diff --git a/doc/configuration.md b/doc/configuration.md
index 25f775db..0e91c607 100644
--- a/doc/configuration.md
+++ b/doc/configuration.md
@@ -21,7 +21,7 @@ Parameters controlling the Cluster-API management server (capi management server
 | `kind_flavor`            |                 | SCS        | `SCS-2V-4`        | Flavor to be used for the k8s capi mgmt server                                                             |
 | `image`                  |                 | SCS        | `Ubuntu 22.04`    | Image for the capi mgmt server. Use `Ubuntu 22.04` or `Debian 12`. Check also the `ssh_username` parameter |
 | `ssh_username`           |                 | SCS        | `ubuntu`          | Name of the default user for the `image`                                                                   |
-| `clusterapi_version`     |                 | SCS        | `1.6.3` <!-- renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api -->          | Version of the cluster-API incl. `clusterctl`                                                              |
+| `clusterapi_version`     |                 | SCS        | `1.7.3` <!-- renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api -->          | Version of the cluster-API incl. `clusterctl`                                                              |
 | `capi_openstack_version` |                 | SCS        | `0.9.0` <!-- renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api-provider-openstack -->         | Version of the cluster-api-provider-openstack (needs to fit the CAPI version)                              |
 | `cilium_binaries`        |                 | SCS        | `v0.15.23;v0.13.0` | Versions of the cilium and hubble CLI in the vA.B.C;vX.Y.Z format                                          |
 | `restrict_mgmt_server` |                                 | SCS        | `["0.0.0.0/0"]`                      | Allows restricting access to the management server by the given list of CIDRs. Empty value (default) means public.           |
diff --git a/terraform/environments/environment-default.tfvars b/terraform/environments/environment-default.tfvars
index ff7168bc..643147d3 100644
--- a/terraform/environments/environment-default.tfvars
+++ b/terraform/environments/environment-default.tfvars
@@ -8,7 +8,7 @@ external_id          = "<external_network_ID>"    # defaults to "" using auto-de
 dns_nameservers      = [ "DNS_IP1", "DNS_IP2" ]	  # defaults to [ "5.1.66.255", "185.150.99.255" ] (FF MUC)
 kind_flavor          = "<flavor>"                 # defaults to SCS-2V-4  (larger does not hurt)
 ssh_username         = "<username_for_ssh>"	  # defaults to "ubuntu"
-clusterapi_version   = "<1.x.y>"		  # defaults to `1.6.3` <!-- renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api -->
+clusterapi_version   = "<1.x.y>"		  # defaults to `1.7.3` <!-- renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api -->
 capi_openstack_version = "<0.x.y>"		  # defaults to `0.9.0` <!-- renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api-provider-openstack -->
 image                = "<glance_image>"		  # defaults to "Ubuntu 22.04"
 cilium_binaries      = "<v0.aa.bb;v0.xx.yy>"      # defaults to "v0.15.23;v0.13.0"
diff --git a/terraform/variables.tf b/terraform/variables.tf
index 95a9436d..b4c34d1e 100644
--- a/terraform/variables.tf
+++ b/terraform/variables.tf
@@ -79,7 +79,7 @@ variable "calico_version" {
 variable "clusterapi_version" {
   description = "desired version of cluster-api"
   type        = string
-  default     = "1.6.3" # renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api
+  default     = "1.7.3" # renovate: datasource=github-releases depName=kubernetes-sigs/cluster-api
 }
 
 variable "capi_openstack_version" {