A total of 1,535 new vehicles were sold during May, up 3.8% from the April sales of 1,479, however, 4.2% less than May 2015, driven by a slowdown in both passenger and commercial vehicle sales. At this point of the year, 7,278 vehicles have been sold so far in 2016, down 20.5% 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 in May, however at a slower pace than in April. Rolling 12 month sales contracted 14.4% in May to 19,366 vehicles, compared to 17,955 recorded in April.
Sales of passenger vehicles fell by 1.6% month on month, from 680 in April to 669 in May. On an annual basis, total sales of passenger vehicles fell by 9.1%. Commercial vehicle sales decreased 0.1% year on year to a sales figure of 866 vehicles, which was due to lower sales numbers of medium and heavy commercial vehicles, slightly offset by an increase in sales of light commercial vehicles. On a monthly basis, commercial vehicle sales was 8.4% higher than in April.
Toyota and Volkswagen continue to dominate the passenger vehicle segment with Volkswagen selling 268 (40%) vehicles and Toyota selling 190 (28%) of the 669 passenger vehicles sold. Toyota was however the market leader in light commercial vehicle sales, having the lion’s share at 51% of the market, followed by Nissan at 16% 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.