New vehicle sales stall again

Jo-Maré Duddy – New vehicle sales last month bucked the trend of October as a strong month, coming in nearly 55% below the historical average for the month.

The 559 new vehicles leaving local showrooms were 42.4% lower than October 2019 and 36.1% down from September 2020. September’s sales of 874 were the highest recorded so far this year and was only the second time in 2020 that sales were able to register positive growth.

“The month of October has historically been one of the stronger months regarding new vehicle sales, but October 2020’s sales of 559 units lagged the average number of vehicles sold during the month by 682 vehicles,” IJG Securities says in their analysis of the latest figures.

“A slowdown in government spending in real terms, coupled with a halt in foreign direct investment brought on by poor policy guidance has resulted in a stagnant economy and as a result erosion of consumer and business confidence,” the analysts say.

Strict lockdown measures aimed at slowing the spread of Covid-19 have intensified this stagnation, they add.

Ciirus Securities says October’s sales came as a surprise.

“Compared to the rest of the year, October is the month that most often sees positive vehicle sales metrics. This illustrates the hardships Namibian consumers and businesses are undergoing, given the need to change consumption patterns,” Cirrus comments.

HITTING THE BRAKES

October’s figure brings year-to-date sales to 6 215 – 2 597 or nearly 30% lower than the same ten months in 2019.

Compared to the corresponding period in 2015 – the year before Namibia entered the current recessionary cycle – October’s sales dropped by about 65% or 11 727 units.

The 7 804 new vehicles sold in the 12 months to the end of October is the lowest since March 2005, IJG says.

Year-to-date sales were driven by light commercial vehicles with 3 233 units sold. Compared to the same period last year, light commercial vehicle sales slowed by nearly 25%.

A total of 2 542 passenger cars were sold during the first ten months of 2020, nearly 35% less than the comparative period in 2019.

On a rolling 12-month basis, passenger vehicle sales are at their lowest level since April 2004 at 3 203 units, highlighting the severity of the slowdown in sales, IJG says.

Year-to-date, 440 medium and heavy commercial vehicles were sold – nearly 29.5% less than the same period in 2019.

OUTLOOK

The sales breakdown for October is: 296 passenger cars (-16.6% year-on-year); light commercial 217 (-59.5%); medium commecial 18 (-28%); and heavy commercial 28 (-49.1%).

Cirrus expects new vehicle sales this year to remain “dampened due to households remaining characterised by higher exposure to 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,” the analysts add.

IJG also forecasts a low demand for new vehicles, “as it is unlikely that economic conditions will improve significantly in the short to medium term”.