The use of innovative strategies by automotive component manufacturers in Gauteng

Abstract

The automotive industry is the third largest sector in the South African economy and it plays such an important role in the economy, that it is often viewed used as a barometer of the health of the economy. Despite the relatively large number of automotive component manufacturers (ACMs) in South Africa, manufacturing a wide range of automotive components, and the incentives offered by the government to increase the local content of vehicles manufactured in the country, the majority of vehicle manufacturers as well as after-market wholesalers and retailers in South Africa source a greater proportion of their automotive components from foreign suppliers. This may be due to a number of reasons, and in this regard, this study investigated the nature and extent to which ACMs in Gauteng, South Africa, used innovative strategies to remain competitive.

A quantitative research design was used, and a self-administered questionnaire was sent to all of the ACMs located in Gauteng. Some of the main findings from the study was that only 48.9% of the respondents had a Research and Development (R&D) department; ACMs ranked their clients, who include motor vehicle manufacturers and original equipment manufacturers, as the most important source of innovation, with existing employees being ranked second, suppliers ranked third, and competitors ranked fourth. The importance of a highly skilled workforce was highlighted by the finding that almost three quarters of the respondents agreed with the statement that new ideas and suggestions from employees had been implemented.

Although the local motor vehicle manufacturers purchase most of the automotive components from ACMs located outside South Africa, the finding that 82% of the ACMs surveyed have been in operation for more than 10 years, with 72% of these organisations in operation for more than 15 years, indicates that most local ACMs are financially profitable and have adapted to global competition.