Category Archives: Economic Research

Economic Research

New Vehicle Sales – January 2021

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A total of 694 new vehicles were sold in January, which is 6 cars fewer than were sold in December, but represents a 3.3% y/y increase from the 672 new vehicles sold in January 2020. On a twelve-month cumulative basis, a total of 7,636 new vehicles were sold up to the end of January 2021, representing a contraction of 26.5% from the 10,395 new vehicles sold over the same 12 month period a year ago. 2021 is thus off to a slightly better start than January 2020, however, new vehicle sales remain sluggish.

355 new passenger vehicles were sold during January, an increase of 7.6% m/m from the 330 passenger vehicles sold in December, and 21.6% higher y/y from the 292 new passenger vehicles sold in January 2020. On a rolling 12-month basis, new passenger vehicle sales rose 2.0% m/m, but are down 27.2% y/y at the end of January. 12-month cumulative passenger vehicle sales were down 66.7% from the peak in April 2015.

Commercial vehicle sales declined to 339 units in January, representing a contraction of 8.4% m/m and 10.8% y/y. During the month 301 light commercial vehicles, 9 medium commercial vehicles, and 29 heavy commercial vehicles were sold. On a year-on-year basis, light commercial sales fell by 10.1% y/y, medium commercial vehicle dropped by 35.7% y/y, and heavy and extra heavy vehicle sales declined by 6.5% y/y. On a twelve-month cumulative basis, light commercial vehicle sales contracted by 25.3% y/y, medium commercial vehicles declined by 37.2% y/y and heavy commercial vehicle sales fell by 27.3% y/y.

Volkswagen started the year off on a strong foot with a 41.4% market share of new passenger vehicles sold, followed by Toyota with a 25.1% market share. They were followed by Kia and Mercedes who each had a 6.5% market share, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota meanwhile started the year off with a solid grip on the light commercial vehicle market with a 55.1% market share, with Nissan in second place with a 13.3% market share. Ford and Volkswagen claimed 11.3% and 5.0% of the number of new light commercial vehicles sold during the month, respectively. Iveco led the medium commercial vehicle category with 33.3% of sales, while Scania was number one in the heavy and extra-heavy commercial vehicle segment with 27.6% of the market share during the month.

The Bottom Line

New passenger vehicle sales started the year off stronger than in 2020, with passenger vehicle sales increasing by 21.6% y/y. This uptick in sales did not pass through to commercial vehicle sales which had a poor start and contracted by 10.8% y/y. While new vehicle sales in January were higher than the first month of the past two years, it remains considerably lower than the numbers recorded between 2012 and 2016. The likelihood of a recovery in 2021 to the levels witnessed during that period seems very low currently. We expect businesses to hold on to their current fleets for as long as possible and for consumers to mostly stick to the pre-owned market, seeing that there are very few economic growth prospects at present.

PSCE – December 2020

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Overall

Private sector credit (PSCE) increased by N$277.2 million or 0.3% m/m in December, bringing the cumulative credit outstanding to N$105.4 billion. On a year-on-year basis, private sector credit increased by 1.6% in December, compared to 2.7% in November. On a rolling 12-month basis, N$1.64 billion worth of credit was extended to the private sector. Compared to the previous year, the rolling 12-month issuance is down 75.5% from the N$6.71 billion issuance observed by the end of December 2019. Of this cumulative issuance, individuals took up N$2.60 billion, while corporates reduced their borrowings by N$546.0 million and the non-resident private sector repaid N$414.7 million of their borrowings.

Credit Extension to Individuals

Credit extended to individuals increased by 0.5% m/m and 4.5% y/y in December, growing at a slightly quicker pace than the 4.2% y/y increase recorded in November. The month-on-month growth mostly stemmed from instalment credit which grew by 1.4% m/m. Instalment credit, however, remains down on an annual basis, falling by 2.6% y/y in December, although at a slower rate than in the prior 11 months. The value of mortgage loans extended to individuals rose by 0.5% m/m and 5.2% y/y. Overdrafts to individuals fell by 0.2% m/m, but increased by 8.6% m/m, following the strong increase of 5.6% m/m and 9.1% y/y in November.

Credit Extension to Corporates

Credit extended to corporates grew by 0.2% m/m after increasing by 2.4% m/m in November. On an annual basis, credit extended to corporates contracted by 1.2% y/y. Overdrafts to corporates showed the strongest monthly increase, registering growth of 1.0% m/m and 12.6% y/y. Demand for instalment credit by corporates remained low, increasing by 0.3% m/m, but contracting by 15.8% y/y. Mortgage loans to corporates, which has been contracting on an annual basis since April 2020, remained depressed, contracting by 0.1% m/m and 8.7% y/y in December.

