Government bought 3000 vehicles ytd
Government seems to be leading the pack when it comes to vehicle sales with an estimated 3000 vehicles bought in 2014 out of the total 18000 vehicles sold in Namibia from January to October. This observation was made by local stockbroking firm IJG Securities upon releasing its monthly vehicle sales report for October 2014.
October continued to be a pace setting month, setting the fourth highest record in terms of vehicle sales for 2014 according to IJG. “2092 vehicles were sold during the month, due to strong sales figures in both the commercial and passenger categories. As such, total sales for the year stand just shy of 18,000 vehicles, up 44% from a year ago,” said IJG.
According to IJG, the upsurge in vehicle sales is reflected in expansionary fiscal and monetary stances pursued by the Ministry of Finance and the Bank of Namibia as well as major foreign direct investment flows witnessed over the past 18 months.
Said IJG, “With regards to fiscal policy, three factors have been driving increased vehicle demand, namely direct purchase of vehicles, increased civil service wages, and income tax rate cuts.
Our estimates suggest that the Government has purchased in the region of 3000 vehicles in 2014 to date, largely on account of the imminent election and the logistics surrounding such.
This is a major [approximately 100%] increase when compared to average annual purchases by the Government, yet such sales are expected to mean-revert again next year.”
Added IJG, “On the monetary policy front, historically low interest rates have served their intended purpose, and driven up demand for credit as the cost of borrowing declined. However, much [around 20%] of the credit extended over the past 24 months has been in the form of instalment credit, which is broadly considered unproductive or consumptive.
This form of credit is largely attributable to vehicles purchased on instalment periods, and highlights the growing demand for vehicle finance in the country as interest rates remain depressed.”
“Strong growth in the local economy, (expected) falling unemployment and increased wages, increase the disposable income of consumers, which disposable funds are often used to purchase vehicles. The strong state of the Namibian consumer can thus be well illustrated by vehicle sales figures.
However as no cars are manufactured in Namibia, all new vehicles sold must be imported. Given the small, open, nature of the Namibian economy, this puts major pressure on the country’s balance of payments, which pressure cannot be sustained long-term,” IJG concluded.