Car sales off to a slow start
A total of 910 vehicles were sold in January, a 14.6% month on month drop from the 1,066 vehicles sold in December, and 34% a lower than January 2016 when 1,379 vehicles were sold, according to an IJG Securities report on Namibia new vehicle sales for January 2017.
IJG in the report said, “for the calendar year of 2016, 16,598 new vehicles were sold, down 21.9% from the 21,246 vehicles sold over the previous calendar year. 2017 is thus off to a slow start as illustrated by the lowest monthly sales since December 2012”.
According to IJG, vehicle sales have been contracting on a year on year basis since mid-2015 with the slowdown felt for both passenger and commercial vehicles. Passenger vehicle sales are down 26.4% year on year and commercial vehicles are down by 39%. Within the commercial vehicle segment, the light commercial category which makes up the bulk of sales, has decreased by 39.4% year on year while medium commercial vehicle sales have decreased by 25% year on year. Heavy commercial vehicle sales are down by 37.5% from last year but sales of these large units are typically low in Namibia.
Passenger vehicle sales decreased by 8.6% m/m to 402 vehicles in January, while commercial vehicles sales decreased by 18.8% m/m to 508. Of the 508 commercial automobiles sold, 478 were classified as light, 15 as medium and 15 as heavy commercial. The total number of passenger and commercial vehicles sold in 2016 were 7,006 and 9,592 respectively and we are likely to see even lower numbers this calendar year.
According to IJG, in 2016 Toyota and Volkswagen dominated the passenger vehicle market based on the number of new vehicles sold. Toyota and Volkswagen claimed 29% and 28% of the market respectively. They were followed by Ford at 7% and Mercedes at 5%, while the rest of the passenger vehicle market was shared by several competitors. The start of this year points to this trend continuing, and Toyota and Volkswagen have again taken the lead in terms of number of vehicles sold.
IJG said Toyota also remains the leader in light commercial vehicle sales with 49% of the market, followed by Nissan at 16%. Isuzu and Ford claimed 13% and 11% of the number of light commercial vehicles sold in January, very much in line with the market share observed in 2016.
“In the heavy category, Hino and Mercedes started off the year by selling four heavy or extra heavy vehicles each, or roughly 27% of the number of heavy commercial vehicles sold over the month. Heavy commercial vehicle sales have dropped to multi-year lows which can be seen as a drop in investor or business confidence,” they noted.
IJG also said that from mid-2015, the new vehicle market in Namibia has been in a state of decline and this trend seems to be continuing as we enter 2017.
“The reduction in government spending had a direct and indirect effect on the demand for new vehicles, both direct orders from government and the weaker economic environment have reduced the demand for capital goods and this is clearly visible in the data,” they said.
“Furthermore, higher interest rates and amendments to the Credit Agreement Act (which requires a deposit of 10% on all vehicle loans and limits repayment periods to 54 months) have reduced the availability of credit used to purchase these capital goods. We expect the slowdown in new vehicle sales to continue into 2017 as the full effect of interest rate increases and cuts in public spending filter through to all areas of the economy,” IJG concluded.