A total of 1,350 new vehicles were sold during February, a drop of 2.8% from the January sales of 1,389 and down 30.7% over February 2015, driven by a slowdown in both passenger and commercial vehicle sales. At this point of the year, 2,739 vehicles have been sold so far in 2016, down 25.2% 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 -8.9% for February.
Sales of passenger vehicles rose by 11.0% month on month, from 546 in January to 606 in February. On an annual basis, total sales of passenger vehicles fell by 26.2%. Commercial vehicle sales decreased 33.9% year on year to a sales figure of 744 vehicles, which was due to lower sales numbers of light and heavy commercial vehicles, slightly offset by an increase in sales of medium commercial vehicles. On a monthly basis, commercial vehicle sales was 11.7% lower than in January.
Toyota and Volkswagen continue to dominate the passenger vehicle segment with Volkswagen selling 180 (30%) vehicles and Toyota selling 113 (19%) of the 606 passenger vehicles sold. Toyota was however the market leader in light commercial vehicle sales, having the lion’s share at 41% of the market, followed by Nissan at 15% and Ford in third place with 14%. 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.