A total of 1,479 new vehicles were sold during April 2016, a drop of 3.0% from the March sales of 1,525 and down 15.1% over April 2015, driven by a slowdown in both passenger and commercial vehicle sales. At this point of the year, 5,743 vehicles have been sold so far in 2016, down 24.0% on the comparable period of 2015. This declining growth rate of new vehicle sales suggests that we may see another contraction in new vehicle sale this year, only to a much larger extent than the slight decrease seen in 2015.
Rolling 12 month sales continued to contract after turning negative in December for the first time in 69 months, with the year on year 12-month percentage change -14.3% for April, down from 19,697 in March to 19,434 in April.
Sales of passenger vehicles fell by 6.6% month on month, from 728 in March to 680 in April. On an annual basis, total sales of passenger vehicles fell by 21.8%. Commercial vehicle sales decreased 8.4% year on year to a sales figure of 799 vehicles, which was due to lower sales numbers of light and medium and heavy commercial vehicles. On a monthly basis, commercial vehicle sales was 0.3% higher than in March.
Toyota and Volkswagen continue to dominate the passenger vehicle segment with Volkswagen selling 191 (28%) vehicles and Toyota selling 212 (31%) of the 680 passenger vehicles sold. Toyota was however the market leader in light commercial vehicle sales, having the lion’s share at 57% of the market, followed by Ford at 11% and Nissan in third place with 9%. Commercial vehicle sales continue to come in higher than passenger vehicle sales as has been the long term trend.
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. However, 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.