The relationship between government support and the sustainability of the South African automotive industry

Abstract

In the early 1990s the South African automotive sector was regarded as ineffective, uncompetitive and dependent on heavy tariff protection for survival. The government’s policy support through the Motor Industry Development Programme lowered tariffs and provided strong support for exports, while the production incentives of the Automotive Production Development Programme reinforced the vision that the long-term development of the sector will best be served through considerable increases in production volumes and accelerated growth. The population consisted of the seven OEMs and the 110 First Tier Suppliers. The results indicate a difference in government support between the vulnerable and non-vulnerable suppliers. The government has shown its commitment to the future of the automotive industry by policy interventions such as the Motor Industry Development Programme and the Automotive Production Development Programme. The question arises as to what extent the government’s guarantees are keeping the domestic automotive manufacturing industry sustainable? The objective of this research was to investigate the relationship between government support and the sustainability of the South African automotive industry. The conclusion of the study is that the South African automotive industry and its suppliers would not be able to survive without continued government support.