Author Archives: IJGResearch

New Vehicle Sales – May 2017

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Vehicle sales remained lacklustre in May with 1,118 vehicles were sold. This is a 27.2% y/y decrease from the 1,535 vehicles sold in May 2016 but 18.2% m/m higher than the 946 vehicles sold in April.  Year to date 5,527 vehicles have been sold, 24.4% less than the corresponding period in 2016. Of these, 2,534 were passenger vehicles, 2,748 were light commercial vehicles, and 245 were medium or heavy commercial vehicles. These are the lowest year to date numbers in the last five years.

Vehicle sales have been contracting on a year on year basis since mid-2015. The slowdown remains evident in both the passenger and commercial segments, the former having contracted 26.8% y/y while the latter is down by 27.5% y/y. A slow sales numbers in the medium and heavy commercial vehicles remain worrisome, as it indicates a lack of business confidence which may be due to either unwillingness or inability to invest into businesses.

Passenger vehicle sales decreased by 19.8% m/m to 490 vehicles in May, while commercial vehicles sales increased by 16.9% m/m to 628. Of the 628 commercial automobiles sold, 576 were classified as light, 23 as medium and 29 as heavy. The sharp month on month increase was largely due to the low base set in April. However, the last month is still below the average sales normally seen in May.

Year to date Toyota and Volkswagen continue to hold a strong market share in the passenger vehicle market based on the number of new vehicles sold, claiming 34% and 29% of the market respectively. They were followed by Ford and Mercedes at 6% and 4% respectively, while the rest of the passenger vehicle market was shared by several competitors.

Toyota also remains the leader in light commercial vehicle sales with 48% of the market, followed by Nissan at 17%. Ford and Isuzu claimed 13% and 10% of the number of light commercial vehicles sold in 2017. Iveco is the leader of medium commercial vehicles with 32% of the market followed by Hino at 28%. In the heavy and extra heavy category, Scania and Mercedes have sold the most vehicles, claiming 26% and 24% 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 well into 2017. Lower government spending, specifically on capital assets have had a direct effect on the number of vehicles sold. Additionally, slower economic growth means that consumers will have lower disposable incomes and many consumers have been reigning in their spending as a result.
Furthermore, the Credit Agreement Act, which was implemented in August of 2016, prescribes a deposit of 10% on all vehicle loans and limits repayment periods to 54 months. This has reduced the number of people eligible for vehicle financing.

 

 

Building Plans – May 2017

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A total of 182 building plans were approved in May with a value of N$655.5 million, while 47 buildings with a value of N$25.1 million were completed. Although the number of plans approved remains relatively low, the value of plans approved saw a sharp increase, as N$501.2 million worth of commercial properties were approved in May. The year to date value of approved building plans currently stands at N$1.16 billion, 44.7% higher than the corresponding period in 2016. On a twelve-month cumulative basis, 1774 building plans were approved worth approximately N$2.33 billion, 13.1% higher than the preceding twelve-month period.

The majority of the number of building plan approvals were made up of additions to properties. 143 plans were approved in May. Year to date 596 additions to properties were approved with a value of N$359.2 million, 5.1% more in value terms than the corresponding period in 2016.

New residential units were the second largest contributor to building plans approved. 136 residential units were approved year to date, 46 more than the corresponding period in 2016. In dollar terms, N$250.6 million worth of residential plans were approved, 32.4% higher than the corresponding period in 2016. The increased activity in the residential sector has been quite a positive development given the current state of the Namibian construction industry.

The number of commercial units approved in 2017 amounted to 16, valued at N$551.3 million, of which 3 plans were approved in May with a combined value of N$ 501.2 million.  This compares to 33 units valued at N$271.4 million approved over the same period in 2016. The approval of these large commercial properties is also a positive development due to the large number of people employed on these seemingly large projects.

Unfortunately, the longer-term trend remains quite negative. The 12-month cumulative number of building plans approved has been steadily declining since its peak in September 2013. This figure has halved from the peak to lows last witnessed in 1991. In the last twelve months 1,774 building plans were approved, 16.7% less than the same measure for May 2016.

Although the month of May witnessed some encouraging developments such as the approval of large commercial properties along with decent number of plans in the residential sector, the construction industry is still struggling. The Construction Industries Federation (CIF) of Namibia claims that 63% of businesses have either closed, are dormant, or have scaled down operations drastically, while at least 30% of the construction workforce has already been retrenched. The CIF expects this situation to worsen if no new tenders are allotted by the end of June.

The abrupt slowdown in the construction sector has caused ripple effects in the economy. According to the CIF, “Retrenchments are being experienced across the entire supply chain. Not only the building and civil contractors, and subcontractors such as electricians, plumbers, flooring specialists, roofers, painters as well as air-condition technicians are affected. Architects, engineers, quantity surveyors as well as suppliers of building materials also needed to scale down operations, and make large-scale retrenchments. Similarly, manufacturers and suppliers of building material are also experiencing a serious downturn.”