Category Archives: Vehicle Sales

A total of 1,317 vehicles were sold in November, a strong bounce from the low witnessed last month, with the value being 13.8% higher than October’s monthly figure. Despite higher volumes sold on a monthly basis, the November figure is still 23.5% lower than that of November 2015. Since January this year, 15,532 new vehicles have been sold, down 21.0% from the number of vehicles sold over the comparable period last year. Year to date vehicle sales have been slower than both 2015 and 2014, but is still slightly ahead of 2013 levels.

Vehicle sales have been contracting on a year on year basis since mid-2015. The slowdown has been felt in both passenger and commercial vehicles, with passenger vehicle sales down 9.0% y/y and commercial vehicle sales down 31.0%. Within the commercial vehicle segments the light commercial category, which makes up the bulk of sales, has decreased by 32.8% y/y, while heavy commercial vehicle sales have decreased by 21.9%. Contrary to these contractions medium commercial vehicle sales have increased by 25% y/y, however, in nominal terms this amounts to only 6 additional vehicles versus last November.

Passenger vehicle sales increased by 16.3% m/m to 535 vehicles in November, while commercial vehicles sales increased by 12.2% m/m to 782. This brings the total number of passenger and commercial vehicles sold in 2016 to 6,566 and 8,966 respectively. Of the 8,966 commercial automobiles, 8,247 were classified as light, 259 as medium and 460 as heavy commercial.

On a year to date basis, Toyota and Volkswagen dominated the passenger vehicle market based on the number of vehicles sold. Toyota and Volkswagen claimed 27% and 26% of the market respectively. They were followed by Ford at 6% and Mercedes at 5%. The rest of the passenger vehicle market is very fragmented.

Toyota remains the leader in light commercial vehicle sales with 44% of the market, followed by Nissan at 15%. Ford and Isuzu each claimed 10% of the number of light commercial vehicles sold in 2016. In the heavy category, Scania is the largest seller, commanding 44% of the market share.

The Bottom Line

Throughout the period of 2014 all the way to mid-2015, we have seen robust growth in vehicle sales, which was driven by a strong consumer base supported by expansionary fiscal and monetary policy and real wage growth. However, vehicle sales have seen a severe contraction in 2016, but the slight uptick in November is encouraging, although it might simply be seasonal. This year’s slowdown has largely been a result of higher interest rates and amendments to the Credit Agreement Act., which requires a deposit of 10% on all vehicle loans and limits repayment periods to 54 months. Furthermore, reduction in government spending (directly on vehicles and otherwise), and a generally weak economic climate have adversely impacted the demand for vehicles.

Going forward we expect the slowdown to continue. Interest rates may increase in response to increases by the US Federal reserve. Additionally, the adverse effects of lower government spending on capital expenditure should also put pressure on vehicle sales for the foreseeable future.

New Vehicle Sales – October 2016

A total of 1,157 vehicles were sold in October, the lowest monthly figure since February 2013. This represents a 7.6% decrease in the number of vehicles sold in September 2016 and 34.5% decline from the number of vehicles sold in October 2015. Since January this year, 14,215 vehicles have been sold, down 20.8% from the number of vehicles sold over the comparable period last year. Year to date vehicle sales have been slower than both 2015 and 2014, but is still ahead of 2013 levels.

Vehicle sales have been contracting on a year on year basis since the end of 2015. The slowdown has been felt by passenger and commercial vehicles alike, with passenger sales down 36.7% y/y and commercial vehicles down 33.0%. Within the commercial vehicle segments the medium and heavy segments displayed the largest slowdown, decreasing 65.1% y/y and 45.5% y/y respectively.

Passenger vehicles declined by 9.6% m/m to only 460 vehicles in October. Commercial vehicles sales decreased 6.2% m/m to 697. This brings the total number of passenger and commercial vehicles sold in 2016 to 6,031 and 8,184 respectively. Of the 8,184 commercial automobiles, 7,545 were classified as light, 229 as medium and 410 as heavy commercial.

On a year to date basis, Toyota and Volkswagen dominated the passenger vehicle market based on the number of vehicles sold. Toyota and Volkswagen each claimed 27% of the market. They were followed by ford at 7% and Mercedes at 5%. The rest of the passenger market is very fragmented.

Toyota was also the leader in light commercial vehicle sales with 44% of the market, followed by Nissan at 15%. Ford and Isuzu each claimed 10% of the number of light commercial vehicles sold in 2016. In the heavy category, Scania is the largest seller, commanding 41% of the market share.

The Bottom Line

Vehicle sales have seen serious contraction in 2016 for several reasons. Firstly, higher interest rates have decreased spending on capital goods, which are normally financed by credit. Secondly amendments to the credit act were enacted with the specific aim of discouraging spending on unproductive goods by requiring a 10% deposit. Lastly and most importantly, government spending on both salaries and capital goods have been cut to the bone in the most recent medium term budget review.

Going forward we expect the slowdown to continue. Interest rates may rise further should a credit rating downgrade in South Africa or Namibia materialise. The adverse effects of lower government spending on capital expenditure should also put pressure on vehicle sales for the foreseeable future.

A total of 1,252 vehicles were sold in September, 8.5% less than the number of vehicles sold in August and 23.9% down compared to the number of vehicles sold in September 2015. Since January this year, 13,058 vehicles have been sold, down 19.3% from the number of vehicles sold over the comparable period last year. Vehicle sales have been declining during 2016 when compared to 2015 and 2014 although still above the levels seen in 2013.

As indicated by the below figure, the 12-month cumulative number of vehicles sold has been contracting since December 2015. The rate of contraction has been rapid with this measure of vehicles sold falling 17.9% year on year and 2.1% month on month. The contraction in 12-month cumulative vehicle sales has been led by passenger vehicle sales which have been slowing at a more rapid rate than the same measure for commercial vehicle sales.

On a monthly basis, total passenger vehicle sales fell 5.2% to 509 in September. Year to date, total sales of passenger vehicles declined by 21.6% to 5,571 from 7,199 sold over the same period last year. Commercial vehicle sales fell 10.7% month on month and 22.8% year on year, while year to date figures dropped by 17.4% from 9,069 to 7,487. Light, medium and heavy commercial vehicle sales dropped on a month on month basis as well as on a year-to-date basis.

Toyota and Volkswagen dominated the passenger vehicle market yet again, with the two brands claiming 31.2% and 26.7% of the market share respectively.  Toyota was the outright leader in light commercial vehicle sales with 46.9% of the market, followed by Nissan at 17.7%, and Isuzu in 3rd place with 13.9%.

 The Bottom Line

Vehicle sales have been contracting by most measures in 2016 for a number of reasons, namely, higher interest rates, a slowdown in government spending (on vehicles as well as in general), recent amendments to the Credit Agreement Act, as well as the high base against which these measurements are compared. The high base created in 2014 and 2015 was a result of large amounts of government spending and rapid growth in private sector credit extension which drove strong economic growth. The pro-cyclical nature of government’s fiscal and monetary policy has resulted in a slightly overheated Namibian economy, and thus a drop in vehicle sales from the high base set in previous years is to be expected.

Going forward we expect to see government spending cut further in the next fiscal year as well as a prolonged freeze on new hires by the state. Interest rates may rise further due to the aforementioned slowdown in government spending affecting banking sector liquidity as well as the probability of both a South African and Namibian credit ratings downgrade to sub-investment grade. These factors along with a weakening Rand are likely to put further pressure on vehicle sales going forward.