Namibia: Struggling New Vehicle Sales a Sign of Slower Growth

The recent trend of weaker domestic new vehicle sales continued during June with all segments, except heavy commercial vehicles, registering declines compared to the corresponding month last year.

At the halfway mark in 2016 the new car market reflected a fall of 10.4 percent, compared to the corresponding six months of 2015, light commercials were down 8.9 percent, medium commercials were down by 19 percent, whilst heavy trucks and buses were down 4.4 percent.

Commenting on the new vehicle sales statistics for the month of June, released on Friday on the website of South Africa's Department of Trade and Industry, the National Association of Automobile Manufacturers of South Africa (NAAMSA) pointed out that the June 2016 aggregate new vehicle sales (44 939 units) had registered a decline of 5 311 vehicles, or a fall of 10.6 percent compared to the 50 250 vehicles sold in June last year.

Aggregate industry export sales at 30 965 for June reflected a marginal decline of 454 vehicles, or a fall of 1.4 percent compared to the 31 419 vehicles exported in June last year. These statistics, which include sales in South Africa and Namibia, are considered by many economic analysts to be a true reflection of economic growth.

The latest figures show that overall, out of the total reported industry sales of 44 939 vehicles, an estimated 37 575 units or 83.6 percent represented dealer sales, 11.9 percent represented sales to the vehicle rental industry, 3.2 percent represented industry corporate fleet sales and 1.3 percent sales to government.

The new car market continued to experience pressure in June and at 29 070 units reflected a decline of 3 850 cars, or a fall of 11.7 percent compared to the 32 920 new cars sold in June last year.

This was despite a strong contribution by the car rental industry, which had accounted for 16.8 percent of new cars sold during the month.

Domestic sales of industry new light commercial vehicles, bakkies and mini-buses at 13 398 units during June reflected a decline of 1 433 units or a fall of 9.7 percent compared to the 14 831 light commercial vehicles sold during the corresponding month last year.

Sales of vehicles in the medium and heavy truck segments of the industry at 779 units and 1 692 units, respectively, reflected a mixed picture and showed a decline, in the case of medium commercial vehicles, of 71 units or 8.4 percent and, in the case of heavy trucks and buses, a modest improvement of 43 vehicles or an increase of 2.6 percent compared to the corresponding month last year.

Industry new vehicle exports during June, 2016 had registered a modest decline of 454 vehicles or a fall of 1.4 percent from the 31 419 vehicles exported in June last year to 30 965 vehicle exports.

The momentum of new vehicle exports are expected to improve during the second half of 2016 as a result of an anticipated increase in light commercial vehicle exports to Europe.

The underlying trend in new car sales, as well as commercial vehicle sales, continued to reflect progressive and steady weakness and domestic sales were expected to remain under pressure over the short to medium-term.

Subdued levels of economic activity, above inflation new vehicle price increases, low levels of consumer confidence and lower finance approvals are also expected to continue weighing on domestic new vehicle sales during the second half of the year.

However, a number of recent key economic indicators appeared to be moving in the right direction including the substantial improvement in South Africa's trade balance and lower than anticipated producer price inflation.

This augured well for interest rate stability over the medium-term. A further positive feature was the welcome rise in the Purchasing Managers' Index, a leading economic indicator, which had now remained above the 50-point mark for the last four months.

This heralded a possible improvement in business activity and the economy in coming months.

In contrast to the continuing difficult domestic trading environment, new vehicle export sales should support the industry's vehicle production levels and South Africa's balance of payments.

In this regard, indications from exporters anticipated an improvement in vehicle export sales during the second half of 2016.

Source: New Era