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.