HOUSEHOLDS are gradually reducing their loan accounts and appear not keen to buy new cars, an analysis by Simonis Storm shows.
"We are of the view that lower disposable incomes have contributed to lower consumer spending, which in turn has affected high- value goods and services, including motor-vehicles," read a statement by Simonis Storm.
The statement follows the release of the August 2019 Namibia car sales figures by the National Association of Automobile Manufacturers South Africa (Naamsa), which show a decline in the number of new cars sold.
The analysis shows that the demand for instalment credit by businesses and households has been on the decline since May 2017, when it dropped to negative and stayed below -0,5% from February 2018 to date.
This downward trend is accompanied by a fall in the sales of vehicles to below 1 500 units in 2017, while for 2018, the sales have ebbed to around 1 000 units, with a big fall to 666 units in January 2019.
Vehicle sales declined annually by 24,5%, while car dealers experienced a fall in sales of 10,6% from July to August as sales declined from 904 to 808.
This means for August, new car sales dropped by approximately 10% on average or more, depending on the car model. For August, only 808 units of vehicles were sold in Namibia, Naamsa stated.
All new vehicle categories recorded a decline in sales for the month, headed by extra heavy vehicles with a 55% (24 units) decline, followed by heavy commercial vehicles which only managed to sell eight units.
The report indicated that compared to the same time last year, new vehicle sales declined by 12,7% to date.
The assessment attributed the downward trend to the struggling macroeconomic environment, specifically lack of consumer spending, low borrowing appetite, depressed business conditions, and the sluggish economic environment.
The report indicates that stimuli will be required to revive the plummeting vehicles industry.
"We are of the view that the new vehicle sales industry will need a catalyst to uphold any upward cycle", it added.
Commenting on the August and year-to-date fall of vehicle sales from 8 081 to 7 035, IJG research analysts said this is the lowest year-to-date sales witnessed since 2009.
IJG explained that vehicle sales is a lagging economic indicator, and thus tells little about what to expect, going forward. However, it continues to paint a picture of the extent of the economic downturn.
"Presently, vehicle sales continue to point to low consumer and business confidence", IJG's analysis states.
They added that declining new vehicle sales, such as commercial vehicles sold year-to-date contracting by 14,0%, shows a slowdown in the demand for durable goods by businesses.