Declining vehicle sales paint bigger picture of weakness

NDAMA NAKASHOLE

IJG Securities say new-vehicle sales statistics act as a barometer of the depressed economic conditions the country is experiencing.

The comment accompanies the fact that latest new-vehicle sales figures this week showed that 918 new vehicles were sold in May, which was 20.5% lower than the sales in May 2017. The annual contraction was higher than the monthly increase recorded in May in comparison to April sales.

A year on, the total number of new-vehicle sales stood at 12 438 in May, representing a decline of over 45% from the peak of 22 664 new vehicle sales recorded during the same period of 2015.

“Preliminary national accounts released by the Namibia Statistics Agency (NSA) estimate that the Namibian economy contracted by 0.8% in 2017. New-vehicle sales statistics are a lagging indicator, acting as a proxy of the depressed economic conditions present at the moment,” the firm said in a report released on Wednesday.

Year-on-year, the cumulative number of new vehicle sales contracted by 16.1% in comparison to the cumulative sales figure recorded in May 2017.

IJG says reduced government spending -on capital assets in particular- continued to have an effect on new-vehicle sales.

“Tighter credit controls have further curbed consumers’ access to credit financing normally used for new-vehicle purchases.”

The report said the year-on-year decline suggested that vehicle owners are holding on to their old vehicles.

The Bank of Namibia’s announcement on Wednesday that the repo rate will be kept unchanged “means consumers and businesses alike will not be provided any reprieve in lowering their current debt servicing cost,” the report said.

Details

Of the 918 new vehicles sold in May, more than half were commercial vehicles while 40% were passenger vehicles, according to the figures.

Of the 544 commercial vehicles sold in May, 507 were light commercial vehicles, while medium commercial and heavy commercial new vehicles together accounted for 37 sales.

Although commercial vehicle sales saw a monthly increase of 20.4%, the category realised a year-on-year contraction.

In their respective categories, vehicle sales of passenger, light, medium and heavy commercial vehicles dropped year-on-year in May, with heavy commercial vehicles recording the biggest contraction of over 50%.

Toyota and Volkswagen continue to hold a strong market share in passenger vehicles based on the number of new vehicles sold.

Toyota also remains a leader in the light commercial vehicle sales, where it claims over half of the new vehicle sales in that category, followed by Nissan.