Analysis of the Motor Industry Development Programme (MIDP) as a promotional tool for the South African automotive industry in the global automotive environment

Abstract

The Motor Industry Development Programme (MIDP) was implemented on 1 September 1995 in the context of the country's political and economic liberalisation and the major structural shift in government policy and the trade regime. In an intensely competitive global environment, the strategies of a few dominant motor vehicle manufacturers, mainly operating from the Triad regions of North America, Europe and Japan, impact significantly on the developments of the global automotive industry.

Over the past decade the small, highly protected and inwardly focused South African automotive industry has become fully integrated in the global strategies of foreign parent companies. As South Africa's leading manufacturing sector, the automotive sector is contributing significantly to the country's economy in terms of exports, investment, employment and the gross domestic product.

The objective of the study was to establish and measure the relevance and value of the MIDP as a promotional tool in the global automotive environment by capturing the responses and perceptions of direct automotive industry exporters and stakeholders for

* the South African automotive industry in general, and * the companies forming part of the empirical survey.

To satisfy the objectives of the study, the research methodology incorporated an extensive primary and secondary research phase (qualitative and quantitative). A structured empirical survey was used to collect the primary data. The survey data were captured and processed by the Bureau for Market Research (BMR), Unisa.

The main findings of the study are that:

* The promotional relevance and value of the MIDP as a promotional tool is embedded in the programme's ability to trigger interest in the South African automotive industry, to generate business and to attract investments. * The MIDP is successful in contributing to the automotive sector's international competitiveness and is therefore a very important promotional tool for convincing foreign parent companies to consider South Africa as an investment destination. * The South African automotive industry would not be able to cope with global competition without the MIDP. * Different factors impact on the business operations of the South African automotive industry in general and the specific company in particular and the factors are viewed differently by the selected groups based on their demographic details.

The process of trade liberalisation is forcing many South African companies to encounter both intensified competition and new forms of competition. The South African government's target of a 6 percent economic growth rate by 2010 will largely depend on the ongoing successes achieved in priority sectors such as the domestic automotive sector.