Vehicle prices are expected to continue rising this year due to geopolitics and high raw material and energy costs, economic research firm Simonis Storm has warned.
“Globally, car manufacturers are still facing high raw material and energy costs, which contribute to vehicle price increases,” said Theo Klein, an Economist with Simonis Storm.
“Car prices have also increased across the world as carmakers focus their limited production on their most expensive and profitable models. Geopolitics could also be driving higher car prices as certain brands relocate their value chains. All the above factors – together with a weak Rand exchange rate – risk seeing vehicle prices continue to rise in Namibia, making it more expensive to purchase and operate cars for Namibians.”
“We mentioned that car prices are likely to rise by between 3% – 5% per quarter following our discussions with various brands in Windhoek. We still see upward momentum to spare parts and accessories inflation rates, while prices charged for vehicle services and repairs remain muted.”
He said rising interest rates are also expected to further hit consumers, who might struggle to afford car repayments, amid indications that the Bank of Namibia will announce a major hike next week Wednesday, after the South African Reserve Bank announced a 75-basis points hike, the biggest hike since September 2002.
“Coupled with the rise in interest rates, we expect demand for new vehicles to start showing signs of a retreat in the vehicle sales data coming out in coming months, “Klein said.
According to vehicle sales data for July, new vehicle sales dropped by 22.4% m/m to 677 units compared to 872 units sold in the prior month according to the National Association of Automobile Manufacturers of South Africa.
On an annual basis, vehicle sales declined by 15.3% y/y in July 2022, dipping below its 6- month moving average.
Passenger and light commercial vehicles had the largest share of units sold in July 2022 with a 56.4% and 39.3% share of all units sold, respectively. On a monthly basis, extra-heavy and heavy commercial vehicles recorded the largest declines in sales.
