The Department of Trade and Industry has appointed a task team to consider a rescue plan for South Africa’s Automotive industry, including possible tax adjustments to help stimulate demand.

The government has already warned that it is not possible to embark on any major bail out package as has been seen in the US and Europe in recent months.

Although details have not been revealed, Business Day reported that the task team is considering a three-pronged plan:

• Bridging finance to be provided by the Industrial Development Corporation (IDC) to assist financially constrained car manufacturers
• Using funds from the Department of Labour and the Manufacturing, Engineering and Related Services Sector Education and Training Authority (merSETA) to help pay for on-the-job training in order to minimise retrenchments
• Incentives to help improve demand, such as scrapping allowances, tax incentives or temporary rebates for trade-ins

“Companies that have already retrenched people are now left with established, highly skilled people. If they were to lay off more workers, these skills would be lost. That is the real problem,” said Roger Pitout, director of the National Association of Automotive Component and Allied Manufacturers.