The Ministry of Industrialization and Trade has increased the import age restrictions for non-commercial second-hand vehicles to 12 years from the current age cap of 8 years.
The new measures which will be effective for a period of 2 years according to the Ministry, are an interim relief measure for the second-hand vehicle industry under the prevailing economic conditions.
“The decision was taken to improve industry performance given the prevailing global economic situation and its effect on Namibia economic sectors and industries. The MIT will further undertake annual assessments of the global economic situation to observe any improvement that will necessitate the removal of the 2 years relief measure,” the Ministry said on Monday.
The vehicle age restriction policy was first implemented in 2004 to allow citizens to import vehicles older than five years. However, two years later the regulations were tightened to discourage locals from importing cars not older than five years.
Simonis Storm Economist Theo Klein said although the move is aimed at addressing vehicles shortages in the secondary car market, it could prove costly for local buyers.
“We do commend the government for trying to address the shortages in the secondary market, but we do not necessarily think this is a wise financial decision for local Namibians, as cars that are12 years old might be at higher risk of all sorts for mechanical issues as opposed to cars that are 8 years old. From an individual financial perspective, you might seat with more repair or costs to replace parts, as opposed to purchasing a car younger than 12 years,” he said.
Klein said the interest of banks to extend loans on 12-year-old vehicles remains to be seen.
“From a supplier’s side, we are not sure how keen banks will be on extending loans to individuals to purchase 12-year-old cars given that they will have a lot of mileage on the clock, thus the rate of depreciation will be faster on the older cars. We recommend that Namibians postpone their vehicle purchases as opposed to going for vehicles that are 8 years, which is the current age limit on imports,” he said.
Klein,however, said the government move could bring down prices in the secondary car market.
“One positive of this development would be to bring prices down in the secondary market, which have significant increases as a result of the shortages in recent months,” he said.
Namibians currently import second hand vehicles from Botswana which currently does not have a vehicle age cap, the United Kingdom and directly from Japan.
According to the May 2022 data from the National Association of Automobile Manufacturers of South Africa, new vehicle sales slowed from a spike in sales seen in the prior month to below its six-month moving average 767 units sold in May, compared to 905 in the prior month.
This represents a drop of 15.2% m/m and the 790 sold in May 2021 represent a drop of 2.9% y/y.
Passenger and light commercial vehicles continue to account for the bulk of new vehicle sales, at 52.4% and 40.3% of total sales respectively in the month under review.
On an annual basis, passenger vehicle sales increased by 12.3% y/y, light commercial vehicles dropped 16.7% y/y, medium commercial vehicles sales dropped 40.0% y/y, with heavy commercial vehicles down 33.3% y/y although extra-heavy commercial rose 3.0% y/y in May 2022.
