Government to spend less on vehicle purchases
Vehicle sales are expected to close in at just under 20 000 units for 2015, slightly down in 2014 where 21 718 units were sold. Government spending for the year is also down by N$400 million. A decline in the price of oil will also help drive sales according to a forecast released by Simonis Storm Securities.
At the fore of the findings is resident economist at Simonis Storm Securities, Daniel Kavishe. He said, “figures for December indicate that monthly vehicle sales declined to 1831 from 1992 in November. The 8.1% decrease in sales is a result of an overall drop in all categories, a natural feature of this time of year. Annualized growth figures for total vehicles sales remain positive at 53.9%, with total commercial vehicles (TCV) increasing by 65.2%”, remarking on data released by the National Association of Auto-mobile Manufacturers of South Africa.
During December, sales in the category of commercial vehicles declined by 16% month-on-month to 985 units. This was mainly a result of declining sales across light commercial vehicle sales category.
“Interest rates remain unchanged despite declining foreign reserves and an increase in household debt levels. According to our estimates for 2015, we anticipate an increase in interest rates from 50 to 75 basis points mainly on the back of a global rising interest rate environment and depending on the level of Namibia’s foreign reserves,” Kavishe explained.
Passenger vehicles increased to 823 units from 764 units in November, a 7.7% increase month-on-month but a 45.1% increase year-on-year. The increase indicated 81% growth in sales for Volkswagen from 99 units to 179 units. The other passenger vehicle that had an increase in sales was Mercedes Benz which increased in sales from 47 units to 60 units.
For the month of December, the total value of vehicles sold is estimated at N$577 million. The total value of vehicle sales for 2014 is estimated at N$7 billion while accumulated vehicle sales came in at 21 718 units according to Kavishe.
Said Kavishe, “oil prices are expected to decline during the course of 2015. With oil prices averaging between US$50 and US$70 per barrel we anticipate increased sales of the diesel powered engines. This can already be seen in the sharp increase in heavy commercial vehicles.”
According to him, N$500 million has been budgeted for vehicle purchases. “Overall, we anticipate that total vehicle sales will come in lower with government spending less on vehicles,” concluded Kavishe.