Category Archives: Economic Research

Economic Research

New Vehicle Sales – March 2016

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A total of 1,525 new vehicles were sold during March, an increase of 13.0% from the February sales of 1,350 and down 29.1% over March 2015, owing to a fall in sales in both passenger and commercial vehicles. Year to date, a total of 4,264 vehicles have been sold in 2016, which is 26.6% below vehicle sales recorded for the same period in 2015.

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Rolling 12 month sales continued to contract after turning negative in December for the first time in 69 months. The year on year 12 month percentage change contracted 12.8% during March, falling below the 20,000 level for the first time August 2014.

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Sales of passenger vehicles rose by 20.1% month on month, from 606 in February to 728 in March. The annual passenger vehicle sales fell by 20%. Commercial vehicle sales continue to come in higher compared to passenger vehicles. Commercial vehicle sales declined by 35.7% year on year bringing the total sales to a figure of 797 vehicles, due to lower sales of both light, medium and heavy commercial vehicles. An increase of 7.4% in commercial vehicle sales was recorded in March, in comparison to February sales.

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The passenger vehicle sales have recorded a decent growth in March, this growth was mostly on account of Toyota and Volkswagen, with Volkswagen selling 213 (29%) and Toyota selling 188 (27%) of the 728 passenger vehicles sold. Toyota retained the market share in the light commercial vehicle sales, recording a market share of 48%, which is 7% above February’s market share, followed by Nissan at 11% and Isuzu at 10% taking Ford’s position last month.

 The Bottom Line

We have seen exceptionally strong vehicle sales growth through 2014 and 2015, fuelled by a strong consumer base supported by expansionary fiscal policy and real wage growth, but the latest figures show that this trend is losing momentum. Strong vehicle sales over the last two years have elevated the base substantially which has led to lower percentage growth figures. Although the number of vehicles sold as a whole is still relatively strong, we expect to see a decrease in vehicle sales as purchase of vehicles by Government will be reduced this year. The Ministry of Finance has allocated N$426.8 million to vehicle purchases in the 2016/17 National Budget, this is N$592.9m or 58.1% less than the N$1.019 billion what was spent on vehicles during the previous financial year. Further downside risks to this are rising interest rates which may limit marginal lenders from qualifying for financing as well as banking sector liquidity which may limit the amount of loans available to finance vehicle purchases.

Namibia CPI – March 2016

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The Namibian annual inflation rate increased to 6.5% in March, up 0.4 percentage points from 6.1% in February. On a month on month basis, prices continued to rise, up 0.8% after the 0.6% uptick seen last month. On a year on year basis, six of the twelve basket categories grew at a slower rate in March than in February while the other half accelerated, pushing up overall inflation. The biggest contributor to inflation on a monthly basis were price increases of food and non-alcoholic beverages, while on an annual basis it was housing utilities price increases.

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The two heavy weighted categories in the basket that experienced accelerated annual inflation were food & non-alcoholic beverages and housing utilities. Food and non-alcoholic beverages inflation was driven by the price increases across the majority of the sub-components, with only soft drinks & juices, non-alcoholic beverages and vegetables prices rising relatively less quickly. The food price increases can largely be ascribed to the drought currently experienced in Namibia and South Africa as is reflected by price increases of fruit, meat and grain products such as bread & cereals.

The annual inflation rate for the category housing, water, electricity, gas and other fuels increased from 7.4% in February to 7.5% in March, contributing 2.1 percentage points to annual inflation. Accelerating price increases in this category was largely driven by electricity, gas and other fuels which increased to 8.9% in March, up from 8.6% in February.

Transport is the third largest basket category by weighting and as the price of transportation flow through to many other basket categories, it has a large impact on overall inflation. The annual inflation rate for the transport basket category slowed down slightly to 4.3% in March down from 4.7% in February. However, we expect to see higher inflation as the effects of the drop in the price of oil over the past year and the knock on effects thereof wear out.

Picture3In conclusion, we expect inflation to accelerate further in 2016 as the full benefit of cheap oil has worn out with the weak currency causing import prices to rise. Looming drought conditions as well as increasing utilities costs should further see inflation pick up in basket categories such as food and non-alcoholic beverages, and alcoholic beverages and tobacco and housing.