Automechanica 2011

Overview of Investment Opportunities

Sales , Imports, Exports and Production Investments by OEMs Vision 2020 Automotive Production and Development

Programme Contact Details

Agenda

Sales, Exports,Imports,ProductionMarket dependant on GDP growthProduction dependant on Investment growth

Sales, Exports,Imports,ProductionMarket nearly doubled in 2006 before global crashProduction exceeded market only 4 times; forecast looks

good

Sales, Exports,Imports,ProductionImports increase rapidly when economy grows Exports took a decade to catch up with imports

Capital Expenditure by OEMsInvestment peaked in 2006 due to platform rationalisation A new OEM will require at least R 5 billion in fixed assets

VISION 2020Passenger & Light CVs

To produce over a million vehicles anualy This is 350 000 more than 2012 forecast Growth expected mainly from exports Potential for 1 or 2 new OEMs OEM volumes will drive more component

localisation New jobs to be expected Skills gap challenge

8

The APDP consists out of 4 pillars that will drive the programme: Import Tariff Protection . Vehicle Assembly Allowance (VAA). Production Incentive (PI). Automotive Investment Scheme (AIS).

APDP

Imp

ort

Ta

riff

s

Veh

icle

As

sem

bly

A

llo

wan

ce

Pro

du

ctio

n

Ince

nti

ve

Au

tom

oti

ve

Inve

stm

ent

Sch

eme

Background and Objectives of the APDP

Protection Rebates Support

36%

25%25% 25%

29%

24%

18%18%18%

10%

15%

20%

25%

30%

35%

40%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

FBU Import Duty FBU Import Duty (EU Pref Rate)

20%

24%

20%20%

28%

10%

15%

20%

25%

30%

35%

40%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

CKD Import Duty Rate

The New APDP will have stable, moderate import tariffs from 2012:

•25% for Completely Built Up Vehicles (CBUs).

•18% for CBU’s out of Europe via the EU preferential rate.

•20% for CKD components used by vehicle assemblers.

FBU Import Duty Rate CKD Import Duty Rate

Import Tariff Protection

MIDP APDP MIDP APDP

The Vehicle Assembly Allowance (VAA) will allow vehicle manufacturers

with a plant volume of at least 50,000 units per annum to import a

percentage of their components duty free.

• 20% reducing to 18% over 3 years.

• Introduction in 2013.

27% 27%

19%18%18%

20%

14%

16%

18%

20%

22%

24%

26%

28%

30%

'04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

DFA% of Domestic Turnover VAA% of Domestic and Export Turnover

Vehicle Assembly Allowance (VAA)

MIDP APDP

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The Production Incentive will be in the form of a duty credit aimed at

raising production value-added:

• 55% reducing to 50% over 5 years.

• Value-added = Sales minus Imported Components and

Non qualifying Raw materials.

• Additional 5% for vulnerable sub-sectors.

• Introduction in 2013.

55%

52%

50%50%51%

54%53%

45%

50%

55%

60%

'13 '14 '15 '16 '17 '18 '19 '20Production Incentive

Production Incentive (PI)

Qualifying Raw Materials25% Standard Value added on raw materials

• PGM’s (Sponge)• Leather (wet blue)• Aluminium (Ingot)• Steel ( Coil / bar)• Stainless steel (Coil)

Automotive Investment Scheme (AIS)

The Automotive Investment Scheme is a Direct Cash Grant to support

investments:

• 20% of a projects value paid over 3 years.

• 5% - 10% Additional support providing certain requirements are fulfilled.

• Limits to be placed to eliminate many small projects:

OEM Investments - project min value is R 30.0 Mio.

Supplier Investments - project min value is R 1.0 Mio.

• Introduction of the AIS 1st July 2010.

ASHLEY GARDENS OFFICE PARKMenlopark, PretoriaCorner Garsfontein & Matroosberg Street

Johan Cloete

jcloete@jfstechnology.co.za +27 82 550 7683

Brian Verwey

brian@bceconsulting.co.za +27 82 877 7263

Werner Pretorius

werner@bceconsulting.co.za +27 82 877 7842

Craig Verwey

craig@bceconsulting.co.za +27 83 603 0332

Rouan Cloete

rcloete@jfstechnology.co.za +27 82 875 0021

CONTACT DETAILS