An exploratory study of challenges faced by small automotive businesses in townships : the case of Garankuwa, South Africa

Abstract

Small, Medium and Micro Enterprises (SMMEs) are seen as an engine for economic growth and development in South Africa (SA), contributing about 36% of the total Gross Domestic Product (GDP) to the South African economy. Despite this positive contribution, the failure rate of small businesses in SA is worrying and estimated to be between 70 and 80% across all sectors of the economy. With this in mind, this article aims at identifying challenges facing SMMEs in the automotive sector within townships. Since this study is exploratory in nature, it was based on a qualitative approach. Eleven participants were selected to participate in this study, consisting of one manager from the Automotive Industry Development Centre (AIDC), one project manager and the centre manager from Seda Automotive Technology Centre (Satec), and also eight small businesses owners operating within the automotive industry in Garankuwa. Findings revealed that lack of access to funding, poor management skills, lack of space and proper infrastructure together with a lack of government support are among the challenges that contribute to a high failure rate of automotive SMMEs in townships such as Garankuwa. Findings of this article will contribute to the body of knowledge and assist in the development of SMMEs in the automotive sector in Garankuwa and the rest of the South African townships. The article also provides recommendations on how these challenges can be addressed to assist SMMEs in the automotive industry.