the auto industry accounts for almost 7 of south africas gross domestic productjohannesburg the expansion of south africas auto industry is central to the governments economic development strategy but the coronavirus crisis has forced carmakers into survival mode and could push ambitious growth plans out of reach industry officials say the government needs to defer some tax payments for the auto industry and relax the criteria for investment incentives and allowances or the pandemic could deal the sector a permanent blow before the crisis the government had crafted a plan to supercharge the sector to help revive the countrys struggling economy and form a beachhead for expansion within africa the worlds last major untapped market for new cars advt but a fiveweek lockdown has brought a manufacturing and retail industry that accounts for almost 7 of south africas gross domestic product and 30 of its manufacturing output to a virtual standstill those plans will be impacted massively said mike mabasa chief executive of the national association of automobile manufacturers of south africa naamsa particularly for the short to medium term that plan is completely out of the window south africa has put its socalled automotive masterplan at the heart of attempts to revive growth through industrialisation after years of stagnation and to bring unemployment down from almost 30 the plan aims to boost growth and create jobs by more than doubling the industrys annual production to 14 million vehicles by 2035 and raising the proportion of auto components made locally to 60 from 39 the new scheme comes after a series of auto industry development plans and will be supported by investment and tax incentives that have been in place in some form for years they include a taxfree cash grant starting at 20 of the value of qualifying investments rising to 25 for component makers and a tax perk related to vehicle production known as the vehicle assembly allowance scant response advt mabasa said naamsa has asked the government to relax the minimum plant production capacity threshold of 50000 cars a year needed for the investment incentive as carmakers believe its too stringent given the fallout from the crisis as part of series of requests on behalf of the industry naamsa has also asked the government to use 2019 production numbers and targets for 2020s vehicle assembly allowance as output is likely to take a major hit this year the sector had some relief with the easing of the countrys lockdown on may 1 as it allowed auto manufacturers to return to 50 capacity but it has had scant response from the government to its calls for specific financial help besides requests for more information the department of trade and industry did not respond to requests for comment most of south africas automakers referred reuters to naamsa for comment naamsa represents 41 firms including bmw ford mercedesbenz isuzu nissan toyota and volkswagen which make some 600000 vehicles a year in south africa and