By Hilary Mare
OVER the past 10 years, vehicle sales have increased by 126.1 percent to its peak of 2150 vehicles in March 2015, Junior Analyst at Simonis and Storm Securities, Indileni Nanghonga has revealed.
Since peak levels, total vehicle sales have declined by 46.9 percent to 1142 units reported in March 2018.
“The drop in vehicle sales can be attributed to government’s fiscal consolidation policy as well as the overall slowdown in the economy,” Nanghonga said.
Namibian New Vehicle Sales increased by 9.9 percent m-o-m to 1142 units in March 2018. On a yearly basis, vehicles sales declined by 18.6 percent in March compared to an 8.0 percent contraction in the previous year.
“On the other hand, the sharp decline in installment credit has also contributed to the drop observed in the new vehicle sales numbers. Total vehicle sales in 2017 were at levels last seen in 2011. Despite the monthly increases observed in February and March, vehicles sales remain below the long term average of 1330 units. Our view is that vehicle sales will still remain edgy in the current tough economic environment,” Nanghonga further explained.
Last month, Confidente reported that that annual new vehicle sales in Namibia declined by 38.7 percent to 13 313 units in 2017 since its peak of 21 718 units recorded in 2014.
“Besides current economic conditions, new regulations relating to deposit requirements as well as additional carbon emissions taxes have not helped the situation. In addition, installment credit has slowed sharply from 18.2 percent y-o-y in 2014 to -4.8 percent y-o-y recorded in February 2018. Our view is that the continuous contraction in installment credit coupled with the broad-based economic slowdown will extend the downward trend in new vehicle sales throughout 2018. At the same time and anecdotally we are also seeing the used car market in a fix with increased promotional sales activity with attempts to offload excess stock,” Nanghonga said.
In this just ended financial year, the motor vehicle industry faced subdued growth as government vowed to cut its vehicle expenditure from N$139 113 000 to N$45 104 000 in the 2017/18 financial year. Essentially goods and services expenditure declined by 21percent whilst capital expenditure decreased by 15 percent (34 percent compared to 2015/16).
Last month, Finance Minister Calle Schlettwein tabled a N$65 billion budget for 2018/19 financial year aimed at increasingly aligning resources to key priority areas, continued reduction in the budget deficit and providing for a growth stimulus package.
In the budget that is likely going to have an effect on vehicles sales as government is one of the main buyers of vehicles, total expenditure over the MTEF is projected to increase by an average of only 1.2 percent on account of expenditure containment measures and the moratorium on new non-productive expenditure items.
“In this regard, aggregate expenditure levels increase from N$65.0 billion in FY2018/19, N$65.7 billion in respect of FY2019/20 and N$66.3 billion by FY2020/21. As a proportion of GDP, total expenditure is projected to continue declining, from 38.4 percent in FY2017/18 to 35.2 percent in FY2018/19 and hover around 32.8 percent on average over the MTEF,” Schlettwein said.
Confidente. Lifting the Lid. Copyright © 2015