AFTER overcoming his fear of rising rental and human resource costs, Vukile Sokoyi (pictured) finally opened his own automotive business, Soma Workshop in East London, with just four employees, in February 2018.
Now servicing an average of 130 cars a year, Soma Workshop is a thriving operation which services cars, overhauls engines, performs car diagnostics and fixes car suspensions – a far cry from the 10 cars it saw in its first year. The staff complement has also grown to 14 permanent employees, comprising eight qualified mechanics, three administrative staff, and three assistant mechanics who will write their trade tests later this year.
Sokoyi has now added towing services to his business after acquiring a tow truck through the Eastern Cape Development Corporation-managed R50 million Automotive Operator Blended Finance Scheme. Launched in 2024, the scheme is aimed at emerging Eastern Cape-based micro, small and medium-sized automotive component suppliers and aftermarket service providers. It funds fixed assets, equipment, machinery, stock, and other critical measures for industry compliance or improving the operating environment, such as specific accreditation, growth programmes, or specialised training.
“We are delighted to be one of the first recipients of this scheme, which bridges current funding gaps facing small and medium operators. Funding for this R900,000 tow truck was offered on a 70% loan and 30% incentive basis. It introduces an important additional revenue stream for us.
“This is the most significant funding injection we have ever received since I founded the business in 2018. The scheme has bridged an important funding gap faced by small businesses such as mine,” explains Sokoyi.
A project manager and civil engineer by profession, Sokoyi worked as a contract manager for various companies before delving into mechanical engineering.
“I wanted to see if my foray into mechanical engineering would pay off. I will be writing my mechanical engineering exams soon. What strengthened my resolve to push ahead was the turnaround we experienced in 2019, with significant growth in turnover, even doing well during the COVID-19 period. We started getting government contracts, conducting fleet maintenance which we still service today.
“We are held in high regard by our clients because of the high quality of our workmanship. We have already serviced about 100 cars in the first six months of this year. We service clients such as the Buffalo City metro, Great Kei Local Municipality, Amathole District Municipality, Department of Transport as well as the local South African Police Service,” says Sokoyi.
ECDC chief executive officer Ayanda Wakaba says the scheme is offered on a 70% loan and 30% incentive basis to applicants who must be individuals and/or companies that have operated for 12 months and are majority black-owned. The minimum disbursement for the blended finance scheme is R300,000, with a maximum of R1 million.
“The focus on this segment of the market is a bid to bridge current funding gaps facing small and medium operators due to resource constraints, lack of an elaborate business history, lack of collateral, the informal nature of business operations, and barriers to market which affect access to opportunities.
“The blended finance scheme intends to increase the number and size of the operations of emerging automotive component suppliers and aftermarket service providers, while transforming others into large-scale automotive operators,” says Wakaba.
Wakaba says this segment of the market is ripe for meaningful support, considering that the Eastern Cape’s Original Equipment Manufacturers (OEMs) and component suppliers employ about 60,000 people. The province’s aftermarket operators are made up of a considerable number of small operators, which are a source of employment and livelihood for many families.
“The Automotive Operator Blended Finance Scheme intends to exploit the potential of the sector by using this funding instrument to attract more service opportunities for this targeted group. The blended finance approach is meant to stimulate the sector and support increased job creation and security among micro, small and medium operators,” Wakaba says.
The scheme is the first of its kind directly targeted at emerging automotive component suppliers and aftermarket service providers, according to Sisa Mbangxa, president of the African Panelbeaters and Motor Mechanics Association, based in Johannesburg.
“This blended finance scheme is critical in supporting the growth of our members. Access to finance packages like these helps emerging suppliers to compete effectively in the automotive industry. This is good news for our 85 members in the Eastern Cape and, by extension, the 350 members who form part of our national footprint. We have a provincial office in East London and another in Ngcobo servicing members who are panel beaters, mechanics, auto electricians, spares suppliers, as well as fitment centres. We will ensure that they take advantage of this opportunity to grow their businesses and support their competitiveness,” Mbangxa says.
