Optimization of local content in the automotive component industry in KwaZulu-Natal.
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Date
2012
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Abstract
The South African government has acknowledged the global competitiveness of the
automotive industry and has identified it as a key economic growth sector, with the aim of
increasing vehicle production to 1.2 million units by 2020, while significantly increasing the
value of local content to a target of 75%. The automotive industry has identified the
automotive component industry as the most valuable source of contributing to increasing the
value of local content in domestically assembled vehicles. It is imperative for the automotive
component industry to focus on optimising local content by improving technology and
capabilities to remain competitive globally.
The aim of this study was to determine the impact optimisation of local content in
domestically assembled vehicles will have on the future growth potential of the automotive
component sector. The objectives of the study examined the extent of localisation in the
automotive component industry, the role of government in optimising local content, the
challenges of optimising local content and economic impact of localisation on future growth
of the industry. The objectives were explored through the aid of quantitative research and
theory comparisons.
Sixty five component manufacturers located in a 100 km radius from Toyota South Africa
assembly plant were targeted. A response rate of 72.3% was achieved using a questionnaire
as the research instrument.
The respondents indicated that the two major challenges faced by the automotive component
industry were, the local manufacturers pricing in comparison to global manufacturers was
higher and the high level of dependence that local manufacturers have on foreign licences. A
large percentage of the respondents believe that to optimise local content in locally assembled
vehicles, government intervention and support will have to be at a high level. Improving
internal competitiveness, rationalisation to achieve economies of scale and maximising
government support are some of the key drivers to achieving optimal local content in the
automotive component industry.
Description
MBA University of KwaZulu-Natal, Durban 2012.
Keywords
Theses--Business administration., Automobile industry and trade--KwaZulu-Natal.