Government’s vehicles budget to decrease from N$12 million
Although government’s budget allocation for vehicles is expected to remain at nearly N$12 million in the financial period of 2019/20, experts expect this to come down by a small margin to N$10 million between 2020 and 2021.
Expert opinion from Simonis Storm Securities is that the scaling down of the budget for vehicle expenditure coupled with stressed private consumers informs the view that the growth outlook for the motor vehicle industry is uncertain.
The firm has also noted a rapid uptake of second-hand vehicles given the number of auctions and aggressive marketing in the second-hand market.
At the same time more consumers are opting to increase mileage on their vehicles, holding onto their cars much longer, Simonis Storm also observed.
In the meantime, the National Association of Automobile Manufacturers South Africa (NAAMSA) released Namibia’s new vehicle sales numbers for February 2019.
According to the statistics, vehicle sales improved moderately by 11.3% month-on-month to 741 units, but it’s not strong enough to offset Simonis Storm’s view of an annual decline of 4.5% to 11 500.
Said the firm, “Our view is that the monthly increase is not substantial enough to retain momentum in the vehicle industry.”
On an annual basis, vehicle sales continue to contract by 27.7% to 741 units, marking the highest contraction in 21 months.
The monthly increase in vehicle sales emanated from an upsurge in light commercial vehicles and passenger vehicles by 16.6% month-on-month and 4.2% month-on-month to 351 units and 344 units, respectively, in February 2019.
Overall total commercial vehicles (light, medium and heavy commercial) increased by 0.2% m-o-m to 371 units in February 2019.
According to the experts, this could suggest a continuous slowdown in commercial activities which translates into sluggish economic growth.
“We observed a general slow growth in vehicle sales, globally, specifically in China (-13.8% year-on-year, February), US (6.6% year-on-year, January) and Europe (4.6%, January).”
“Closer to home, SA’s vehicle sales also contracted by 6.5% year-on-year in February 2019, re-enforcing the pressure faced by the industry. We continue to see the same downturn in the Namibian market,” said the firm.