Rising costs will drag car sales down in Namibia… as July vehicle sales fall 22.4% month-on-month

Rising global prices for automotive components and power generation, coupled with a weak exchange rate of the rand, will likely lead to continued increases in vehicle prices in Namibia.

This, in turn, will make it more expensive for Namibians to buy and use cars.

This depressed situation was highlighted by stock brokerage firm Simonis Storm, which expects demand for new vehicles to begin to decline, especially as interest rates are still on a trajectory. ascending.

The latest Namibian sales figures from the National Association of Automobile Manufacturers of South Africa (NAAMSA) show new vehicle sales fell 22.4% month-on-month (m/m) in July 2022 to 677 units, compared to 872 units sold in the previous month.

On a yearly basis, vehicle sales in Namibia fell 15.3% year-on-year (y/y) in July 2022, falling below its six-month moving average.

NAAMSA further reported that passenger vehicles and light-duty vehicles had the largest share of units sold in July 2022 with a 56.4% and 39.3% share of all units sold, respectively.

On a month-to-month basis, extra heavy-duty and heavy-duty commercial vehicles saw the largest declines in sales.

Overall, vehicle sales in 2022 exceeded 2021 levels through June 2022.

The July data point is the third monthly and annual decline in vehicle sales, and the first time the number of units sold has fallen below levels seen in 2021.

Inflation rates for spare parts and accessories are accelerating, while prices charged for vehicle services and repairs remain low.

Automobile inflation rates have slowed to single digits in 2022, averaging 4.2% year-to-date from 8.8% in 2021.

In previous reports, Simonis Storm Securities (SSS) warned that local car prices are expected to increase by 3-5% per quarter, following talks with various brands in Windhoek.

The figures also confirm that Toyota and Volkswagen remained dominant brands in the local auto market, while seven brands accounted for 71% of total vehicle sales in July 2022.

A report on car sales from SSS noted that European automakers recorded the lowest number of new vehicle sales in June 2022 since 1996.

According to data released by the Association of European Automobile Manufacturers, vehicle sales were down 17% year-on-year in June 2022, with Volkswagen suffering the biggest drop of 24% year-on-year.

While manufacturers such as BMW AG, Volkswagen and Mercedes AG reported in May 2022 that semiconductor shortages have eased, it will still take time for increased production and supply to reach global dealerships with inventory. .

SSS further mentioned that geopolitics could lead to higher car prices as some brands relocate their value chains.

Following the conflict in Ukraine, Renault sold its 68% stake in AvtoVaz (a state-backed entity in Russia) for one Russian rouble.

Jeep announced in July 2022 that it would close its factory in China, according to Bloomberg Intelligence.

SSS further warned that a potential war between Taiwan and China could lead to a drop in global semiconductor supply.

“Globally, automakers continue to face high raw material and energy costs, which are driving up vehicle prices. Car prices have also risen around the world as automakers focus their limited production on their most expensive and profitable models. Additionally, energy shortages and potential energy rationing in Germany are raising concerns about plant closures, exacerbating inventory shortages globally,” reads the sales report. SSS vehicles for July 2022.

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2022-08-16 Edgard Brandt