Vehicles sales unresponsive to low rates
A total of 792 new vehicles were sold in Namibia during the month of May compared to 755 sold in the prior month.
21 June 2021 | Economics
With consumer and business confidence remaining low in Namibia, households and businesses in general might delay vehicle purchases in hope of an improved economic environment in the future. Simonis Storm (SS)
Despite interest rates being low to make borrowing attractive, new vehicle sales remained weak for the month of May.
Last week, the Bank of Namibia (BoN) announced that the repo rate will remain unchanged at 3.75%, which implies that the prime lending rates for local commercial banks will also remain at 7.50%.
At the monetary policy announcement, central bank governor, Johannes !Gawaxab, noted that the domestic economy remained weak during the first four months of 2021.
In April, private sector credit extension (PSCE) growth increased to 3.1% in April 2021 relative to 2.0% in March 2021.
The rise in the growth rate of PSCE was mainly explained by a slightly higher uptake of credit by households during the year to the end of the of April 2021. Nonetheless, growth in PSCE remains at historically low levels due to the persistent sluggish domestic economic activity, reinforced by the Covid-19 pandemic, BoN said.
According to Simonis Storm (SS), “we have seen a decline in demand for instalment credit from both households and businesses. We therefore do not believe that households or businesses in general are taking advantage of lower interest rates on car loans to purchase new vehicles, given the current economic environment and uncertainty.”
A total of 792 new vehicles were sold in Namibia during the month of May compared to 755 sold in the prior month, an increase of 4.9%. On an annual basis, new vehicle sales increased by 65.0% in May.
The biggest contributors were heavy and light commercial vehicles, which recorded an increase of 50.0% and 15.2% month-on-month in May 2021 respectively.
Sales in extra heavy and medium commercial vehicles weighed on total vehicle sales, recording a drop of 28.3% and 25.0% month-on-month in May 2021, SS said.
Toyota, Volkswagen, Ford, Kia and Nissan were the top 5 sellers in terms of units sold, each recording 288, 112, 69, 50 and 48 units respectively.
On an annual basis, Kia saw the biggest growth in sales recording 257.1% year-on-year in May 2021, while Nissan, Toyota, Ford and Volkswagen rose by 92.0%, 66.5%, 53.3% and 25.8% year-on-year, respectively, SS added.
Toyota, Volkswagen and Ford continue to dominate the motor market with a market share of 36%, 14% and 9% respectively. The top ten brands (Toyota, Volkswagen, Ford, Kia, Nissan, Mercedes, Hyundai, Suzuki, Isuzu), out of a total 59 brands sold in Namibia, they contributed 87.2% of the vehicles sold in May 2021 compared to 89.2% of vehicles sold in May 2020. Most notably is Volkswagen’s market share drop to 14% from 19% a year ago, whereas other brands either maintained or slightly increased their market share, SS pointed out.
The 5-year average number of vehicles sold per month, prior to March 2020 when the government initiated a national lockdown, is 1177 units.
“We have seen the number of vehicles sold recovering from April 2020’s lows to almost pre-Covid-19 levels. With consumer and business confidence remaining low in Namibia, households and businesses in general might delay vehicle purchases in hope of an improved economic environment in the future,” SS said.