Longer time to repay car loans

The extended loan repayment period might provide immediate relief to consumers, but analysts doubt whether it will boost new vehicle sales.

14 September 2020 | Business

The linear trend … suggests that new vehicle sales in 2020 will likely be the lowest observable value since 2003. – Cirrus Securities

Jo-Maré Duddy – As new vehicles sales this year are on track to hit the lowest figure since 2003, the ministry of industrialisation and trade on Friday announced that the period to repay a vehicle loan was extended from the current 54 months to 72 months.

The executive director of the ministry, Steve Katjiuanjo, in a statement said the amended regulation in terms of the Credit Agreements Act took effect as from 1 September.

“The amendments were necessitated by the fact that the economy for the past four years has been contracting and this state of events was further compounded by the outbreak of Covid-19,” Katjiuanjo said.

He added: “The government has been coming up with strategies that are aimed at resuscitating the economy while at the same time cushioning consumers against the effects of the global economic downturn.”

Katjiuanjo said the amendment is aimed at providing relief to consumers. “Consumers whose income have not been adversely affected are advised and encouraged to maintain their current instalments,” he said.

Showcase of economy

The news followed the release of the latest data which shows 593 new vehicles were sold in August. According to Cirrus Securities, this is 11% lower than July and 26.6% down compared to August 2019. Year-to-date, new vehicle sales contracted by 31.9%.

“Moreover, the linear trend – with approximately 66% of the year complete – suggests that new vehicle sales in 2020 will likely be the lowest observable value since 2003,” Cirrus said.

Commenting on the latest figures, IJG Securities said the new data shows how “badly economic activity has been hampered since the lockdowns were imposed”.

“New vehicle sales are down considerably when compared to 2019, which by itself was a bad year for vehicle sales,” IJG said.

‘Risks remain’

Simonis Storm (SS) said the numbers were to be expected “as the main risks remain – the uncertain economic and health situation, no clear policy direction, reduced appetite for borrowings, business closures, loss of income, reduced spending power, and low consumer and business confidence”.

Cirrus put the existing trend in context of households which remain “characterised by risk of either retrenchments or wage reductions, high debt levels (relative to disposable income) and greater difficulty accessing finance given the riskier macro environment”.

“Moreover, new vehicle sales will also continue to be hindered by increased supply of second-hand vehicles from the tourism industry, as many participants opt to reduce their fleet size – thereby providing a cheap substitute,” Cirrus added.

IJG expects “the current depressed trend in new vehicle sales to remain depressed for the medium term as there are currently very few catalysts for economic growth”.

“It is unlikely that many businesses and consumers will be in a financial position to purchase new vehicles for the rest of the year,” IJG said.

Similar News


Copper struggles on virus resurgence

8 hours ago | Business

Copper prices eased back yesterday from the highest levels in more than two years as Covid-19 cases surged, threatening to curb economic activity and metals...

'Broke' Edgars won't dent Oryx rent

8 hours ago | Business

Oryx Properties has shielded itself against possible vacant space in Maerua Mall resulting from Edcon's bankruptcy protection by reaching a lease agreement with South African-based...

Declining repo rate supports domestic activities

8 hours ago | Business

PHILLEPUS UUSIKUThe Bank of Namibia (BoN) and the South African Reserve Bank (SARB) have cut the repo rate several times since both countries announced states...

Namdock jumps into staff housing delay

8 hours ago | Business

ELLANIE SMIT WINDHOEK Walvis Bay ship repair company, Namdock, says a new contractor should be appointed as soon as possible to proceed with a...

Mining safety worsens

8 hours ago | Business

ELLANIE SMITWINDHOEKDespite some impressive individual member achievements, overall safety at Namibia's mines declined last year.This is according to Chamber of Mines president Zebra Kasete, who...


8 hours ago | Business

Shell launches cost-cutting drive Royal Dutch Shell is looking to slash up to 40% off the cost of producing oil and gas in a major...

No fracking in Kavango - ministry

8 hours ago | Business

ELLANIE SMITWINDHOEKThe mines ministry has dismissed reports of fracking activities in the Kavango Region that could threaten the Okavango ecosystem.Reconnaissance Energy Africa (ReconAfrica) last week...

KIA Motors announces safety recall

8 hours ago | Business

KIA Motors South Africa (Pty) Ltd will conduct a safety recall on 2 175 KIA Sorento (BL) and KIA Carnival/Sedona (VQ) models manufactured in Korea...

Mining industry contracts 11.1%

1 day - 21 September 2020 | Business

ELLANIE SMITWINDHOEKThe mining industry has recorded a negative growth of 11.1% last year, a deep contraction from the positive growth of 16.1% in 2018.This is...

Start-up grant application date extended

1 day - 21 September 2020 | Business

ESTER KAMATIOTJIWARONGOThe applications for phase two of the financial assistance grant for start-ups, which was rolled out through a partnership between the ministry of industrialisation...

Latest News

Covid-19: Partying Namibians throw caution...

8 hours ago | Health

JEMIMA BEUKES WINDHOEKNamibians have thrown caution to the wind and are failing to adhere to regulations without being policed, after the Covid-19 state of emergency...

Swapo's Wakudumo and Shinduvi face...

8 hours ago | Politics

Kenya KamboweRUNDUThe Swapo Kavango East regional executive committee (REC) passed a motion of no confidence in the region's coordinator Ottilie Shinduvi and the regional mobiliser...

Kauhaie wins the crown

8 hours ago | Youth

Irene-Mari van der Walt Swakopmund • [email protected] the cancellation of the Mr Teen Swakopmund 2020, the Miss Teen Swakopmund 2020 pageant went ahead at...

Government availing shacks humiliating

8 hours ago | Opinion

In January 2019, President Hage Geingob described shacks (corrugated iron homes) as a 'humanitarian crisis'. “We have a crisis where human beings are staying in...

World Tourism Day

8 hours ago | People

Michael ShagandjwaThe country should establish more unique heritage attractions that reflect our country’s background. Create an interesting image with reservations that are worth viewing and...

Spread your financial wings

8 hours ago | Columns

Irene-Mari van der Walt I don’t know much about money but I know that they say it can’t buy happiness. I also know that people...

Namdock jumps into staff housing...

8 hours ago | Business

ELLANIE SMIT WINDHOEK Walvis Bay ship repair company, Namdock, says a new contractor should be appointed as soon as possible to proceed with a...

WAP wen Bakpro-kompetisie

8 hours ago | Education

Windhoek Afrikaanse Privaatskool was die wenners van die Bakpro Back-to-School-kompetisie. Die skool het 14 413 broodsakkies ingesamel en was die wenners van rekenaars en projektors...

Unam students appeal against traditional...

8 hours ago | Education

ENZO AMUELEStudents at the University of Namibia (Unam) are in a bitter contest against the writing of traditional examinations.The university recently issued a circular about...

Load More