Simonis Storm released the National Association of Automobile Manufacturers of South Africa(NAAMSA’s) Namibia new vehicle sales statistics for the month of November 2016 this week. Vehicle sales strengthened during November, recording a significant increase by 13.8% m-o-m compared to a consistent contraction over the last four months. On an annual basis, total vehicle sales contracted by 23.5% compared to 13.6% in the prior year.
The monthly increase in vehicle sales can be attributed to increases in vehicle units across all categories with an exception of Buses, said Simonis Storm.
The stock brokerage firm attributes the increase to commercial banks financing arrangements (specifically Prime -1.50 or 1.25 and buy now and start paying off in February) through certain dealerships. They believe that this is unsustainable over the medium term.
Total vehicle sales recovered from the persistent decline since June 2016, increasing by 13.8% m-o-m to 1 317 in November 2016. The increase in new vehicle sales can be attributed to an increase in all vehicle categories but Buses remained constant.
Passenger Vehicles grew by 16.3% m-o-m to 535 units in November 2016 compared to -9.6% recorded in the prior month. In addition, Light Commercial, Medium Commercial, Heavy Commercial and Extra Heavy Commercial Vehicles also recorded positive increases of 8.7% m-o-m, 30.3% m-o-m, respectively.
On an annual basis, Light Commercial, Passenger, and Heavy Commercial Vehicles continued to contract by 32.8%, 9.0% and 73.1%, respectively.
While as Medium Commercial and Extra Heavy Commercial Vehicles recorded positive annual growth of 25.0% and 34.5%, respectively. The suggested aggregate value of new vehicle sales stood at N$537.2mn during November 2016 compared to N$472.0mn recorded in the prior month.
The value of new vehicle sales during the month under review grew by 13.8% m-o-m but has contracted by 10.1% y-o-y. The growth in the value of vehicle can be attributed to a 13.8% growth in Medium Commercial and Heavy Commercial and Extra Heavy Commercial vehicles to 1 317 units. This accounts for 16.5% of the total aggregated value of vehicles.
SSS believes the increase in expensive (Heavy Vehicles) vehicles coupled with banks financing schemes has led to the upsurge in the overall value.
The Bank of Namibia left interest rates unchanged at 7.00% at the MPC meeting held on the 7th of December 2016. “This will stabilise economic activity. Furthermore, Installment credit recovered in October 2016, growing by 0.6% m-o-m compared to a 60 contraction (0.4%) in the prior month. With interest rates on hold coupled with a stronger Rand (USDZAR13.7 as of 14 December), Simonis Storm expects vehicles sales to remain subdued at current levels in the short term.