Declining global car production to weigh on sales

Declining global car production implies that Namibian dealers are likely to continue struggling to source stock as constrained new vehicle supply goes to alternative bigger markets. This is keeping a constraint on local vehicle sales which are showing an improvement from sales levels recorded in the last two year, Simonis Storm said.

Vehicle sales continue to slow in October 2022, contracting for a second consecutive month. On a monthly basis, vehicle sales declined by 2.2% month-on-month in October 2022, compared to 3.2% month-on-month in September 2022.

However, vehicle sales are still trending above sales levels of 2021, as 996 units were sold in October 2022, compared to 717 units in October 2021, Simonis Storm pointed out.

New vehicles purchased by individuals are likely dominated by cash sales given that household instalment credit growth remains lacklustre, growing by a meagre 0.9% on average year to date compared to an average 13.0% corporate instalment growth during the same period.

Between the first quarter of 2020 and the first quarter of 202, over N$20 billion in claims have been paid out from life insurance policies from local insurance companies. This could explain the rise in cash sales which some local dealers have pointed out.

Global metal prices have decreased 23.0% since the peak in March 2022 and are expected to remain subdued due to decreasing demand evidenced by declining factory orders in various industrial nations.

“We forecast the Rand to average 16.53 against the US dollar for most of 2023, slightly stronger than levels seen in 2022. Together with lower base and precious metal prices, we believe that new vehicle prices could show signs of moderating in 2023, providing local consumers some relief in the automotive market,” Simonis Storm said.