Impact and implication of future mobility on the South African automotive industry
- Authors: Mnyaka, Mtutuzeli Bennett Basil
- Date: 2013
- Subjects: Motor Industry Development Programme , Motor vehicle industry -- South Africa , Subsidies -- South Africa , Incentives in industry -- South Africa , Competition -- South Africa
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8894 , http://hdl.handle.net/10948/d1020891
- Description: The South African Automotive industry has been one that has enjoyed the subsidies schemes like the Motor Industry Development Program (MIDP), and in the near future the Automotive Production Development Program (APDP). There are however different schools of thought when it comes to subsidies for an industry. One is that there should be no incentives when others are for the schemes, which one is best for the growing economy of a young democratic and highly unemployed nation? Looking at the next planned incentive scheme to be introduced to replace the MIDP, the APDP is it better than the MIDP? How are these schemes going to benefit the country in the future and will they exist for as long as we have the Auto industry in South Africa? The objective is to prompt those in political power and positions capable of influencing infrastructure changes to think long term when making decisions today that will affect future generations. Future generations should be able to benefit from future technologies of the day and not be hindered by the lack of improved and capable infrastructure.
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- Date Issued: 2013
A critical analysis of the South African automotive industry and government incentive policy
- Authors: Gaskin, Sean
- Date: 2010
- Subjects: Motor Industry Development Programme , Automobile industry and trade -- Government policy -- South Africa , Incentives in industry -- South Africa
- Language: English
- Type: Thesis , Masters , MBA
- Identifier: vital:8656 , http://hdl.handle.net/10948/1358 , Motor Industry Development Programme , Automobile industry and trade -- Government policy -- South Africa , Incentives in industry -- South Africa
- Description: The automotive industry in South Africa exists in its current state due to the developmental programmes created by the South African government. During the next three years the government’s main development policy for the automotive industry will change from the Motor Industry Development Programme (MIDP) to the Automotive Production and Development Programme (APDP). As a result of this change there were feelings of uncertainty experienced across the domestic automotive industry during the APDP’s design and the period leading up to its launch, more or less years 2008 to 2010. Also present is the fear that the industry would collapse when faced with global competition should this change not fully comprehend all aspects of South Africa’s automotive industry. The research problem addressed in this study was to determine the effect on the sector’s competiveness in light of the impending change in governmental development programmes. This was accurately explained and expressed clearly while sub problems were identified from areas in the main problem that required further analysis due to their criticality or lack of clarity. A comprehensive literature review was executed to understand the nature and extent of the South African automotive industry, the Motor Industry Development Programme and the Automotive Production and Development Programme. A primary research instrument was constructed, in the form of a questionnaire, to test specific themes exposed during the literature review which can influence the sector’s competitive advantage. This questionnaire was distributed with the assistance of industry representative bodies NAAMSA (National Association of Automobile Manufacturers of South Africa, the domestic de facto representative body) and NAACAM (National Association of Automotive Component and Allied Manufacturers, a component manufacturers’ representative body), to an even spread of respondents representative of the senior management and executives of automotive companies in South Africa. From the results obtained from the sample group, it seemed that there was consensus on many issues regarding the current structure of the South African automotive industry. Specifically, the profitability of vehicle assemblers and component manufacturers is heavily iii influenced by the incentives offered under the MIDP and the industry is not viable without them. The respondents were virtually unanimous in indicating that there is a need for some form of incentive programme and were positive about the effect the MIDP has had thus far on the automotive industry of South Africa, particularly the effect on the structure, focus and encouraging a reduction in complexity. The research found that it is common practice for OEMs to include the import duty on vehicles imported for domestic consumption even though this duty will be paid with the use of import-duty rebate credit certificates (IRCCs), which are provided to those vehicle assemblers who are net exporters of vehicles. Looking to the future, it emerged that the APDP will have a similar, positive effect on the domestic automotive industry when compared to the MIDP, but the effect will be experienced in a more aggressive manner. Companies will be encouraged by the new development programme to more aggressively improve aspects such as restructuring, rationalising, reducing model proliferation and improving low scale economies for example. Also the APDP will encourage OEMs to increase plant production volumes and ensure that reasonable scale economies are present to develop a domestic component supply industry to a degree. However, the volumes will be insufficient to create a world-class supplier industry. As a result automotive companies will have to be more aggressive in their adoption of more automated production processes and through Automotive Investment Scheme capital investment will increase in both vehicle assemblers and component manufacturers. Component manufacturers indicated that they would invest more in the coming years under the APDP than previously while vehicle assemblers indicated that their investment levels will remain as before. While this is good for the industry, labour is somewhat left out of this: considering the APDP’s focus on increased volumes and capital investments automotive companies are not incentivised to make use of labour-absorbing production processes. The study also found that there is still a need for tariff protection and that the domestic industry would collapse in the face of global competition. The research found that the APDP was compliant with South Africa’s commitments to the World Trade Organisation. Finally, the Department of Trade and Industry’s goal of producing 1.2 million vehicles per annum by 2020 was revealed to be unrealistic and unreachable.
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- Date Issued: 2010