A successful automotive industry is often seen as a symbol of the economic success of a country and the automotive industry plays a key part in the economic well-being of South Africa’ South Africa has its own original equipment manufacturers (OEMs) such as BMW, Nissan, Ford, Volkswagen, Daimler-Chrysler/Mercedes, General Motors and Toyota and automotive components manufactures (ACMs), which are located in three of the nine provinces in south Africa (Naude, 2009:10). An important and most efficient tool that is used by the South African automotive industry is buyer-supplier collaboration which is aligned with the objective of this assignment to identify and discuss the factors that influence buyer and supplier collaboration in South African automotive industry. This assignment will firstly define the automotive industry and the industry buyers and suppliers as well as the relationship between the two. The factors include Pressure by OEM to reduce prices, Lack of advanced communication between the buyer and the supplier, trust, Geographic location, product design, technology, interdependency, Supplier inflexibility/delivery reliability and rapid change of demand in terms of quantity by the buyers. Furthermore the impact of globalisation in South African automotive industry will be underlined. Much emphasis has been placed on globalization in the automotive industry as a result of the rapid increase in automotive exports.
Background to the South African Automotive Industry
The automotive industry has been in existence for decades in South Africa, since the introduction of Ford and GM assembly plants in the 1920’s the industry has seen tremendous growth in the past years to make it one of the biggest contributors to the Gross Domestic Product of South Africa. General Motors (GM) is the first Original Equipment Manufacturer (OEM) to operate within the confines of the South African border, initially began operations in the early 1920’s, the birth of the automotive industry (Naude, 2009) Before 1920 South Africa had little sales in automobiles and therefore did not have assembly lines locally and automobiles were imported fully built and therefore only a few components and accessories manufacturers were present. In mid-seventies high levels of taxes and growth in the local market prompted some original equipment manufacturers to build assembly plants locally (Gastrow, 2013).According to black (2001) vehicle production increased in a rapid pace in the period of 1950 to the beginning of 1980 leading to sales increasing by tenfold. According to Humphrey et al (1998) the two assembly plants established by Ford and GM contributed to the South African automotive entrance to the global automobile market as a growing market or industry. These two companies imported their unassembled parts or components and assembled them in the plants established in South Africa. In the 1930’s some of the components that Ford and GM used in...