People have been advised to be cautious when purchasing older models of vehicles, as they may have technical problems.
This comes in the wake of the Ministry of Industrialisation, Trade and SME Development allowing the import of vehicles older than 12 years, increasing the year limit from the current eight years.
Theo Klein, economist at Simonis Storm Securities, praised the ministry for this initiative, which aims to address the vehicle shortage in the secondary market, which the firm has discussed in previous reports.
He, however, emphasized the buyers may experience increased likelihood of mechanical issues with older models of the vehicles.
‘’While we commend the government for being creative and trying to address market shortages, we would not advise individuals to buy older cars. These cars would likely be at higher risk of having mechanical issues, which could prove more costly to own than a newer car with less mileage,’’ he said.
Meanwhile, YTD annual growth rates for both passenger and commercial vehicle imports have been lower compared to the same period in 2021.
Klein notes that despite recent decreases in import levels, the firm expects shortages of both new and quality used cars to remain a constraint on Namibian vehicle sales.
‘’Local demand still exceeds supply, despite the interest rate hiking cycle. This implies that vehicle prices are likely to continue on an upward trend (for both new and second-hand cars), raising official inflation rates going forward as the transport category is the third largest in our consumer price basket used to calculate inflation,” he said.
New vehicle sales in June 2022 increased by 12.5 percent month on month, slightly higher than the 6-month moving average.
According to the National Association of Automobile Manufacturers of South Africa (NAAMSA), 866
new vehicles were sold in June 2022, a 2.7 percent increase from 770 units in May 2022 and 843
units in June 2021.
Passenger and light commercial vehicles sold the most units in June 2022, accounting for 49.3 percent and 43.3 percent of all units sold, respectively.
Furthermore, growth in new commercial vehicle sales (light, medium, heavy, and extra-heavy combined) has been slightly lower than growth in overall new vehicle sales YTD.
Year to date, new commercial vehicle sales have averaged 383 units per month, which is lower than the monthly averages of 403 and 446 recorded in the same period in 2021 and 2019, respectively. According to preliminary figures, freight transport by road increased by 4.4 percent year on year in 2021, and the Transport sector expanded by 6.3 percent year on year in 1Q2022.
‘’Despite commercial vehicle sales slightly moderating below 2021 sale levels, we remain optimistic on seeing a continued expansion in the Transport sector for 2022, being one of the sectors that support our 2.5% GDP growth forecast for 2022. Truck companies indicate that inflationary effects are currently driving sales revenues higher, where rising input costs that are passed on to consumers and transport fees based on values of products being transported have increased are two factors leading to higher transport prices charged to consumers,’’ he explains.
Globally, the economist stated that, contrary to what is expected in Namibia, some Bloomberg estimates point to lower vehicle sales growth globally.
‘’In the future, aggressive interest rate hikes and recession fears may weigh on vehicle sales.
Between January 2022 and April 2022, global vehicle sales fell by 12.2 percent on average per month, with average monthly sales falling by 16.9 percent in the United States, the European Union (14.8 percent), the United Kingdom (3.1 percent), and China (2.1 percent),’’ said Klein.