Abstract
The South African automotive industry is vital to South Africa's economy. This can be seen by the significant contribution made by the industry towards GDP and economic growth. Furthermore, we have seen the level of intervention the South African government has engaged itself in the automotive industry since the 1920s. This shows the sector's value to the economy and society at large through the potential opportunities in business and employment that the presence of automotive assembly plants can bring to a nation. The manufacture, distribution, servicing, and maintenance of motor vehicles and their components are all part of the automotive sector in South Africa. South African SMEs have great opportunities to realise their full potential. Several interventions exist through government intervention, either actively through its schemes, grants and loans or indirectly through taking advantage of what legislation and subsidies offer. Despite the available opportunities and interventions from the state, SMEs in the automotive industry face unique challenges that often lead to their failure within the first three years of existence. These challenges, which are critical elements that determine either SMEs' survival or succumb to the barriers to trade and entry, underscore the need for this research. Hence, it was essential to determine these unique challenges and juxtapose them against the interventions available that allow the industry to mitigate the challenges SMEs encounter in the value chain. Therefore, this study aimed to assess the role played by economic policy in the growth and development of SMEs in the automotive value chain. The assessment focused on three economic policies: Broad Based Black Economic Empowerment (BBBEE), trade, and industrial policies and their respective interventions. The study combined the challenges faced by SMEs as described in the literature with the challenges described by participants according to their lived experiences and perceptions regarding economic policy interventions for the automotive industry in its area of expertise. The study followed a qualitative research approach. Data was collected using semi-structured interviews with two types of participants: Type 1 - employees of NAACAM and Type 2 - SME owners in the automotive industry. The responses to interview
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questions were transcribed and coded from where themes emerged. The study's findings revealed that the interventions directly impacted SMEs' ability to access markets they would not otherwise have been able to access. The observed interventions were concerned with BBBEE, trade policy and industrial policy. The study showed that SME growth and development would not be possible without government intervention due to the structure of the global automotive industry. It showed that few automotive manufacturers could find a suitable location to assemble vehicles. The reason for that was that successful operations in this field were determined not only because of geo-economic advantages but also due to the incentives that governments provided or failed to provide for investing in assembly plants. It was revealed that the survival of SMEs in the automotive value chain would not have been possible without certain interventions. One challenge noted in the roll-out of the interventionist programmes was the lack of outreach and simplicity in accessing these interventions. The study revealed a particular criterion in successfully designing and implementing economic policy interventions targeted at SMEs.