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President Jacob Zuma has directed members of the Presidential Infrastructure Coordination Commission to follow up on the issues raised by the automotive sector during their meeting with the President in Port Elizabeth yesterday.

The President, accompanied by Minister Gugile Nkwinti who chairs the economic cluster and Economic Development Minister, Mr Ebrahim Patel as well as Premier Noxolo Kiviet met with industry leaders led by the President of the National Association of Automotive Manufacturers Mr David Powels and the President of the National Association of Automotive Component and Allied Manufacturers (NAACAM) Mr Stewart Jennings.

The visit was aimed at promoting job creation and Vision 2020 for the auto industry, which is aimed at ensuring the growth of the sector to produce at least 1,2 million vehicles per annum. The current output is more than 500 000.

Government’s Motor Industry Development Programme, which has been implemented since 1995, and has been appreciated by the sector, is to be replaced by a new programme, the Automotive Production and Development Program (APDP) in 2013. The President promoted the programme to the sector yesterday, which has been developed with their support, including that of the National Union of Metalworkers of South Africa (NUMSA).

The key objectives of the APDP include the following:

• Stimulate expansion of automotive vehicle production to 1.2 million vehicles per annum by 2020 with associated deepening of the components industry
• Provide appropriate levels of support for these ambitious targets without being overly generous
• Expand value-added production, investment, employment and net government revenue: directly and via multiplier effect
• Achieve better balance between domestic and export focus to supply growing domestic demand
• Make a large positive contribution to the balance of payments.

Industry leaders welcomed the plan and pointed to the positive impact of government support in the industry. They requested that for the goals to be fully achieved, the President should also consider the challenges, amongst others:

• An increasing level of imports onto the domestic market
• Inadequate levels of local content.
• Performance of the global economy affecting aggregate demand in key export markets.
• Relatively cheaper vehicle components from low cost countries such as India and China.
• Rising input costs, for example energy tariffs and port cargo duties.
• Relatively small size of the domestic market (less than 1% of global the market) and distance to key automotive markets (logistical costs).

Minister Gugile Nkwinti, who chairs the Management Committee of the Presidential Infrastructure Commission, will work with Minister Ebrahim Patel who chairs the Secretariat of the Commission to lead discussions with the industry as well as the Eastern Cape provincial and local government leadership to find solutions. They will report to the President on an ongoing basis.

The transport equipment sector, which includes the automotive sector, is the biggest manufacturing group in the Eastern Cape in terms of both output and employment, followed by food; beverages; tobacco; petroleum products; and rubber sector.