Namibians should be prepared to dig deeper this year to buy cars due to disruptions in the global supply chain caused by the Russia-Ukraine conflict, economic advisory firm Simonis Storm (SS) has warned.
“The invasion of Ukraine will disrupt global supply chains of new vehicles as well as disrupting the production of electric chips. While the Rand has held its ground year to date, we do believe that local consumers should be prepared for additional new vehicle price hikes in 2022. Local dealerships will likely continue to struggle in sourcing new stock, maintaining a limit on new vehicle sales growth,” SS Economist Theo Klein said.
He added that there was a chance for the local market to see demand exceeding supply, “indicating that vehicle sales would be higher in the absence of global vehicle manufacturing limitations, despite the prospect of rising interest rates.”
In 2021, 9 428 brand new vehicles were sold in the country, representing a 23.9% annual increase compared to 7 612 sold in 2020.
In February this year a total of 883 vehicles were sold in Namibia, compared to 705 sold in the prior month and 893 sold a year ago according to the National Association of Automobile Manufacturers South Africa (NAAMSA).
Vehicle sales during the month under review decreased by 1.1% y/y and increased by 25.2% m/m for February 2022.
Vehicle sales in February were mainly driven by purchases of passenger cars, which accounted for 49.7% of total units sold, up 6.8% year on year with 439 units sold and light commercial accounting for 41.4% vehicles sold, with 366 units sold todate.
Toyota dominated sales, with a 45.8% market share during February, followed by Volkswagen at 8.5%, Ford with a 5% share and both KIA and Nissan sharing 4.9% of total sales.
“Vehicle sales moved above the 6-month moving average and we maintain our view that vehicle sales will be marginally positive from 2021 as a result of high local demand, but constrained by foreign supply of new vehicles which we discuss later,” said Klein.
He said the global shortage of chip (semiconducter) will continue to impact Namibia’s vehicle sales, worsened by the Russia Ukraine conflict.
“Disruptions to – and sanctions on – these crucial raw materials from Ukraine and Russia are expected to once again disrupt the global supply of electronic chips. This has been an existing problem prior to the invasion and will weigh down on global vehicle production in the coming months. We therefore expect Namibian dealerships to continue struggling in sourcing stock from international factories,” Klein said.
