By Hilary Mare
WITH carbon emission tax widely expected to affect volumes of vehicle sales going forward, the cost of this new tax will be passed on to consumers as they will pay more than they have done in the past, Simonis and Storm Securities has enlightened.
This tax which came into effect on July 11 2016, is only applicable to certain vehicles most notably passenger vehicles, Sport Utility Vehicles (SUVs) and double cab vehicles with Gross Vehicle Mass (GVM) not exceeding five tonnes.
Whilst motor cycles, trucks and buses will not be subject to the duties, the tax is N$40 per gram carbon dioxide/km emission exceeding 140g. Of interest to note is that the Toyota and the Volkswagen brand accounts for over 50.0 percent of total vehicle sales of which 22.1 percent is the Toyota Hilux.
“Vehicle sales have remained robust in the recent past, but going forward we expect that this new tax coupled with lower spending by consumers will result in the tax collection not being as high as may have been initially expected. This is because volumes will be lower and this tax will be passed on to consumers,” Indileni Nanghonga, a trainee economist at Simonis Storm highlighted.
This is subsequent to the National Association of Automobile Manufacturers of South Africa (NAAMSA) releasing Namibia’s new vehicle sales statistics for the month of June 2016 in which they said new vehicle sales grew by 3.5 percent m-o-m to 1,589 units compared to a 3.7 percent recorded in the prior month.
On an annual basis, total vehicle sales contracted by 13.8 percent y-o-y compared to a -4.2 percent registered in the prior year. The monthly upsurge in vehicle sales can be ascribed to an increase in number of units sold of Light Commercial Vehicles (6.7 percent m-o-m), Medium Commercial Vehicles (36.8 percent m-o-m), Heavy Commercial Vehicles (14.3 percent m-o-m) and Extra Heavy Vehicles (66.7 percent). In contrast, Passenger Vehicles continue to decline by – 3.9 percent m-o-m. Light Commercial Vehicles, which accounts for 54.8 percent of total new vehicle sales, are believed that they will continue to be the main driver in the number of new vehicles sales.
The suggested aggregate value of new vehicle sales stood at N$6.3 billion during June 2016 compared to N$5.7 billion recorded in the prior month. This is the highest value recorded since a N$6.3 billion was recorded in September 2015. The 10.5 percent m-o-m growth in the value of new vehicle sales can be attributed to an increase in the Medium Commercial and Extra heavy Commercial Vehicles which accounts for 85.7 percent or N$5.4 billion of the total value in June 2016.
“We believe that the 2.0 percent increase in the cost of vehicles sold during June 2016 has partially contributed to the increase in the value of new vehicle sales,” Nanghonga said.
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