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The revised Automotive Investment Scheme: A new B-BBEE challenge and opportunity

The Automotive Investment Scheme (AIS) was introduced to grow and develop the automotive sector. 

The AIS incentive takes the form of a non-taxable, reimbursable cash grant for qualifying investment.  When the scheme was introduced, the qualifying investments were as follows:

  • Certain Original Equipment Manufacturers (OEMs) – 20% grant
  • Certain Automotive Component Manufacturers (CMs) – 25% grant
  • Automotive Tooling Manufacturers – 25% grant

These grants aim to stimulate growth in the sector through increased plant production volumes, sustained employment and an overall stronger value chain.

The Department of Trade, Industry and Competition (DTIC) recently published amendments to the AIS guidelines, which became effective 1 July 2021, inclusive of, inter alia revised B-BBEE targets These changes essentially widened the scope of support to include:

  •  New Energy Vehicle Manufacturers – 30% grant
  • Energy Efficient Vehicle Manufacturers – 30% grant

Revised AIS Guidelines: Key points you need to considerBroad Based Black Economic Empowerment (B-BBEE) minimum requirements

When the AIS guidelines were first released, the requirement to achieve certain B-BBEE levels was a contentious issue. To address industry concerns, Interpretation Note 01/2015 was issued, stating that qualifying applicants must simply be B-BBEE compliant (i.e. B-BBEE levels 1 to 8). 

The revised guidelines, effective 1 July 202,1 require improved Scorecard performance in order to qualify for the AIS incentive,  as follows: 

  • Original Equipments Manufacturers (OEMs): At least B-BBEE level 6 as of July 2021, and at least B-BBEE level 4 by 31 December 2022; 
  • Components Manufacturers (CMs): At least B-BBEE level 8 as of July 2021, at least B-BBEE level 6 by 31 December 2022, and at least B-BBEE level 4 by 31 December 2023. 
  • New Manufacturing Entities: At least B-BBEE level 8 for the initial 36 months after incorporation; thereafter, at least B-BBEE level 4. 

When B-BBEE expertise makes all the difference

The new requirements are rigorous and fairly extensive. Many stakeholders, especially international investors, will find adapting to the new requirements challenging and complex. However, the process can be streamlined and simplified if you have a comprehensive and integrated understanding of the B-BBEE Scorecard. Notably, some stakeholders are too narrowly focused on the Ownership component, overlooking more flexible and effectively attainable points opportunities in other areas. Notably, there are powerful opportunities to develop effective, ongoing ESD and SED initiatives. 

Driving investment, accelerating participation

Under the revised Automotive Investment Scheme guidelines, the AIS aims to create a framework that meet to, connected, objectives.  First, the AIS creates substantial investment incentives to drive growth in the sector. At the same time, South Africa’s major auto manufacturers will now more meaningfully participate in all the elements of the B-BBEE codes. Broad-based, meaningful, B-BBEE engagements is designed both to enhance the participation of Black South Africans throughout the auto sector value chain and also to create broader social benefit. 

There are new templates available for application forms. These must be submitted together with all supporting documents within the submission timing requirements for assets to qualify under the AIS. Under the amended guidelines, the applicant must also comply with the specified B-BBEE requirements.

Submission of application to the relevant government department within the specified timeframe is essential. It is therefore critical to investigate whether you could benefit from the AIS incentive well before the 120 / 90 calendar day deadlines specified above.

BEE123 makes meeting the new requirements fast, simple and rewarding 

Under the new AIS guidelines, the B-BBEE compliance demands are much more rigorous. BEE123 can provide the support, guidance and technology your business needs to easily navigate the new requirements. 

BEE123 has rich experience in B-BBEE codes across all sectors, including extensive experience within the automotive space, across the entire value chain – from OEMs, to component manufacturers and retailers. Our subject matter experts understand how best to leverage our clients’ realities for enhanced scorecard performance.

A more effective way to manage compliance

BEE123’s Management Software System is an advanced digital B-BBEE solution that makes the whole compliance process easy to understand, plan, manage and implement. 

Automation transforms the B-BBEE compliance process. Manual compliance processes are inefficient and unsustainable. At best, they are a huge drain on your company’s resources, which could more profitably be deployed elsewhere. 

For many companies that rely on outdated manual processes, B-BBEE compliance is enormously time-consuming and labour-intensive, not to mention frustratingly complex. BEE123 compliance software makes B-BBEE compliance simpler, faster, more transparent and much easier to achieve, even under the most complex industry conditions. 

An expert advisor in your corner

B-BBEE certification isn’t a once-off event, it’s an ongoing process. As leading B-BBEE experts, BEE123 consultants will guide you through the changing legislative terrain and grey areas that inevitably arise as new corporate obligations are introduced in terms of Black Economic Empowerment. We go beyond helping you understand the letter of the law, providing tailored strategic advice that helps you leverage the B-BBEE codes to meet your business goals and make a real social impact. 

Why BEE123?

  • Revolutionary technology that simplifies compliance, provides rich data-driven insights, and enhances efficiency
  • A blue-chip client base that drives us to innovate
  • Over a decade setting the standard for managing B-BBEE compliance
  • Rich experience in B-BBEE codes across all sectors
  • Unwavering attention to client service levels and adding value
  • A total staff complement of more than 40, made up of dedicated specialist teams and subject matter experts
  • B-BBEE scorecard benefits to those who use us (we are a 65% Black-Owned Level 2 B-BBEE contributor)

We’re With You on Your Transformation Journey

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