Automotive Business Review February 2015 | Page 38

by Frank Beeton M oving atters Frank Beeton scans the transport world for news pertinent to the Logistics Sector. who have decided, on economic grounds, to import their cabs in built-up and finished condition. While the process of assembling and trimming cabs is not unduly onerous, requiring only relatively simple fixtures, the need to apply adequate corrosion protection, which usually involves the dip application of electrophoretic e-coat primer before final painting, and is very necessary for vehicles destined for our coastal areas, will require substantial up-front investment. More on the Truck Investment Scheme moving matters Last October, we reported and commented on the Department of Trade and Industry’s document entitled “Programme Guidelines for the Medium and Heavy Commercial Vehicles Automotive Investment Scheme”, which was first published for comment on July 1st, 2014. Even with the incentives available, the relatively low sales volumes available in the local truck market will make the amortisation of such an investment a lengthy process, particularly if the entire painting operation is ring-fenced for MHCV products alone, as apparently required by this programme. S ubsequently, on November 23rd, the Department issued the approved version of the document, which had been duly signed off by Minister Rob Davies. After laying the two 27-page documents side-by-side for comparison, we discovered two significant differences, in that local assembly of truck cabs would become a nonnegotiable qualifier for participation in the scheme from 1st April, 2016, and a provision which allowed bus and truck body manufacturers to access incentives, provided that they are part of the supply chain linked to medium and/or heavy commercial vehicle original equipment manufacturers. Other than the aforementioned, there were only some detailed revisions which did not materially alter our original reaction to the programme. In October, we said: “From our perspective, it is important to understand, first off, that this is not a local content programme, but only an incentive for new investment in vehicle assembly or component manufacture activities. There are no additional penalties for manufacturers and importers who elect to continue importing vehicles in CBU condition. The decision to invest in local assembly remains, therefore, completely voluntary, and can be made on economic grounds. The fact that both locally assembled and imported vehicles currently compete in the South African market also suggests that the present level of import duties imposed on the latter are not unduly punitive.” That position has not changed. The introduction of the cab assembly qualifier is not likely to influence the attitude of manufac