1,947 new vehicles were sold in Namibia during February, up 13.5% m/m, which is mostly due to January being a seasonally slower month. The higher monthly numbers, compared to January, were on account of a 15.7% increase in commercial vehicle sales and a 10.5% rise in passenger vehicle sales. At this point, total sales for the year stand at 3,663 vehicles, up 11.1% on the comparable period of 2014.
The 12-month cumulative measure increased further to 22,319 and is now 29.6% higher than a year ago, up 0.7% from the previous month.In our view the growth in the 12-month cumulative number is largely a result of a lower base in the previous year.
Sales of passenger vehicles increased by 10.5% m/m to 821 vehicles sold during the month, up from the previous month’s 9.7% contraction. On an annual basis, passenger vehicle sales rose, increasing 11.1% y/y after increasing 6.4% in January. Commercial vehicle sales rose 15.7% to a sales figure of 1,126 vehicles, which was due to higher sales numbers of light commercial vehicles on the back of government tenders coming through. On an annual basis, commercial vehicle sales increased by 7.2%.
Toyota and Volkswagen dominated the passenger market, selling the most vehicles in February, with the two brands claiming 26.9% and 24.1% respectively. Toyota once again was the market leader in light commercial vehicles, having the lion’s share of sales at 48.1% of the market, followed by Nissan at 16.3%, and Ford in 3rd place.
The Bottom Line
The strong increase in vehicle sales is attributed to a number of factors, namely the on-going expansive fiscal and monetary positions of the Ministry of Finance and Bank of Namibia, as well as purchase of vehicles by Government.The Ministry of Finance has allocated N$984.5m to vehicle purchases in the 2014/15 National Budget, this is N$517.8m or 111.0% more than what was spent on vehicles during the previous financial year. Additionally, the mining sector has purchased a number of commercial vehicles over recent months, largely on account of the on-going construction of the Tschudi, Otjikoto and Husab mines in the country.
Strong growth in the local economy, (expected) falling unemployment and increased wages, has increased the disposable income of consumers, which disposable funds are often used to purchase vehicles. The strong state of the Namibian consumer can thus be well illustrated by vehicle sales figures. However as no cars are manufactured in Namibia, all new vehicles sold must be imported. Given the small, open, nature of the Namibian economy, this puts major pressure on the country’s balance of payments, which pressure cannot be sustained long-term.
The strong growth witnessed in February is expected to continue, however may slow towards the end of the year as monetary policy tightening starts to gain traction. Nevertheless, government tenders yet to be delivered are expected to maintain the momentum of the vehicle sales through 2015.