By:Justicia Shipena
The load shedding in South Africa is said to limit vehicle sales in Namibia, a vehicle sales analysis for January 2023 has shown.
Despite this, the country has seen an increase in vehicle sales for the month, making it the best January since 2019, according to research firm, Simonis Storm.
“Loadshedding in South Africa will also hamper on car manufacturing operations and so limit vehicle sales for Namibia in turn,”Simonis Storm economist Theo Klein said in a report.
The report showed that 798 units were sold in January 2023 compared to 708 in January 2022, an increase of 12.7% year-on-year.
The firm said units sold in January are lower than sales levels seen in the last months of 2022, dipping below the 3-month moving average.
Meanwhile, monthly units sold are down by 16.2% month-on-month in January 2023.
“January typically records the lowest number of units sold compared to all other months in the year. This is most likely due to disposable incomes being low after the festive season and holidays at the end of each year,”Klein said.
Simonis Storm said it expects vehicle sales to improve going forward in 2023.
In the same period, passenger vehicles which accounted for 59% of units sold in January 2023 were the main contributor to the annual increase, rising 15.0% year-on-year.
This was followed by light commercial vehicles which accounted for 37% of units sold, which rose 10.5% year-on-year.
Despite a rising interest rate environment, demand for new vehicles was strong across passenger and commercial vehicles, said the report.
“Instalment credit uptake by households remained lacklustre as some local banks see car loans as high risk and so we observed an increase in cash vehicle sales as car loan supply was artificially constrained.”
The report said instalment credit uptake by corporates averaged a stellar 13.0% in 2022, making it the highest level recorded since 2014.This, the firm said, is indicative of its conversations with local trucking companies who all remain keen to expand their fleet to satisfy client inquiries and orders.
Furthermore, the report noted that supply chain issues are expected to continue showing signs of normalisation, especially with China having removed its zero Covid-19 policies this year.
“We already saw a normalisation in shipping costs and delivery times between North and South trade routes, and now expect the same for East and West trade routes. Certain brands such as BMW amongst others never experienced supply chain issues since the pandemic in Namibia,” the reportstated.
In addition, Simonis Storm said other brands, keeping all else constant, should see an improvement in the supply of new vehicles from international factories to their local dealerships.
However, the research firm is of the opinion that there are numerous constraining factors on car production globally, adding that the ongoing war in Ukraine is likely to limit semiconductor production.
Ukraine manufactured about half of the world’s neon supply, a key element for semiconductors before the war.
“Ukraine’s neon operations have completely been stopped since the invasion. This could provide shortages for a while as we do not see an end to the war soon,” the reportstated.
The company added that locally, imports of commercial vehicles have steadily improved from pandemic lows, however, passenger vehicle imports remain fairly sluggish. This has some dealerships seeing an improved inflow since the end of 2022 to reduce their backlog of customer orders.
Although, given the mixed view of supply chain easing, and constraints on global car production, Simonis Storm said it is difficult to say how vehicle sales will evolve in 2023.
Thus, the research firm is of the view that local demand will remain strong despite interest rates being high.
“And for imports of new vehicles to continue recovering, leading to an increase in the number of units being sold.”