According to South Africa's largest news source Independent Online, China-base car maker Chery may drop the plan to establish a completely knocked down (CKD) plant in South Africa.
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Zhou Biren, deputy general manager of Chery and general manager of Chery International, said it is hard for the company to decide whether to establish a CKD plant in South Africa because the import duty rate on CKDs is only 5 percent lower than what it would be for complete built units (CBUs) in the country. "Many countries have introduced stimulus packages to attract foreign investment and we also need such stimulus in South Africa," said Zhou Biren.
In South Africa, the tariff rate on CBUs is 25 percent, compared with 20 percent on CKDs. Some car manufacturers that have plants and run export operations in the country benefit from the Import Rebate Credit Certificates (IRCC). As a result, CKDs are at a competitive price disadvantage due to the tax costs.
In accordance with South Africa's Automotive Production and Development Programme, the incentives provided by the government are only available to car manufactures that produce more than 50,000 cars annually. Zhou Biren also indicated that it is a big challenge for Chery to surpass this annual output threshold