Banking Sector Liquidity

The overall liquidity position of commercial banks deteriorated significantly during December, declining by N$1.09 billion to reach an average of N$1.25 billion. The Bank of Namibia ascribed the decline to periodic corporate tax payments to the government during December. The relatively low liquidity position has prompted commercial banks to utilize the BoN’s repo facility, with the balance of repo’s outstanding increasing from N$0 at the start of December to N$1.04 billion at the end of the month.

Reserves and Money Supply

Broad money supply rose by N$12.2 billion or 7.4% y/y in December, as per the BoN’s latest monetary statistics release. Foreign reserve balances rose by N$1.23 billion or 4.0% m/m to N$31.75 billion in December. According to the BoN, the increase is due to net inflows of rand currency from commercial banks during the month.

Outlook

Overall, private sector credit growth remained depressed in 2020, slowing from the roughly 6% y/y growth observed at the beginning of the year to the 1-2% range at the end of the year. The slowdown in growth was especially evident from May onwards, as corporates started repaying their debt. What is also evident from the data is that mortgage demand by individuals was relatively strong compared to corporate demand for mortgages, with the average annual growth rate for individuals registered at 5.4% compared to the average corporate growth rate of -4.9% in this category. Corporate demand for instalment and leasing credit contracted sharply during the year, indicating that corporates are hanging on to their existing fleet and machinery. This is to be expected in the current economic climate where the is little reason for businesses to expand their current operations as no significant improvement in economic growth is expected.

New Vehicle Sales – December 2020

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700 New vehicles were sold in December, 1 more than the upward revised 699 in November, but a 2.0% y/y decrease from the 714 new vehicles sold in December 2019. Year-to-date 7,614 vehicles have been sold, a 26.8% contraction from December last year and the lowest annual vehicle sales figure since 2004. Of the 7,614 new vehicles sold during the year, 3,212 were passenger vehicles, 3,869 were light commercial vehicles, and 533 were medium and heavy commercial vehicles.

A total of 330 new passenger vehicles were sold during December, representing a 2.9% m/m contraction, but a 5.1% y/y increase. 3,212 passenger vehicles were sold in 2020, a 29.4% decline from 2019 and lower annual sales than the preceding 16 years. Passenger vehicle sales made up 42.2% of the total number of new vehicles sold during 2020 broadly in line with the trend over the last 6 years.

370 new commercial vehicles were sold in December, an increase of 3.1% m/m, but a 7.5% y/y contraction. During the month 315 light commercial vehicles, 13 medium commercial vehicles, and 42 heavy commercial vehicles were sold. On a year-on-year basis, light commercial sales have declined by 6.0%, medium commercial vehicles fell 38.1% and heavy and extra heavy vehicles sales contracted 4.5%. On a twelve-month cumulative basis, light commercial vehicle sales dropped 24.2% y/y, medium commercial vehicle sales fell 35.3% y/y and heavy commercial vehicle sales contracted by 25.4%.

Toyota lead the market for new passenger vehicle sales in 2020, claiming 28.6% of the market, followed by Volkswagen with a 25.5% share. They were followed by Kia and Hyundai at 6.8% and 5.8%, respectively. The only other manufacturer that managed to breach the 5% market share mark was Mercedes-Benz with 5.3% of the market, leaving the remaining 27.9% of the market to other brands.

Toyota also remained the leader in the light commercial vehicle space in 2020 with 56.0% market share, with Nissan in second place with a 12.9% market share. Ford and Isuzu claimed 12.3% and 6.7% respectively of the number of new light commercial vehicles sold for the year. Mercedes lead the medium commercial category with 32.0% of sales while Volvo Trucks was number one in the heavy and extra-heavy commercial vehicle segment with 21.6% of the market share during the year.

The Bottom Line

2020 was a dismal year for vehicle sales. The cumulative number of new vehicle sales for the year amounted to 7,614, a decline of 26.8% from the cumulative number of vehicles sold in 2019 and a 66.4% contraction from the peak of 22,664 new vehicle sales recorded in April 2015 on a cumulative 12-month basis. The year-to-date sales graph at the top of this report shows how severely the new vehicle industry was impacted by the lockdown in April. The recovery since then has been slow and overall new vehicle sales have still not returned to the already low levels of 2019. The introduction of the longer-dated 72-month vehicle loans has had a small positive impact on new passenger vehicle sales, but not enough to offset the damage done by lockdowns. With there being few signs that 2021 will see significant economic growth, we expect new vehicle sales to remain under pressure.