The response of an original equipment manufacturer to the Motor Industry Development Programme : a case study

by Franse, Ricardo

On the 21st September 1995, the government introduced the Motor Industry Development Programme (MIDP), in compliance with the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). Deliberate efforts by the South African government were required to promote structural changes to the domestic motor industry by opening up the economy to international competition through a programme of tariff reduction and export promotion.

The integration of the South African automotive industry into global markets would have been extremely difficult, if not impossible, without the MIDP and it would thus be safe to conclude that the economic performance of the researched would have been close to impossible if it was not for the MIDP. The MIDP, as an economic policy, has been embraced by the researched company as a "vehicle" to drive corporate goals in terms of value creation for all stakeholders.

The research proposition that the MIDP as an economic policy has contributed to the economic performance of the researched company is examined. In this respect, Annual and Management Accounting reports were analyzed to determine the effect the MIDP has had on the researched company over the last ten years. In addition, two semi-structured interviews were also conducted with the Strategic Finance Planning executive and the Financial Controller of the company.

The results show that the MIDP has had positive spin-offs for the researched company. The same results should be valid for the other original equipment manufacturers (OEMs) in the local automotive industry that have embraced the MIDP as a vehicle to create economic value added.