Abstract
Purpose and Objective: The South African automotive component industry faces huge challenges in a very competitive global market. The primary focus of this research article is to determine the challenges facing exporters within this industry with special reference to selected sub-sectors. The challenges are approached from a supply chain perspective only. Problem Investigated: The research problem of this study was to identify these unique challenges and ascertain whether the implementation of a 'philosophy of continuous improvement' could be used as a strategic tool to address the challenges they face in the market. Methodology: This study included a combination of literature review, interviews with managers in the selected sub-groups and questionnaires sent out to determine the challenges facing automotive component exporters. In order to test the content validity and the reliability of the questionnaire, a pilot study was conducted at two organisations that are the main suppliers of automotive filters for passenger vehicles. The non-probability convenience sample technique was used to select the sample and consisted of selected sub-sectors that contribute 64,1% of the total value of automotive component exports in South Africa. Out of twenty-seven questionnaires sent out, twenty (74% response rate) were duly completed by the respondents and returned to the researcher. Findings: South Africa faces unique challenges and these are listed and ranked according to priority from most to least important as follows: 1. The reduction of production costs; 2. R/US$ exchange rate effect on the respondent's export sales and profit margin; 3. Exchange rate fluctuations; 4. Threats to the local automotive component market; and 5. Increased competition by way of manufactured imports being sold in the South African market. Value of Research: The study provides recommendations that can be used within the automotive component industry.
Highlights
A country historically not known to have been a global player in the automotive industry, the globally competitive nature of the automotive industry and the dominance of developed nations in the global automotive industry make it unlikely for a developing country such as South Africa to succeed in the global automotive industry
The challenges facing the South African automotive component manufacturers and their potential to create a competitive advantage are derived from the empirical research
In order to survive, it is essential that South African exporters adhere to the philosophy and practice of continuous improvement to become and remain more globally competitive
Summary
Due to the competitive nature of the global automotive industry, the approach of the South African automotive industry to focus on automotive components rather than the entire automobile appears to have been more realistic. The competitive nature of the automotive component industry, requires that organisations operating in this industry need to. Strive to establish and sustain a competitive advantage should they wish to survive and grow This quest for competitive advantage is apparent in the recent empirical research undertaken in the automotive component industry in South Africa. There is a movement towards a world in which national economies are merging into a mutually dependent global economic system, commonly referred to as globalisation (Hill, 2001:4). For the purposes of this article the approach taken is that globalisation is the predominant trend with regards to the motor component industry
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