Category Archives: Economic Research

Economic Research

New Vehicle Sales – February 2019

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741 New vehicles were sold in February, an increase of 11.3% m/m from the 666 vehicles sold in January. This is however 27.7% lower than the 1,025 new vehicles sold in February 2018. Two months into 2019, 1,407 new vehicles have been sold of which 674 were passenger vehicles, 652 light commercial vehicles, and 81 medium and heavy commercial vehicles. The first two months of 2018 saw 1,876 new vehicles sold. On a twelve-month cumulative basis, a total of 11,437 new vehicles were sold as at February 2019 representing a contraction of 11.2% from the 12,873 sold over the comparable period a year ago.

A total of 344 new passenger vehicles were sold during February, increasing by 4.2% from the 330 passenger vehicles sold in January. On a year-on-year basis however, February new passenger vehicle sales were 31.6% lower than the 503 vehicles sold a year ago. Year-to-date, passenger vehicle sales rose to 674, reflecting lower annual sales than the preceding 8 years, and a 25.7% decline from February 2018. On a rolling 12-month basis, passenger vehicle sales are at their lowest level since January 2011, highlighting the severity of the slowdown in sales.

Commercial vehicle sales reflect a similar picture, declining by 24.4% year-to-date and 10.7% y/y on a rolling 12-month basis. A total of 397 new commercial vehicles were sold in February, representing an increase of 18.2% m/m, but a contraction of 23.9% y/y. 351 Light commercial vehicles, 14 medium commercial vehicles, and 32 heavy and extra heavy commercial vehicles were sold during the month. Light commercial vehicle sales have dropped 27.5% y/y, while medium commercial vehicle sales fell 26.3% y/y, and heavy and extra heavy sales rose 68.4% y/y. On a twelve-month cumulative basis, light commercial vehicle sales dropped 11.9% y/y, while medium commercial vehicle sales rose 10.1% y/y, and heavy commercial vehicle sales fell 2.9% y/y. This is the fifth consecutive month that medium commercial sales have showed positive growth on a twelve-month cumulative basis.

During February, Volkswagen overtook Toyota in terms of year-to-date market share of new passenger vehicles sold. Volkswagen claimed 30.7% of the market, followed closely by Toyota with 28.3% of the market. They were followed by Ford and Mercedes with 6.5% and 6.1% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota remained the leader in the light commercial vehicle space with a 68.4% market share, with Ford in second place with an 8.3% market share. Volkswagen and Isuzu claimed 6.6% and 4.4%, respectively, of the number of light commercial vehicles sold thus far in 2019. Hino leads the medium commercial vehicle segment with 35.7% of sales while Scania was number one in the heavy and extra-heavy commercial vehicle segment with 34.0% of the market share year-to-date.

The Bottom Line

New vehicle sales remained dismal in February as 12-month cumulative new vehicle sales have declined by 11.2% y/y to 11,437 at the end of February. While historical data indicates that new vehicle sales typically pick up somewhat in March, we are of the view that the increase in sales for the month will be small as both consumer and business confidence remain depressed and as such, the prospects for new vehicle sales remain dim in the short- to medium-term. Recent new vehicle sales figures suggest that vehicle owners are holding on to the vehicles they already own or purchasing second hand and imported vehicles.

PSCE – January 2019

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Overall

Total credit extended to the private sector (PSCE) increased by N$180.1 million or 0.19% in January, bringing cumulative credit outstanding to N$97.1 billion. On a year-on-year basis, credit extended grew by 7.16% in January, compared to 7.37% in December. Cumulative credit extended to the private sector over the last 12-months amounted to N$6.48 billion. Individuals took up N$3.58 billion worth of credit over the last 12-month, corporates took up N$2.31 billion, and claims on the non-resident private sector accounted for N$598.1 million.

Credit Extension to Individuals

Credit extended to individuals increased by 0.3% m/m and 6.7% y/y in January, versus 0.7% m/m and 6.9% y/y in December. Mortgage loans extended to individuals increased by 7.7% y/y in January, in line with the increase seen in December. Other loans and advances (which is made up of credit card debt, personal and term loans) grew by 0.6% m/m and 18.3% y/y in January. Installment credit, which is quite often used to purchase new vehicles, contracted by 6.8% y/y. Household demand for overdraft facilities was quite strong in January, increasing by 2.3% m/m and 2.7% y/y, compared to the 1.8% m/m and 4.2% y/y increase seen in December.

Credit Extension to Corporates

Credit extension to corporates increased by 6.3% y/y in January, moderating slightly from the 6.5% y/y increase recorded in December. On a month-on-month basis, credit extension to corporates rose 0.1% after decreasing by 0.3% in December. Installment credit extended to corporates, which has been contracting since February 2017 on an annual basis remained depressed, contracting by 8.8% y/y in January. Leasing transactions to corporates declined further in January by 20.0% y/y. Overdraft facilities extended to corporates rose by 4.5% m/m and 11.4% y/y. Mortgage loans to corporates rose by 2.5% y/y, while other loans and advances increased by 28.1% y/y.

Banking Sector Liquidity

The overall liquidity position of commercial banks fell by a hefty N$2.6 billion to reach an average of N$262.1 million during January from N$2.8 billion in December. According to the Bank of Namibia (BoN), the decline is attributable to corporate tax payments made at the end of December, as well as the usual slow spending from the Government during January each year. There has been an increase in use of the BoN’s repo facility by commercial banks, with the outstanding balance of repo’s increasing from N$1.29 billion at the start of January to N$2.29 billion by month end. The use of the facility is a further sign that some banks are facing challenges in terms of liquidity.

Reserves and Money Supply

As per the BoN’s latest money statistics release, board money supply rose by N$7.3 billion or 7.6% y/y in January, but decreased by N$622.4 million or 0.6% m/m. Foreign reserve balances fell by N$228.6 million to N$30.7 billion in January, representing a 0.7% m/m contraction in reserves. The BoN stated that the decrease in reserves was due to net purchases of the South African rand by commercial banks for investment purposes abroad and import payments.

Outlook

Although growth in PSCE moderated for a second consecutive month, the 7.16% y/y increase was still a faster rate of increase than in most months in 2018. Rolling 12-month private sector credit issuance is up 50.5% from the N$4.31 billion issuance observed at the end of January 2018, with individuals taking up most (55.2%) of the credit extended over the past 12 months.

As a result of the recessionary environment Namibia finds itself in, short-term and unsecured loans continue to grow at a quicker rate than that of mortgage and installment credit, as is evident by the 3.9% m/m increase in overdrafts during the month. Short-term borrowing satisfies short-term needs, and the subdued uptake of productive credit by corporations is a clear indication that business confidence remains depressed. The uptake of short-term credit is unlikely to drive meaningful expansion of productive capacity.