Developing the South African Auto Industry: Lead Firm Sourcing Strategies and Local Productive Capabilities

Lorenza Monaco and Tobias Wuttke ()
Additional contact information
Lorenza Monaco: Economics of Innovation and Industrial Policy at the UCL Institute for Innovation and Public Purpose (IIPP), London, and South African Research Chair in Industrial Development, University of Johannesburg
Tobias Wuttke: Bard College, Berlin.

No 202303, SARChI-ID Working Papers from SARChI Industrial Development (SARChI-ID), University of Johannesburg (UJ)

Abstract: The South African automotive industry has become integrated with the global value chains of the locally active foreign vehicle assemblers over the last 30 years. Exports, production volumes and absolute levels of domestic value added have gone up, but relative levels of local content have declined. This working paper takes a deeper empirical look at the sourcing strategies of the assemblers governing the global value chains on the one hand, and at the domestic component manufacturing base on the other hand. The empirical data stems from more than 50 semi-structured interviews conducted throughout 2021 with assemblers, large multinational component firms with subsidiaries in South Africa, local component manufacturers, policy makers and industry experts. The paper provides a thorough understanding of the sourcing strategies of automotive lead firms, and how they enable and constrain the extent of local value addition in component and materials production, and thereby the multiplier of having the industry in the country. Through a mapping of locally owned component manufacturers, it provides novel data that can complement quantitative indicators like absolute and relative local content data. The paper then discusses the set of structural, policy-related, market-dependent and capability-related issues that local component suppliers face with regard to deepening local value addition. Eventually, we argue that only by combining an understanding of lead firms’ sourcing strategies and local component suppliers’ perspectives is a proper assessment of obstacles and opportunities for localisation possible.

Keywords: assemblers; component suppliers; South Africa; industrialisation (search for similar items in EconPapers)
JEL-codes: L62 O14 O25 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-02, Revised 2023-02
References: Add references at CitEc
Citations:

Published

Downloads: (external link)
https://www.uj.ac.za/wp-content/uploads/2021/10/wp ... port-penetration.pdf First version, 2023 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:adz:wpaper:202303

Access Statistics for this paper

More papers in SARChI-ID Working Papers from SARChI Industrial Development (SARChI-ID), University of Johannesburg (UJ) Contact information at EDIRC.
Bibliographic data for series maintained by Melanie Ridgard ().