The Automotive Investment Scheme (AIS) was originally released by the dti in May 2010, by Minister Rob Davies. This programme was a direct replacement of the Productive Asset Allowance (PAA) which formed a part of the Motor Industry Development Programme (MIDP).

The AIS is the capital investment component of the MIDP replacement Automotive Production Development Programme (APDP). The AIS’s primary focus is investment in production capacity by Original Equipment Manufacturers (OEM) and Component Manufacturers in the Passenger and Light Commercial Vehicle supply chain. In 2012 the dti released the People-Carrying Automotive Investment Scheme (P-AIS) as an additional sub-component of the AIS, with specific focus on the mini-bus and taxi segment.

In October 2014 the dti released the Medium & Heavy Commercial Vehicle-AIS, which caters for the medium and heavy commercial truck and bus segment of the automotive industry. The principles and methodology of the AIS and the P-AIS carry through to this programme with specific deviations that cater for the different nuances of the bus and truck market. The asset categories and Competitiveness Improvement Costs are identical to the AIS and P-AIS.

The AIS provides a non-taxable cash grant of between 20% and 30% for vehicle manufacturers and 25% to 35% for component manufacturers, paid over three years and based on qualifying investment plus a performance element.

The dti on 4th December 2015 announced a further amendment to the AIS, P-AIS and MHCV-AIS guidelines. The amendment sees the introduction of a minimum B-BBEE compliance level in order to qualify an application and payment of claim(s).

The amendment states that an applicant or claimant must demonstrate a B-BBEE compliance level with a score of 1 to 8, for an existing automotive assembler or component manufacturer. A level 8 indicates that there is minimum compliance to the B-BBEE Codes of Good Practice. Historically, a certificate had to accompany an application for adjudication, or a claim for payment, irrespective of the compliance level. This practice has now changed because a valid certificate with a compliant score must be provided. This is significantly different to other mainstream dti grant programmes where the minimum prescribed compliance level to qualify for the programme is Level 4.

New automotive assemblers or component manufacturers with turnover below R 10 million will be considered Exempt Micro Enterprises (EMEs) - financial statements that have been verified by an external accredited person may be used to prove the EME status. The automotive programmes require R 10 million in turnover as an entry level requirement. Should the EME status remain in place at the time of claim submission (i.e. less than R 10 million turnover), the project would be non-qualifying as a programme minimum entry level requirement has not been complied with. By the time a claim has to be submitted a B-BBEE certificate with a score of 1 - 8 must be provided.

The introduction of the minimum B-BBEE compliance level aligns the automotive programmes with government’s focus on furthering the economic transformation objectives. This amendment is not as prescriptive as other programmes but is a first for this industry sector.

The same B-BBEE amendment is applicable for all three derivatives of the automotive grant programmes.

For further enquiries please contact Dylan Jessup, Operations Director
e-mail: dylan.jessup@sasfin.com
Tel: +27 (0)11 531 9155
Mobile: +27 (0)82 466 0436