OPINION: The forgotten backbone of SA’s automotive industry

By Siphamandla Gwala South Africa’s automotive industry may be a success story, but this growth and potential do not appear to be shared equally across its value chain.

The industry is one of the country’s economic powerhouses, contributing an estimated 5.3% to GDP and supporting over 110 000 direct jobs and a further 300 000 across the broader value chain.

Yet beneath these impressive numbers lies a less visible, less well-known story: the struggle of the small businesses that keep much of the industry moving.

From component suppliers and repair businesses to logistics operators and other specialised service providers, SMEs play an important role in the automotive ecosystem.

Their contribution may, in fact, be considerably larger than official statistics indicate, with many smaller and informal businesses operating beyond the full reach of economic measurement.

But being an important part of the value chain does not necessarily translate into access to opportunity.

Many SMEs face persistent barriers to finance, market access, skills, technology and procurement opportunities, making it difficult to scale their operations, compete with larger players and build sustainable businesses.

The result is a paradox: an industry with significant economic uplift and an extensive SME ecosystem where too many smaller businesses remain on the margins of the very growth opportunities they help create.

Consider the local mechanic operating from a home-based workshop in a town, township, or suburban area.

He may employ several people, possess excellent technical skills, and have a strong reputation among customers.

Yet, despite the quality of his work, he often finds himself unable to grow beyond his backyard operation due to a range of structural and economic barriers.

This article explores some of the key challenges facing small businesses in South Africa’s automotive sector.

One of the most significant challenges facing small businesses is compliance costs and limited access to information regarding industry regulations, funding opportunities, business development programmes, and government support initiatives.

While many SME owners and managers have valuable technical skills, they have limited formal education or business training.