New vehicle sales show improvement
New Vehicle Sales increased by 9.9% to 1142 units in March 2018, while on a yearly basis, vehicles sales declined by 18.6% in March compared to an 8.0% contraction in the previous year.
Simonis Storms Securities (SSS) noted that over the past 10 years, vehicle sales have increased by 126.1% to its peak of 2150 vehicles in March 2015. Since peak levels, total vehicle sales have declined by 46.9% to 1142 units reported in March 2018.
“The drop in vehicle sales can be attributed to government’s fiscal consolidation policy as well as the overall slowdown in the economy,” SSS added.
On the other hand, the sharp decline in instalment credit has also contributed to the drop observed in the new vehicle sales numbers. Total vehicle sales in 2017 was at the levels last seen in 2011. Despite the monthly increases observed in February and March, vehicles sales remain below the long term average of 1330 units. SSS is of the view that vehicle sales will still remain edgy in the current tough economic environment.
According to IJG Securites, the Bank of Namibia’s announcement to keep the repo rate unchanged at 6.75% means that consumers and businesses are not provided with slight cost of debt relief, and coupled with tighter credit controls introduced in March last year means that the demand for vehicle finance will in all likelihood remain limited.
About 625 Commercial vehicles were sold in March, representing an increase of 18.8% m/m, but a contraction of 12.0% y/y. 576 light commercial vehicles, 14 medium commercial vehicles, and 35 heavy commercial vehicles were sold in March.
“The continued slowdown in commercial vehicle sales remains worrisome as it is an indication of lower capital expenditure by corporates and lower business confidence in general,” IJG stressed.
Caption: Total vehicles (Units) and Instalment credit y-o-y (R.H.S) Source: NAAMSA/BoN/SS Research.