Uitenhage-based OEM scores state subsidies

Its R5-billion investment could be as high as 30% of its total investment.

Investments of more than R5-billion by Volkswagen SA in Uitenhage have been approved by the government, meaning they will qualify for state subsidies.

The news was given by Trade and Industry Minister Rob Davies in the National Assembly in reply to a written question from DA trade and industry specialist Kobus Marais.

It came a month after the Mandela Bay company announced a series of investment plans, many of them involving high-volume exports.

Based on previous information released by the government and companies, the VWSA investment could qualify for between 20% and 30% of its total.

The government's policy, together with a determination for South Africa to remain as a vehicle manufacturing centre, is seen as having been a major factor for a number of companies planning investments.

One totalling R3-billion by Ford is for its engine plant in Port Elizabeth and assembly plant in Pretoria.

It was reported after the Ford announcement last month that it would receive up to R900-million in government support.

Davies said at the time that time that recent investment in the motor industry totalled R9-billion in government support and should create 3 500 jobs on top of the existing 135 000.

Among the other investments are plans by General Motors in Port Elizabeth to spend R700-million in the next two years in introducing two replacement models, with additional spending to come if it wins approval to build a third new model in the city.

This month, it begins stocking a R250-million parts warehouse built at the Coega industrial development zone.

In his reply in Parliament to Marais, Davies said Volkswagen SA had been approved under the productive asset allowance of the current motor industry development programme (MIDP) for its R818-million investment in an engine plant and a R4.4-million investment for the new Polo.

The minister also explained why the approval had been granted through the MIDP and not the pending automotive production and development programme's (APDP).

No application had been received from VWSA for automotive investment scheme assistance (AISA), he said, "as the scheme had not yet been launched".

Davies said the automotive product investment programme was aimed at "promoting domestic auto component manufacturing and increasing vehicle assembly plant production by light motor vehicle manufacturers".

The target was for local manufacturers to reach annual production of 1.2 million vehicles by 2020.

"Projects that contribute to increasing production volumes of assembled vehicles and auto components such as the VW investment are aligned with the key objectives of the programme."

Davies said a total of R2.7-billion had been budgeted for the automotive investment scheme for the next three years for both light vehicle manufacture and component manufacturers.

The minister said revisions had been made to the AIS. Guidelines would be launched during the first quarter of the current financial year.