…As peak tourism season kicks in
By Hilary Mare
VEHICLE sales have increased 23.5percent m-o-m in June, a factor that securities firm, Simonis and Storm has attributed to the peak tourism season.
“We believe that the hype around vehicles sales in June was driven by the tourism peak season that started from May and ends in October. This was a seasonal increase and we do not expect excessive increase in new vehicle sales in the coming month,” IndileniNanghonga, Junior Analyst atSimonis and Storm Securities said this week.
However, the firm also highlighted that the sales also declined by 5.4 percent y-o-y to 1 134 units at the end of June 2018.
The annual decline can be attributed to negative growth in extra heavy and passenger vehicles by 41.6percent and 11.1percent, respectively.
“In our view, the demand for extra heavy vehicles will remain low over the medium term as construction activities remains gradual. The monthly increase was as a result of an increase in all categories with an exception of buses and heavy commercial vehicles that remained mute in June,” added Nanghonga.
Essentially, vehicles channelled through rentals have increased to 236 units in June 2018.
“This increase has been seen historically during this period with the Toyota brand increasing market share to 54percent in June compared to 45percent in May 2018. We expect total vehicle sales to decline by 12.8 percent to 11 605 units for the year,” further explained Nanghonga.
According to Simonis and Storm, the Toyota brand claimed 54 percent of the market share, volkswagen claimed 11 percent, Ford held 8 percent and Nissan and Isuzu both claiming only 3 percent of the market share.
Over the past 10 years, vehicle sales have increased by 126.1 percent to its peak of 2150 vehicles in March 2015.
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 earlier this year.
In March, 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 has had an effect on vehicles sales since 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 affirmed.
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