As the economy remains under pressure, Namibia’s vehicle sales have shown a slight improvement in September 2017 compared to the same month in 2016; latest data recorded by Simonis Storm Securities has shown.
Simonis Storm Securities trainee economist Indileni Nanghonga says sales for September 2017 contracted by 7.1% year on year, a slight improvement when compared to a 23.9% contraction recorded in the prior year.
Year-to-date (ytd), vehicle sales contracted by 27.9% to 9 410 units when compared to 13 058 units recorded during the same period last year.
“In contrast, vehicle sales recorded positive growth of 6.3% m-o-m to 1 163 units compared to 1 094 units in the prior month,” says Nanghonga.
She says this monthly upsurge was particularly reflected in the category of passenger and medium commercial vehicles which improved by 10.8% and 116.7%, respectively.
Commercial vehicle sales are often seen as an indicator of economic growth; the local brokerage firm has said, she adds.
On an annual basis, vehicle sales have been in a negative territory over a prolonged period since July 2015.
Meanwhile, the vehicle industry has remained subdued as the economy continue wearing down and end of July 2017 figures by Simonis Storm show sales as having contracted by 23.5% year-to-date to 15523 units compared to a contraction of 16.6% year-to-date in July 2016.
On a monthly basis, however, overall vehicle sales for July had picked up by 10.3% to 1346 units.
The slight pick-up comes at a time when the domestic economy remains very weak.
Despite inflation being on a downward trend, the Bank of Namibia showed in its previously Monetary Policy Statement that average annual growth in private sector credit extension continued to be slow in the first six months of the year.
And although the apex bank cut the repo rate by 25 basis points this year to support economic growth, Simonis Storm was pessimistic about the potential of this to boost vehicle sales.
Speaking to The Villager this week, Nanghonga hinted that the cut in the repo rate has not come close to be a needle-mover as far as vehicle sales are concerned since there has been a contraction in instalment credit lending.
“It will not make sense if you combine it with that (repo rate cut) because we did not see a pickup in instalment credit, so the contraction is due to other factors than the decline in interest rates,” she said.
Simonis Storm views the continuous contraction in instalment credit lending by commercial banks will continue to be a drag on an already struggling motor industry as well as the economy.
Four months ago, the firm noted that it expected overall vehicle sales to return on its downward spiral by the beginning of 4Q2017 as the Namibia tourist season ends.