs by more than doubling the industry’s annual production to 1.4 million vehicles by 2035 and raising the proportion of auto components made locally to 60% from 39%.

The new scheme comes after a series of auto industry development plans and will be supported by investment and tax incentives that have been in place in some form for years.

They include a tax-free cash grant starting at 20% of the value of qualifying investments, rising to 25% for component makers, and a tax perk related to vehicle production, known as the vehicle assembly allowance.

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Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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