By:Hertha Ekandjo
From a selection of car brands, higher-end brands increased their sales by 24.1% year to year (y/y) on average, said Simonis Storms in its December 2022 car sales report.
In particular, Land Rover sales stood out, having increased sales by 127.9 % y/y in 2022 (most likely from a low base), with Haval sales going up by 24.9%, recording the greatest increase in units sold, falling under medium- to lower-end brands, with sales that increased by 12.6% y/y.
This is despite local dealerships battling with supply-chain issues, which have led to major backlogs in customer orders.
The report indicated that vehicle sales rose on an annual basis by 29.7% y/y but declined on a monthly basis by 8.6% month to month (m/m) in December 2022.
“A total of 952 units were sold in December 2022, below the 6-month moving average compared to 1045 units sold in November 2022. Medium commercial vehicles were the main contributor to the annual increase, rising 94.4% y/y in December 2022, followed by heavy commercial vehicles that went up by 40.0% y/y, and passenger vehicles increased by 39.2% y/y,” economist Theo Klein said.
The report further noted that during 2022 a total of 10923 units were sold, 15.9% higher than the 9427 units that were sold in 2021 and exceeding the 10415 units sold in 2019.
Annual sales were split 51% for passenger vehicles and 49% for commercial vehicles. This was despite Namibia being in an interest rate hiking cycle and high commodity prices and shipping costs, together with a weak Rand exchange rate, leading to an average of 5% increase in vehicle prices across different brands during 2022.
According to Simonis, this provides an indication of some job recovery that took place in 2022 (supported by medical aid data from Namfisa) and that spending power remains surprisingly resilient to an extent as car brands across different income levels on average recorded an increase in sales during 2022.
The improvement in vehicle sales correlates with positive growth rates recorded in the wholesale and retail sector throughout 2022, expanding by 0.8% y/y, 0.6% y/y, and 10.2% y/y in the first quarter, second quarter, and third quarter of 2022, respectively.
Simonis Storm reported that consumer spending has been somewhat resilient last year, despite inflationary pressures and rising interest rates when comparing vehicle sales in 2022 to 2021.
“Also, banks are viewed as being risk-averse, given that numerous car loan applications were rejected for customers trying to buy vehicles from low to high-end brands. Indeed, vehicle sales would have been higher in the absence of these constraints,” the report stated.
The report indicated with the expectation that the supply of new vehicles from overseas factories should improve from mid-2023 onwards, “together with a continued momentum in spending from last year, we do expect vehicle sales to remain on an upward trend in 2023”.
Commercial vehicles, in particular, could see improved sales figures owing to favourable mining and transport sector growth forecasts for 2023, as well as the construction of green hydrogen projects at the coast.
The financial experts highlighted that commodity prices are expected to continue decreasing until mid-2023 (before China reopens its economy), and shipping costs are likely to continue on a downward trend. They also say the rand trading is at stronger levels due to a weaker US dollar in the first half of this year.
“In addition, we do expect the interest rate hiking cycle to come to an end by 1Q2023 in Namibia. These factors combined should hopefully put a limit on new vehicle price increases to some extent and maintain affordability for local customers.”
Luxury Car Sales Growth Outpaces Broader Industry
