Sunday 16 May 2021
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Economic headwinds continue to hit vehicle sales

By Megameno Shikwambi

Total vehicle sales declined by 0.2% month-on-month and by 18.3% year-on-year to 806 units according to the recently released statistics by the National Association of Automobile Manufacturers South Africa (NAAMSA).
The biggest contributor to the annual drop was the light commercial vehicles (LCV), recording a drop of 30.8% y-o-y in September 2019.
Overall, total commercial vehicles (Light, Medium and Heavy commercial vehicles) have declined by 27.8% y-oy to 450 units in September 2019, which could suggest slackening commercial activities (manufacturing and services sectors) in the economy.
Year to date (ytd), vehicle sales declined by 13.7% to 7 829 units compared to 9 067 units over the same period last year.
The biggest lag came from LCV which declined by 18.3% to 3 763 units compared to 4 608 units during the same period last year.
Passenger vehicles also declined, recording a -11.4% to 3 522 units ytd, while buses declined by 14.3% to 18 units ytd.
Heavy commercial (HCV) and extra heavy commercial vehicles (XHV) were the only vehicle categories that increased ytd, recording a 23.1% and 24.4% to 80 and 255 units, respectively.
The increase in these categories are associated with an uptick in construction activities (property and commercial construction coupled with road construction).
In South Africa, performance in the new vehicle market continued to decline during September 2019.
The aggregate domestic new vehicle sales declined by 0.9% to 49 191 units compared to 49 630 units sold in the prior year.
Monthly, export sales had registered a modest decline compared to the high base level of the corresponding month last year.
Vehicle sales remain a challenge in both developed markets, SA and Namibia.
“Total new vehicles sales declined by 13.7% to 7 829 units ytd ending September compared to 9 067 units same time last year.   We reiterate our annual (2019) forecast of 11 035 units, a 7.3% decline compared to a 10.6% contraction in 2018.
We do price in a worst-case scenario of a 13.5% decline in overall vehicle sales to 10 300 units,” said Simonis Storm in a report launched recently.
Despite economic headwinds, Namibia has improved its competitive ranking marginally, as per the latest World Bank Report.
The region was led by Mauritius which ranked at 52, South Africa, the second most competitive in the region, improved to the 60th position, while Namibia (94 from 100), Rwanda (100), Uganda (115th) and Guinea (122nd) all improved significantly.
Meanwhile, the World Bank has also slashed the economic growth forecast for sub-Saharan Africa for 2019 to 2021 by 0.2 percentage points from its earlier projection, citing a slowdown in fixed investment and policy uncertainty in the global economy.
According to the bank, the regional economy was anticipated to pick up by 2.6% this financial year, from a 2.8% growth that was projected in April.
The World Bank has also said that GDP growth would soar to 3.1% in 2020 and 3.2% in 2021.
“Despite some improvements, the external environment is expected to remain difficult and uncertain for the region,” the bank said in its October Africa’s Pulse report. According to Professor Klaus Schwab who compiled the report, sustained economic growth remains a critical pathway out of poverty and a core driver of human development.
He said there is overwhelming evidence that growth has been the most effective way to lift people out of poverty and improve their quality of life.
“For least-developed countries (LDCs) and emerging countries, economic growth is critical for expanding education, health, nutrition and survival across populations. The importance and policy relevance of growth has been re-affirmed in the United Nations’ 2030 Agenda for Sustainable Development, adopted by all UN member states in 2015, which identified 17 Sustainable Development Goals (SDGs) to be achieved by 2030. Goal 8 calls for “sustained, inclusive and sustainable economic growth”.
“Growth is also a means or a prerequisite for achieving many of the other SDGs, including ending poverty in all its forms everywhere.
For most of the past decade, growth has been subdued and remained below potential in many developing countries, hampering progress on several SDGs.
The competitiveness landscape painted by the GCI in 2019 demands more effort to restore productivity and growth to lift living standards,” concluded the Professor.

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