Staff Writer
Namibia’s vehicle market is set to face new cost pressures as proposed changes to the road funding model gain momentum.
The Road Fund Administration (RFA) has indicated that the fuel levy needs to rise to N$4.46 per litre to close the growing gap in funding for road maintenance. This would be an increase of N$2.06 per litre.
Simonis Storm said the adjustment comes as ownership costs remain high due to expensive fuel, rising insurance prices, and increased vehicle maintenance costs.
The firm said the levy increase would have a clear impact on the total cost of vehicle ownership. For private motorists, the rise would add between N$150 and N$300 a month depending on the vehicle and distance travelled.
High-mileage users such as taxis, couriers and freight operators could face N$900 to more than N$1 000 in extra monthly fuel expenses.
Over a standard five year financing period, Simonis said the cumulative cost ranges from N$9 000 for a small car to more than N$50 000 for commercial fleets. The firm said these costs function like an increase in monthly installments and will put more pressure on household and business budgets.
Concerns about the efficiency of infrastructure spending remain part of the debate. Industry voices have criticised the development of high-specification road projects, often referred to as Rolls Royce roads. They argue that Namibia could cover more of the national road network with cost-effective designs.
Simonis said when funding goes to prestige upgrades rather than routine maintenance, motorists face two burdens. These are higher levies and faster vehicle depreciation caused by damaged road surfaces. Poor maintenance leads to increased wear on suspensions, tyres, bushings and brakes, which raises annual repair costs for households and businesses.
The commentary noted that these cost pressures will influence how consumers buy vehicles. Higher operating costs often push buyers toward smaller engines, hybrids and fuel-efficient models. This shift is strongest in entry- and mid-range segments, where affordability plays a major role.
Fleet operators may extend replacement cycles or switch to models with lower lifetime costs. This could result in instalment and leasing credit becoming more concentrated in inefficient segments. Demand for larger petrol and diesel models may weaken unless driven by commercial need.
Simonis said a higher fuel levy would increase transport-related inflation, raise retail distribution costs and reduce disposable income. Over time, this weakens consumer confidence and credit demand, which can slow vehicle sales unless supported by strong commercial activity or favourable lending conditions. The October 2025 interest rate cut to 6.50% helps by reducing borrowing costs but does not remove the financial pressure caused by a higher levy.
The firm said the success of the levy increase depends on trust and execution. Simonis noted that the long-term benefits will be visible only if levy proceeds are ring-fenced and directed to road preservation rather than costly projects. If this happens, benefits like safer roads, stable maintenance costs and predictable vehicle depreciation can follow. If not, consumers will face higher fuel costs and higher repair bills, which will damage affordability in the automotive sector.
