Lionel October. Picture: TREVOR SAMSON
Lionel October. Picture: TREVOR SAMSON

Motor industry executives have taken issue with trade & industry director-general Lionel October’s assertion that the government and the industry are "99% in agreement" on future automotive policy. Significant differences still exist between them, one executive said.

October told a conference at Kyalami on Friday that negotiations on a successor to the 2013-20 Automotive Production and Development Programme are almost complete and that officials are filling in details before the plan is presented to the cabinet. Trade & industry minister Rob Davies has said he wants to reveal the automotive "masterplan", which will run from 2021 to 2035, before the end of 2018.

BMW SA MD Tim Abbott said that even if the final version is not ready, the industry needs clear guidelines on the government’s future thinking. Most motor companies plan at least seven years ahead.

Talks under wraps

Industry executives and labour representatives have been asked by the department of trade & industry not to divulge details of the latest talks. However, it is well known the biggest obstacle is the government’s insistence that motor companies must have no worse than a level four broad-based BEE rating to access investment and production incentives from 2021. Most companies are at level eight.

The government proposed that, to reach level four, they should surrender up to 25% of equity to black SA shareholders. Multinational parents unanimously rejected the idea.

Instead, they proposed a R3.5bn venture capital fund into which all motor companies would pay. The money would be used to identify and develop black-owned components suppliers. As the money is spent, companies will top up the pot.

October said on Friday that the fund idea has been adopted. The question is whether the department will buy the industry’s proposal that it should entitle companies to all the scorecard points they would have earned by ceding part-ownership. "We have done the sums here and if we get all the points, we will reach the empowerment target," Abbott said.

Another CEO, speaking on condition of anonymity, said: "Without those points, none us will get there.

"But there’s no guarantee. It’s still a sticking point. We need a sensible discussion."

There is also anxiety over the department’s target of minimum 60% local content in SA-built vehicles. While some companies are already there, others are well short. The industry average is below 40%.

The programme has been credited with making the local motor industry more competitive globally. Incentives include rebates of up to 30% on production-related investment.