The Automotive Investment Scheme (AIS) forms part of the broader Automotive Production and Development Programme and supports investment in South Africa’s automotive sector. The programme aims to stimulate industrial growth, increase production volumes, and sustain employment. In addition, it strengthens the automotive value chain and encourages value-added manufacturing. It also promotes investment in new and replacement models, as well as components. Therefore, the scheme plays a critical role in enhancing competitiveness and driving long-term sector development.
Objectives and Strategic Impact
The AIS focuses on improving local manufacturing capacity. Furthermore, it supports research and development activities within South Africa. It also promotes employment creation across the automotive value chain. In addition, it encourages value addition and industrial expansion. Consequently, the programme contributes to economic transformation and sector sustainability.
Moreover, the scheme strengthens linkages between manufacturers, suppliers, and service providers. It also enhances local capabilities and reduces reliance on imports. As a result, South Africa improves its position within the global automotive market.
Benefits of the Automotive Investment Scheme
The AIS offers several key benefits to qualifying participants. It supports tooling investment, which enhances production efficiency. It also promotes research and development activities within the country. Furthermore, it encourages job creation and skills development.
In addition, the scheme strengthens the automotive value chain. It also supports value addition within manufacturing processes. Importantly, it promotes empowerment by enabling broader participation in the sector. Therefore, the AIS contributes to inclusive economic growth.
Additional Incentive Opportunities
Applicants may qualify for an additional grant of up to five percent, resulting in a cumulative benefit of up to 10 percent. However, applicants must meet specific performance criteria to access this additional support.
For light motor vehicle manufacturers, the project must demonstrate a measurable increase in unit production per plant. On the other hand, component manufacturers must show an increase in turnover. In addition, they must manufacture components not previously produced in South Africa. Consequently, the scheme rewards measurable growth and innovation.
Funding Scope and Limitations
The AIS limits funding to competitiveness improvement costs incurred within the first three years after the start of production. Furthermore, each entity can receive a maximum grant of R1 million per three-year cycle. Therefore, applicants must carefully plan and structure their investments to maximise the benefit.
Eligible Entities for the Automotive Investment Scheme
The AIS supports two main categories of applicants. Firstly, light motor vehicle manufacturers qualify under specific production thresholds. They must achieve a minimum of 50,000 units per plant annually within three years.
Secondly, component manufacturers and deemed component manufacturers may also qualify. These entities must demonstrate secured demand through contracts, awarded tenders, or letters of intent. In addition, they must participate in the Original Equipment Manufacturer (OEM) supply chain. Furthermore, they must achieve at least 25% of total turnover or R10 million annually by the end of the first full year of production.
Helpful Guidelines based on the Automotive Investment Scheme (AIS)
The programme allows the use of second-hand machinery, equipment, and tooling. However, a consulting engineer appointed by the Department of Trade, Industry and Competition (DTIC) must verify its suitability. The equipment must also have never received previous incentives from the department or the International Trade Administration Commission.
In addition, warehouses that form part of the manufacturing facility may qualify. However, they must be located on the same premises as the production facility. Only assets used within South African operations qualify under the scheme. Therefore, applicants must ensure compliance with all eligibility requirements.
Claiming Process and Timelines
The AIS follows a structured claiming process. Firstly, applicants submit claims at defined intervals. The first claim covers the period from commissioning to one day before production starts. Secondly, the second claim occurs 12 months after production begins. Thirdly, the final claim occurs 24 months after production starts.
All claims must be submitted within six months after the end of each claim period. Therefore, applicants must adhere strictly to the timelines to avoid delays or rejections.
Application Submission Requirements
Applicants must submit completed applications before production begins. OEMs must submit applications at least 120 days prior to commencement of production. Meanwhile, component manufacturers, deemed component manufacturers, and tooling companies must submit applications at least 90 days before production starts.
Consequently, early planning is essential to ensure compliance with all submission deadlines. Proper preparation also improves the likelihood of approval.
Why Dream Team Capital (DTC) to assist you further…
We are dedicated to the provision of professional corporate services characterized by independent and creative thinking to maintain our leadership position and credible reputation.
Our work encompasses mutual trust with each client; international companies as well as small- and medium-sized enterprises. Each client’s activities, products and professional environment are carefully taken into consideration; our goal is to provide tailor-made solutions to the client’s specific business and other corporate needs.
Our strength is the ability fully to grasp the exact niche needed in your line of business, whether the need is full implementation, consulting, or service and mentoring; we provide the support and expertise to help you achieve your vision. This is one of our core competencies.
We will help define who you are, what you provide, what your market needs and ensure your business proposal is sound and achievable.
At DTC we understand the complexities of the various business grants and the process for each. We have assisted thousands of entrepreneurs through the application process to access business grants, and we can assist you with the same.
Contact us for further information on this incentive on the Automotive Incentive Scheme and assistance to access the grant and funding…
