Consumer base in vehicles loses momentum
Although high vehicle sales and economic growth was experienced in Namibia throughout 2014 and the first half of 2015, fuelled by a strong consumer base supported by expansionary fiscal and monetary policy and real wage growth, the latest figures show that this trend is now losing momentum.
Meanwhile, a total of 1,589 new vehicles were sold during June, up 3.5% from the May sales of 1,535, however, 13.9% less than June 2015. The slowdown was driven mainly by a 29.0% decline in passenger vehicle sales. For the first six months of 2016, 8,869 vehicles were sold, down 19.4% on the comparable period of 2015.
A report availed by IJG Securities stated that the extent of the contraction in new vehicle sales suggests that it is extremely likely that another contraction in new vehicle sale can been seen this year, only to a much larger extent than the slight decrease seen in 2015.
“Strong vehicle sales over the last two years have elevated the base substantially, which has led to lower percentage growth figures, although the number of vehicles sold is still relatively strong. The current slowdown was largely expected, as higher interest rates, lower government spending (directly on vehicles and otherwise), lower retail activity from Angolans and a broadly weaker economic environment have dampened new vehicle demand,” IJG stated.
Sales of passenger vehicles fell by 3.9% month on month, from 669 in May to 643 in June. On an annual basis, total sales of passenger vehicles fell by 29%. Commercial vehicle sales increased 0.7% year on year to a sales figure of 946 vehicles. This increase was mostly driven by growth in sales of light and heavy commercial vehicles. On a monthly basis, commercial vehicle sales were 9.2% higher than in June.
On a 12 month rolling basis, cumulative vehicle sales continued to contract through June, with the rate of contraction increasing slightly when compared to the preceding month. Rolling 12 month sales contracted 14.8% in June to 19,110 vehicles sold over the previous 12 months, compared to 19,366 recorded in the 21 months to May.
“At the same time, it appears that commercial banks are becoming more cautious in their lending practices, both due to tighter funding conditions and caution with regards to household debt levels in the rising interest rate environment. Going forward, we expect vehicle sales to remain around current levels for the rest of the year, before returning to a more organic growth path over the longer term,” IJG further stated.
Toyota and Volkswagen continue to dominate the passenger vehicle segment with Toyota selling 274 (43%) vehicles and Volkswagen selling 153 (24%) of the 669 passenger vehicles sold. Toyota had 50% of the market share in light commercial vehicle sales, followed by Nissan at 17% and Ford in third place with 11%. Commercial vehicle sales continue to come in higher than passenger vehicle sales as has been the long term trend.