By Hilary Mare
ACCORDING to a report released by the National Association of Automobile Manufacturers of South Africa (NAAMSA), Namibia’s new vehicle sales statistics for the month of September 2016 saw new vehicle sales contracting by 8.5 percent m-o-m to 1 252 units compared to a 12.8 percent contraction recorded in the prior month.
On an annual basis, total vehicle sales contracted by 23.9 percent compared to -13.9 percent registered in the prior year. The monthly contraction in vehicle sales can be ascribed to a decline across all vehicle categories. The new vehicle sales number (1 252) was the lowest since 1 190 units recorded in December 2013.
“We expect vehicle sales to continue its downward trend due to structural issues within the country. The implementation of fuel levy rates by the Ministry of Finance coupled with the carbon emission tax and slowing Private Sector Credit Extension (PSCE) will continue to subdue vehicles sales in the country. We expect the Government to continue cutting expenditure on unproductive assets (e.g. vehicles) as a measure of fiscal consolidation),” Simonis and Storm Securities viewed.
The decline in new vehicle sales can be attributed to a contraction in Passenger Vehicle sales which contracted by 5.2 percent m-o-m to 509 units in September. Light Commercial Vehicles continued its downward trend for three consecutive months and has contracted by 10.1 percent m-o-m to 684 units.
Furthermore, Medium Commercial and Extra Heavy Vehicles also declined by 27.6 percent and 10.3 percent, respectively. Heavy Commercial Vehicles and Buses remained constant at three and zero units, respectively. September recorded the lowest vehicle sales number of 1 252 units since December 2013. Furthermore, passenger vehicles recorded the lowest number of units last year since 501 units in December 2011.
The suggested aggregate value of new vehicle sales stood at N$498.6 million during August compared to N$567.8 million recorded in the prior month. The value of new vehicle sales during the month under review contracted by 12.5 percent m-o-m and 21.4 percent y-o-y to N$498.6 million compared to N$631.6 million in the prior year. The weakening of the Rand in October, triggered by the South Africa Finance Minister Pravin Gordhan being summonsed to appear in court, is likely to lead to an increase in the cost of vehicles in the last quarter of the year.
“We revised our GDP forecast for 2016 downwards to 2.5 percent from 4.1 percent as reported in our quarterly investment strategy 3Q2016. This is attributed to a widening trade deficit and the slowdown in economic activity in Namibia. The water crisis has largely affected most of the big contributors (construction, manufacturing and agriculture) to GDP.
The higher interest rates coupled with slowing PSCE will put pressure on economic growth. Carbon taxes and municipal tariffs implemented will also put pressure on certain performing sectors such as the vehicle industry and high water and electricity dependent sectors,” extended Simonis and Storm.
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