An analysis of the impact of the first phase of South Africa's Motor Industry Development Programme (MIDP), 1995-2000

The South African motor vehicle industry is an important branch of the local manufacturingsector, contributing significantly to manufacturing value added and employment. Over the lastdecade, the local industry has undergone a series of policy reforms, and in recent years hasincreasingly been exposed to globalisation. This article reviews the role of government policy inshaping the industry, and examines the impact of the first phase of the Motor IndustryDevelopment Programme on the industry for the period 1995–2000 in respect of domesticproduction, automotive industry employment, export performance and the automotive tradebalance. The article concludes that even though the industry registered strong export growth thatcontributed to improving the automotive trade deficit, it was deficient in sustaining domesticproduction and employment levels. The imminent challenge for the local industry’s developmentis to maintain its export growth trajectory in the long term in the absence of costly governmentprotective incentive mechanisms.