Vehicle sales in Namibia spiked in March, with units sold reaching a record high since units sold in July 2017.
The country, according to statistics from research firm Simonis Storm, sold 1,280 units in July 2017, compared to 1,226 units in March 2023.
“Vehicle sales were primarily driven by the usual, with passenger and light commercial vehicles accounting for 94.2% of total units sold in March 2023. However, medium-commercial vehicles recorded the largest annual increase in March 2023, followed by extra-heavy commercial and light commercial,” Simonis Storm Economist Theo Klein said.
He stated that year-to-date sales have increased by 28.8%, despite the fact that 1Q2015 had the highest vehicle sales, with 1Q2023 being the best performing first quarter since 2018.
“In 1Q2023, 3,134 units were sold, growing by 18.5% q/q from 2,645 units in 4Q2022. The wholesale and retail sector increased by 6% y/y in 2022, which is the second consecutive year that this sector recorded an expansion following four years of economic contractions,” he explained.
Klein said total annual vehicle sales tend to co-move with growth in the wholesale and retail sectors.
As a result, the firms expect vehicle sales to continue trending upward and above levels recorded in the last two years and this is likely to contribute positively to the wholesale and retail sector for 2023.
The firm reports that supply chain issues have normalised in recent months as indicated by some local dealerships as improved delivery of new stock from global factories has allowed some dealerships to address significant backlogs that arose in 2022.
“This partly explains why vehicle sales in 1Q2023 were the largest since 1Q2018. As supply chains continue to normalise, this could be supportive of vehicle sales in coming months.”
In addition, individual investors who hold shares in Namibian Breweries received their special dividend of N$26.35 per share and these returns are expected to return to the vehicle market.
“Based on the shareholder register, there are 1,315 retail investors who will receive a total of N$226.6 million in special dividends that are not subject to dividends tax. Naturally, these funds must go somewhere and so a portion of this could be spent in the economy, potentially benefiting the property, vehicle and retail sectors in coming months,” said Klein.
Therefore, he explained that despite interest rates being high and rising further in 2023, demand for new vehicles has been resilient and this is expected to boost momentum for new vehicle sales.
“We do expect Bank of Namibia (BoN) to hike the repo rate by 25bps each in their 19 April and 14 June 2023 meetings. This implies a repo rate of 7.5% by mid-2023,” he added.
