Windhoek-Namibian vehicle sales contracted by 23.5 percent year-to-date at the end of July 2017 to 15523 units compared to a contraction of 16.6 percent year-to-date in July 2016. On a monthly basis, however, overall vehicle sales picked up by 10.3 percent to 1346 units.
This decrease in vehicle sales was particularly reflected in the category of light commercial vehicles – supported by continued stronger demand in the rental market, as Namibia’s tourist season continues.
“While we note a moderate rebound in vehicle sales, we believe that this reflects a seasonal pattern and should not be construed as a reflection of an improvement in economic conditions, locally, as Private Sector Credit Extension (PSCE) continues to trend downwards.
“We thus expect overall vehicle sales to return on its downward spiral by the beginning of 4Q2017 as the Namibia tourist season ends. Although we now expect the Bank of Namibia (BON) to cut the repo rate by 25 basis points at its meeting on 16 August 2017, we still do not foresee this as supporting vehicles sales, as we believe households would require some time to adjust their disposal income and spending priorities,” commented Frans Uusiku, an economist at Simonis Storm Securities.
Growth in Namibia’s PSCE slowed during the first six months of 2017. The annual PSCE growth stood at 8.5 percent on average during this time, which is lower than the 12.5 percent recorded over the same period in 2016. The subdued growth was in line with the general weakness of the economy.
The slower growth in PSCE is primarily due to reduced growth in credit advanced to the household and corporate sectors, especially in the form of mortgage and instalment credit.