Category Archives: Economic Research

Economic Research

New Vehicle Sales – January 2018

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881 New vehicles were sold in January, which represents a 5.6% m/m increase from the 834 sold in December. This is however 0.5% lower than the 885 new vehicles sold in January 2017. From a rolling 12-month basis, a total of 13,195 new vehicles were sold at January 2018 representing a contraction of 17.8% from the 16,043 sold over the same period in 2017 and as illustrated below, 2018 is getting off to a slow start.

A total of 427 new passenger vehicles were sold during January, increasing by 14.8% m/m and 10.6% y/y. January 2018 has so far registered a better start to the year. The previous two years have both recorded a y/y and m/m decline. Passenger vehicle sales have been impacted in large by amendments to the Credit Act that requires tighter credit conditions, as well as by reduced government expenditure and depressed consumer confidence in the current economic climate.

Commercial vehicle sales declined to 454 units, a 1.7% m/m, and 9.0% y/y contraction. For January, 427 light commercial vehicles, 14 medium commercial vehicles, and 13 heavy commercial vehicles were sold. On a year on year basis light commercial sales have declined by 9.1%, medium commercial sales started the year as they did in 2017 and heavy and extra heavy sales have decreased by 13.3%.

Toyota is starting off 2018 with a firm grasp on the market for new vehicle sales with a 43% share of the passenger vehicle market followed by Volkswagen with 19%. Toyota also remained the leader in the light commercial vehicle space with a 62% market share with Nissan in second place with a 11% share.

The Bottom Line

Cumulative new vehicle sales have been on the decline since December 2015 and continues its downward trend in January to its lowest level since March 2012. The current recessionary environment coupled with the reduction in government spending is further highlighted by depressed business and consumer confidence. Tighter credit controls have limited the amount of credit available that is used to finance vehicle purchases, slowing private credit extension, particularly instalment credit, proves as testament to the decline. Lower levels of capital expenditure from corporates remains worrisome, while relief for business and consumers alike rest on the renewed optimism in SA, now under new leadership, which might well avoid a ratings downgrade and possibly opening the door to a rate cutting cycle.

Building Plans – January 2018

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A total of 153 building plans were approved in January, representing a 32% m/m increase from the 116 building plans approved in December. In value terms, approvals increased by N$170 million from December’s N$100 million to N$269 million in January. January 2018 is getting off to a slower start in terms of the 153 plans approved, compared to January 2017 in which 171 building plans got the nod. In value terms however, January 2018 fared slightly better than January 2017, approving N$10 million more plans than the N$259 million approved in January 2017.  For completions, the y/y statistic paint a rather skewed picture given that the increases are calculated off a rather low base. Looking from a rolling 12-month perspective, a 50% increase in the number of completions is more reflective of the state of building plan completions which equates to 640 worth N$674 million.

Additions to existing properties made up the largest portion of the total building plan approvals in terms of both number and value. For the month of January 129 building plans were approved worth N$233 million, 49% more in value terms than in January 2017, although the number of plans approved dropped by almost 10%.

New residential units were the second largest contributor to the total building plans approved in January. Approvals for new residential units for January 2018 were 32% lower than they were in January 2017. 17 new units worth N$25 million were approved in January 2018, representing a 60% decline from the N$62 million approved in the first month of 2017.

The number of new commercial units approved in January amounted to 7, valued at N$12 milion. Almost the same number of approvals in January 2017 were worth N$40 million. On a rolling 12-month cumulative basis, the number of approvals contracted by 35% y/y, a trend that has been on the decline since March 2016.

The 12-month cumulative number of building plans approved ticked up slightly in January with a 4.6% y/y increase. A total 1,903 building plans to the value of N$ 2.2 billion were approved and represents an increase in value terms of 4.7% y/y. The number of building plans approved, on a cumulative 12-month basis, has been on the decline for the greater part of 2017. Depressed consumer and business confidence are pronounced by economic indicators such as building plans statistics. Consumers and institutions are currently under pressure and this is further amplified by the slowdown in the extension of credit to the private sector. There is optimism that rests squarely on interest rates that might offer some respite to the consumers and corporates alike. Inflation has moderated well within the SARB’s target band and the new political landscape provides for greater market sentiment and belief that SA will not be downgraded by Moody’s. Coupled with the need to kickstart a much-desired economic recovery might just set the scene for interest rates to be cut in SA and thus affording BoN the opportunity to follow suit.