A feasibility study presented recently has found sufficient industry appetite to establish an automotive cluster in Gauteng, offering a potential lifeline for a sector grappling with mounting global pressures and stalled progress on local content targets.
Stephen Price, project lead from BMA who conducted the study for the International Labour Organisation (ILO), said South Africa’s automotive manufacturing faces a stark reality: global production has flatlined over the past five years whilst China and India have flooded markets with vehicles at unprecedented scale.
“South Africa and Gauteng in particular is operating in a highly competitive environment,” Price said during the presentation of findings from the ILO-funded study, which was supported by the Automotive Industry Development Centre (AIDC) and the Department of Small Business Development.
The research, which engaged over 100 stakeholders through 50 interviews and a major industry workshop at the AIDC, surveyed 47 organisations about their interest in joining a collaborative cluster structure.
Appetite for collaboration
Results showed moderate to high interest across the value chain, though Price acknowledged that securing firm commitments from OEMs and tier one suppliers remains critical work that lies ahead.
Anton Fiets from the AIDC welcomed the study’s timing, noting that recent developments in the automotive industry over the past 12 to 18 months make the findings particularly relevant. “We hope there will be meaningful engagements and progressive actions following the outcome of this study,” he said.
Mzi Memani from the Department of Small Business Development emphasised government’s commitment despite sector challenges.
“We have two choices. Either we decide not to support the sector because of its challenges and let the country be bombarded with imported products, or we collaborate with bigger players globally and find opportunities for our companies to continue manufacturing and deepen the industrialisation agenda.”
Infrastructure gaps and isolation
The study identified significant strengths in Gauteng’s automotive ecosystem, particularly proximity to multiple OEMs and established supply park infrastructure through both the AIDC’s Automotive Supply Park and Rosslyn’s TARZ facility. Provincial and local government support also ranked as a key advantage.
However, stakeholders highlighted infrastructure and logistics as major pain points. Being inland creates an immediate cost disadvantage compared to port-based competitors, compounded by ongoing challenges with rail and port efficiency.
Price noted that manufacturers invest heavily in factory efficiency but face mounting cost pressures from infrastructure failures beyond their gates.
Perhaps most tellingly, the study found very little peer-led learning and connection within the value chain despite geographical proximity. This gap represents a core opportunity for a cluster model, which has proven effective in other South African regions and internationally.
Price explained that clustering addresses a fundamental challenge: improving competitiveness alone is slow, costly and limits learning opportunities.
“Doing this as a government alone or as a company on its own can be very slow and very costly. There’s limited learning from others, so you end up repeating mistakes that could have been avoided,” he stated.
The study benchmarked six South African clusters across different sectors, finding that successful models operate as standalone non-profit entities with industry leadership and government support.
All required both an anchor government funder and industry membership fees, with some leveraging additional funding through SETA programmes, donor support and enterprise development initiatives.
Devon Automotive Cluster served as a case study, demonstrating tangible impact on a budget of roughly R5 million annually.
Over three years, the cluster unlocked R135 million in commercial opportunities for MSMEs, trained over 450 employees, ran continuous improvement programmes for 15 companies and hosted more than 25 shared learning events with over 1,000 participants.
Proven cluster model
When surveyed about priorities, Gauteng stakeholders identified four key areas: shared learning events and factory visits topped the list, followed by MSME upgrading and market access, research and development focused on deepening localisation, and skills development programmes.
Price stressed that any cluster must avoid duplicating existing initiatives and instead complement work already underway.
“It’s important that the first step would be developing a clear value proposition and making sure there’s lead company commitment, balanced representation, government commitment and capable, credible cluster leadership,” Price said.
The recommended operational model calls for a neutral facilitator initially rather than in-house staff, allowing rapid mobilisation without HR overheads whilst maintaining neutrality during establishment.
An executive committee comprising OEMs, tier suppliers, MSMEs, government representatives and academia would provide strategic oversight and ensure no single part of the value chain dominates decision-making.
Funding would require an anchor public commitment for at least three years, signalling government prioritisation to industry. The AIDC has indicated willingness to serve as host and potential anchor funder.
Industry membership fees would be tiered by company size, with the goal of eventually achieving a 50-50 public-private funding split as the cluster matures.
Price was frank about the sector’s predicament and the need for change. “The automotive industry needs action and better collaboration. It’s difficult for the industry at the moment and something different needs to be done.”
He noted that whilst the South African Automotive Masterplan set out to deepen local content and reshape the value chain, progress has fallen well short of targets. “There’s still lots of work to be done on deepening local content and it is imperative that all spheres within the sector work together to shift that.”
The study suggests a cluster could be operational within a year if commitment is secured, with pilot programmes running during the establishment phase to build early momentum and demonstrate value.
Whether industry and government can translate feasibility into action will determine if Gauteng’s automotive sector gains a new tool in its fight for regional competitiveness.