Vehicle sales in Namibia experienced a slight decline in May 2023, with a total of 982 new vehicles sold, compared to 1,004 in April and 1,226 in March, latest figures show.
However, despite this dip, sales remained robust, with a year-on-year increase of 28%.
According to Cirrus Capital Junior Economist Enos Kamutukwata, the growth in year-to-date vehicle sales has exceeded the levels recorded in 2018, driven largely by passenger vehicles, which saw a 25.6% year-on-year increase and a 7.9% month-on-month increase.
“Commercial vehicle sales also showed a positive trend with a 30.7% year-on-year growth, although they experienced an 11.0% month-on-month decline,” he said.
Despite the challenging economic environment characterised by inflation and high interest rates, he asserted that vehicle sales have remained resilient in the first five months of the year.
Simonis Storm sales report highlights a mixed pattern of demand among local dealerships with high-end vehicle models have seen positive demand, while low-end models have experienced flat to negative demand.
“This divergence suggests that inflationary pressures are impacting the middle class, who typically opt for low-end vehicle models. The increase in interest rates has made it more challenging for consumers to obtain affordable loans, “said the Firms Researcher Angelique Bock.
She added that car loans currently carry an average interest rate of 13.5%, making it difficult for many prospective buyers to meet the stringent requirements imposed by financial institutions.
Consequently, several car loan applications have been rejected due to clients already carrying excessive debt burdens or not meeting the institutions’ requirements.
Bock said apart from rising interest rates and higher living costs, other factors contributing to the decline in new car sales include supply constraints, competition from more affordable brands like Jac and Mahindra, and changing consumer behaviour.
“Consumers are increasingly opting to keep their vehicles for longer periods and are more inclined to choose extended warranties instead of purchasing new cars frequently. These trends present challenges for local dealerships in maintaining sales growth and meeting customer demands,” the researcher said.
Meanwhile, financial services company IJG revealed that Toyota remains dominant in the new passenger vehicle sales segment with 39.3% of the segment sales year-to-date.
“The manufacturer has sold just over double the number of new passenger vehicles year-to-date than its closest competitor, Volkswagen. Volkswagen, which is sitting at 19.3% of segment sales year-to-date, is followed by Kia at 8.9%, and Haval and Suzuki, at 5.1% each,” revealed the company’s vehicle sales report.
Furthermore, Toyota also maintained its stronghold in the light commercial vehicle segment, claiming 53.3% of the sales year-to-date with Ford next in line with 13.0% of the market share.
“Mercedes leads the medium commercial vehicle segment with 36.4% of the market share, while Scania remains on top in the heavy and extra heavy commercial segment with 29.4% of the segment sales year-to-date,” said IJG.
