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JANUARY 2023 is the best January since 2019 in terms of new vehicles sold in Namibia, with 798 units sold in 2023, compared to 708 in January 2022 – a rise of 12,7% year on year (y/y).
However, according to an analysis by Simonis Storm Securities, despite this uptick in the number of units sold last month, these figures are lower than sales levels in the last months of 2022.
“On a monthly basis, units sold are down by 16,2% month on month in January 2023,” Simonis says.
According to the analysts, January typically records the lowest number of units sold compared to all other months of the year.
This is most likely due to disposable income being low after the festive season and holidays at the end of each year.
“With the repetition of this long-term trend, we do expect vehicle sales to improve going forward in 2023,” Simonis says.
Passenger vehicles – which accounted for 59% of units sold in January 2023 – were the main contributor to the annual increase, rising 15,0% y/y in January 2023, followed by light commercial vehicles which accounted for 37% of units sold, and rose 10,5% y/y.
Despite a rising interest rate environment, the demand for new vehicles was strong across passenger and commercial vehicles.
“Instalment credit uptake by households remained lacklustre as some local banks see car loans as high risk, and so we observed an increase in cash vehicle sales as car loan supply was artificially constrained.
“However, instalment credit uptake by corporates averaged a stellar 13,0% in 2022, the highest levels recorded since 2014. This is indicative of our conversations with local trucking companies which all remain keen to expand their fleet to satisfy client enquiries and orders,” the analysts say.
Supply chain issues are expected to continue normalising, especially with China having removed its zero-Covid policy earlier this year.
Certain brands, such as BMW among others, have never experienced supply chain issues since the pandemic outbreak in Namibia. Other brands should see an improvement in the supply of new vehicles from international factories to their local dealerships.
However, there are numerous constraints on car production globally.
The ongoing war in Ukraine is likely to limit semi-conductor production. Ukraine manufactured about half of the world’s neon supply – a key element for semi-conductors – before the war, the analysts say.
“Ukraine’s neon operations have completely stopped after the invasion. This could provide shortages for a while as we do not see an end to the war soon,” they say.
Taiwan is expecting demand for semi-conductors to ease due to expected recessions in advanced economies.
However, demand will remain strong in emerging markets, which could keep shortages in place.
According to Simonis, load-shedding in South Africa will also hamper car-manufacturing operations and will in turn limit vehicle sales for Namibia.
“Although, given the mixed view of supply chain easing, but constraints on global car production, it is difficult to say how vehicle sales would evolve in 2023,” Simonis says.
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