Increased local content strategy of Toyota SA.
Pillay, Sarvasan Anandam.
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The increased globalisation of the automotive industry of South Africa has brought with it both opportunities and threats for the various players. Companies taking advantage of the government's Motor Industry Development Plan have quickly learned that exporting both components and vehicles is the most suitable way forward. Toyota SA, in its new role as a global player has strategized that sourcing parts from local suppliers will give it the competitive advantage to then compete internationally. The company has planned to increase its local content targets from 40% to around 70% in the next few years. The question that rises to the fore is "are the local suppliers able to cope in meeting this challenge?" This study explores the various issues faced by Toyota SA as well as its local suppliers in attempting to achieve these targets. While Toyota SA has to deliver the expectations of developed countries, it is faced by a local supplier base that for many reasons, lags behind the rest of the world. The study adopts classical techniques for analysis as well as recent techniques in evaluating the suitability of the increased localisation strategy. Finally, based on the impact of the various forces, recommendations are made as to the strong and weak points of the strategy. Poor product development capabilities and technical/operational improvement requirements at suppliers, the lack of internal resources at Toyota SA and finally the weak second and lower tier supplier levels all emerge as issues to be addressed. These issues cannot be ignored for the implementation of the increased localisation strategy to be successful.