Vehicle Sales Rise Despite Looming Repo Rate Increase

By:Staff writer
An increase in the interest rate could not deter the vehicle sales sector recording its highest sales in nearly six years.
At least 1,226 units were sold in March, compared to 1,280 units sold in July 2017.
Bank of Namibia (BoN) is set to announce the Monetary Policy Committee’s (MPC) decision on the repo rate this week, with the most likely outcome being an increase by 25bps.
Simonis Storm Securities researchers said an increase will also follow in June this year, implying a repo rate of 7.5% by mid-2023.
“Therefore, despite interest rates being high and rising further in 2023, demand for new vehicles has been resilient and we expect this could continue to keep momentum in place for new vehicle sales,” the firm said.
The spike in sales was primarily driven by passenger and light commercial vehicles accounting at 94.2% of total units sold in March 2023.
According to Simonis Storm, medium-commercial vehicles recorded the largest annual increase in March 2023, followed by extra-heavy commercial and light commercial.
For the year so far, sales have increased by 28.8%. It also means that the first quarter of the year is the best performing first quarter since 2018.
Some 3,134 units were sold in this period, growing by 18.5% quarter on quarter from 2,645 units in the last quarter of 2022.
The analysts have also observed that annual vehicle sales tend to co-move with growth in the wholesale and retail sector, which they say has increased by 6% year on year in 2022.
“We presume that demand from local transport companies is driving corporate instalment credit growth in recent months,” Simonis Storm said.
The firm previously reported that transport companies are keen to expand their fleet due to more cargo calls being made to Namibia.
“This comes as load-shedding in South Africa prevents the port at Durban from operating at full capacity. We therefore expect Namibia to continue benefiting from this situation as load-shedding is unlikely to be resolved any time soon and so, demand for commercial vehicles in Namibia can continue to rise. Regarding households, instalment credit growth has been relatively flat as cash sales still constitute a meaningful proportion of total units sold,”the firm said.