Cape Town - The new motor industry development programme (MIDP) is likely to take the form of a subsidy to support the production platforms or investment plans of the domestic industry, according to trade and industry minister Mandisi Mpahlwa.
Mpahlwa could not quantify what effect the entry of new Chinese and Indian motor vehicles might have on profit margins or on the production of South African motor vehicle component manufacturers.
In reply to a parliamentary question from Democratic Alliance trade spokesperson Pierre Rabie, Mpahlwa said it was important to note that since opening up the domestic market in the 1990s by reducing tariff protection and allowing for the rebating of import duties, "the volume and variety of imported vehicles have increased".
In connection with the call by the National Association of Automotive Component and Allied Manufacturers for restrictions on imports, Mpahlwa acknowledged that opening up the South African market could have a negative effect on local component suppliers, which faced additional competition from global suppliers.
Nevertheless, competition in the domestic marketplace benefited the consumer, Mpahlwa argued.
He added that the department of trade and industry was finalising the new support programme for the motor industry, which should be ready next month. It would focus "on value addition, while being consistent with South Africa's multilateral obligations".
Imported vehicles are estimated to account for 60 percent of the market. There are nearly 700 models available in South Africa, with 92 launched last year.
The current motor industry development programme took over in the mid-1990s from local content programmes that had been in place for 35 years.
These determined incentives and penalties for car manufacturers, first on the basis of mass and later by the value of a vehicle's local input.
The current development programme, however, has rested on import-export complementation. Certificates equivalent to the rand value of exported items are granted for parts, sub-assemblies or entire vehicles. These are marketable.
A tariff reduction of 60c of every rand is taken for imported parts.