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Namibia records demand for new vehicles despite rising interest rates

By February 13, 2023 0
Namibia records demand for new vehicles despite rising interest rates

The Namibian vehicle market had a promising start in 2023, with 798 units sold in January 2023, compared to 708 in January 2022, representing a year-on-year increase of 12.7%. 

This was revealed in the latest statistics from research firm Simonis Storm.

However, while the January sales figures are encouraging, they are below the three-month moving average and 16.2% lower than the previous month. 

Simonis Storm Economist Theo Klein explained: "January typically records the lowest number of units sold compared to other months in the year. This is most likely due to disposable incomes being low after the festive season and holidays at the end of each year. With this long-term trend in mind, we do expect vehicle sales to improve throughout 2023." 

Despite the mixed outlook for the supply chain and constraints on global car production, Klein remains optimistic about the local demand for new vehicles. "We expect local demand to remain strong, with imports of new vehicles continuing to recover, leading to an increase in the number of units sold. This is despite high interest rates." 

The main contributors to the annual increase in vehicle sales were passenger vehicles, accounting for 59% of units sold in January 2023, with a rise of 15.0% year-on-year. Light commercial vehicles, accounting for 37% of units sold, rose 10.5%. 

"Despite the rising interest rate environment, demand for new vehicles remains strong across both passenger and commercial vehicles," Klein said. "Instalment credit uptake by households was lacklustre, leading to an increase in cash vehicle sales as car loan supply was artificially constrained. On the other hand, instalment credit uptake by corporates averaged a stellar 13.0% in 2022, the highest levels recorded since 2014." 

The research firm also reported some brands, such as BMW, never experienced supply chain issues during the pandemic in Namibia, while others should see an improvement in the supply of new vehicles from international factories to local dealerships. 

However, global constraints on car production, such as the ongoing war in Ukraine, which is likely to limit semiconductor production, and the expected recessions in advanced economies, could impact vehicle sales in 2023. 

According to Klein, "In our Economic Outlook 2023 survey, 48% of respondents do not believe the war will end in 2023. Loadshedding in South Africa is expected to limit vehicle sales for Namibia in turn." 

Klein notes, imports of commercial vehicles in Namibia have improved from pandemic lows, while passenger vehicle imports remain sluggish, although some dealerships have seen an improved inflow since the end of 2022 to reduce their backlog of customer orders.

 

 

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Last modified on Tuesday, 14 February 2023 21:12
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