A total of 1,402 vehicles were sold in March, a 21.8% m/m increase from the 1,151 vehicles sold in February, but 9.6% lower than March 2016 when 1,551 vehicles were sold. Year to date 3,463 vehicles have been sold, of which 1,635 were passenger vehicles, 1,683 light commercial vehicles, and 145 medium and heavy commercial vehicles. Compared to the first quarter of previous years, this is below the numbers for the last five years.
Vehicle sales have been contracting on a year on year basis since mid-2015 and this trend continued unabated in March. Although the last month saw a month on month uptick in the number of vehicles sold, cumulatively still off to a very slow start. The slowdown is evident in both the passenger and commercial segments, the former having contracted 5.5% y/y while the latter is down by 13.2% y/y. On a twelve-month cumulative basis, vehicle sales are down 19.7%. It is quite concerning that the heavy and extra heavy commercial segments have seen some of the lowest first quarter sales in nearly ten years, which would indicate that businesses are not investing in new equipment.
Passenger vehicle sales increased by 26.2% m/m to 688 vehicles in March, while commercial vehicles sales increased by 17.8% m/m to 714. Of the 714 commercial automobiles sold, 642 were classified as light, 23 as medium and 49 as heavy. The sharp month on month increase seems to be a seasonal trend, as vehicle sales are normally higher in March on average. However, it remains a positive sign that sales have been in line with previous years for the month of March.
Year to date Toyota and Volkswagen continue to hold their market share in the passenger vehicle market based on the number of new vehicles sold, claiming 32% of the market each. They were followed by Ford at 7% and Mercedes at 5%, while the rest of the passenger vehicle market was shared by several competitors.
Toyota also remains the leader in light commercial vehicle sales with 47% of the market, followed by Nissan at 17%. Ford and Isuzu claimed 15% and 10% of the number of light commercial vehicles sold in 2017. In the heavy and extra heavy category, Mercedes and Scania have sold the most vehicles, claiming 30% and 25% of the market respectively.
The Bottom Line
From mid-2015, the new vehicle market in Namibia has been in a state of decline and it seems this trend will continue for into 2017. This is due to four main factors. Firstly, Lower government spending, specifically on capital assets will have a direct effect on the number of vehicles sold. The latest budget confirms that this will be the case as only N$45.1 million has been budgeted for the purchase of vehicles in the 2017/18 fiscal year’s development budget, a large cut from the N$382.2 million spent in 2015/16. Secondly, slower economic growth means that consumers will have lower disposable incomes on which to spend on capital assets. Thirdly, the bank of Namibia has implemented the Credit Agreement Act, which requires a deposit of 10% on all vehicle loans and limits repayment periods to 54 months. This has reduced the number of people eligible for credit to purchase vehicles. Lastly, the possibility of higher interest rates following the credit downgrade in South Africa, might deter long term borrowing, weighing further on demand.