Toyota remains the leader in the Namibian market, selling the most cars again and taking up 51% of the market space in August 2023, 1 percentage point higher than the previous month.
According to a report released by Simonis Storm, Toyota is closely followed by Ford (7%), Volkswagen (6%), Kia (5%) and Scania (4%).
“The increased market share of Ford is primarily due to the high demand for the Ford Raptor (64 were sold in August 2023). In the past, Volkswagen used to follow second but previous engagements exposed that their sales have been relatively flat due to higher prices,” said the firm in the report.
Despite this however, demand for vehicles in Namibia has decreased by 13.2% m/m in August 2023, from 1,260 units in July to 1,094 units in August.
On an annual basis, vehicle sales improved by a meagre 4.0% y/y in August, much lower than the consistent double digit growth figures witnessed in August 2022. YTD, annual vehicle sales grew by an average of 29.5%.
“The resilience of local demand for vehicles set a remarkable YTD average of 1,099 vehicles sold per month in 2023, the highest it has been since 2018. This is largely due to demand from individuals purchasing through dealerships – accounting for 92% of sales YTD, but also due to increasing demand from rental companies taking up the remaining 8% of sales YTD. Dealerships purchased 1,092 vehicles (up 14.1% y/y), while rental companies purchased 2 vehicles in August,” said Simonis Storm.
As per the Namibia Statistics Agency (NSA) data, vehicle inflation exhibited a year-on-year increase of 7.6% in August 2023. Nevertheless, analysis of suggested retail prices provided by the National Association of Automobile Manufacturers of South Africa (NAAMSA) reveals that passenger vehicles have experienced a more pronounced inflationary trend, with an average 10.9% y/y increase. This surge is primarily propelled by passenger vehicles (up 13.1% y/y), light-commercial vehicles (up 13.6% y/y), medium commercial vehicles (up 25.6% y/y), and extra-heavy commercial vehicles (up 16.0% y/y), while the average price of heavy commercial vehicles witnessed a decline of 13.5% y/y in August 2023.
“Simultaneously, the spare parts industry has encountered an upswing in sales during August 2023, as evidenced by the modest uptick in annual prices. This signifies a preference among vehicle owners for the repair of their existing vehicles as opposed to acquiring new ones. However, for those who do opt for new vehicle acquisitions, the consumers are purchasing vehicles cash. Notably, our calculations together with informed insights from local dealers, indicate that 59% of vehicle purchases in August 2023 were conducted through cash transactions, while the remaining 41% were financed,” the firm said adding that this shift in consumer behaviour can be attributed to the elevated repo rate of 7.75% and prime rate of 11.5%, which have acted as deterrents, discouraging consumers from seeking vehicle loans due to the associated burden of higher interest rate payments.
Nominal vehicle financing has dropped significantly in FY2017 (down 29.2% y/y) and has increased by 23.3% in FY2022 since FY2017. When adjusting for inflation, the real growth of financed vehicle assets has remained relatively stagnant, averaging at -2.5% y/y in FY2022 across all banking institutions.
“Currently, the new vehicle market is experiencing a resurgence, driven by improvements in the supply chain landscape. Although certain high-end brand categories continue to encounter supply chain challenges, they represent a minority within the overall sample. Dealers have reported that new vehicle sales constitute a significant 80% of total sales, with the remainder comprising pre-owned vehicle sales.
Engagements with industry stakeholders have revealed that the pre-owned vehicle market is now decelerating, following its previous boom during the period of high supply chain disruptions in 2022. Dealers capitalized on this situation by increasing their profit margins on pre-owned vehicles to record highs, effectively compelling consumers to make purchases at retail prices rather than trade-in values. Consequently, demand for pre-owned vehicles has experienced a notable decline, prompting dealers to adjust their profit margins downward in response. Moreover, there has been a marked shift in consumer behaviour within the market. Consumers are now displaying a heightened inclination towards acquiring new vehicles that offer equivalent luxury and enhanced ancillary benefits, such as warranties and service plans, exemplified by brands like Haval and Chery, all while incurring lower costs compared to what they would typically spend on high-end automobiles,” explained Simonis Storm.