Windhoek
The seemingly exponential increase in the number of vehicles in the capital has left many a motorist frustrated at the lack of parking space, not to mention the snail’s pace at which rush-hour traffic moves.
While the City of Windhoek scrambles to implement its Transportation Master Plan, which should hopefully clear up some of the congestion on Windhoek’s roads, the number of vehicles continues to increase every year.
“Even with the current economic outlook, Namibia’s gross domestic product (GDP) growth has been robust over the last decade. Local businesses have therefore been confident in acquiring commercial vehicles,” said Purvance Heuer, the Director of Securities at Simonis Storm Securities.
Interest rates, which have been lower in the last decade compared to the previous decade, have also played a notable role in encouraging spending on vehicles. “Government has been a large spender on vehicles especially during the year of the election in which government significantly increased its purchase of vehicles. At the same time banks have been very creative in providing vehicle finance products that build in balloon payments which reduce the monthly payments and make them more ‘affordable’ for customers,” said Heuer
Meanwhile, drastically reduced prices for “imported” vehicles have opened up a whole new market for prospective car owners.
Cheap “imports” coming from neighbouring Botswana and from as far as the United Kingdom and Japan are flooding the local market and as a consequence add to the congestion on Windhoek’s roads.
Advanced economies such as the UK and Japan have introduced strict policies around writing off vehicles that have reached a certain age. “This has forced owners to export their cars to markets such as Namibia at significantly reduced prices. International low interest rates have also made it more attractive for vehicle owners, in say the UK or Europe, to buy new vehicles and sell their vehicles in the international second-hand markets, of which Namibia has been a beneficiary,” Heuer explained.
Experts also believe that in the current economic climate, consumers will find themselves either having to hold onto their cars for longer before replacing them with a new model, or taking their budget to the used market.
This focus on affordability highlights the pressure on consumer budgets at a time when the cost of motoring is on the rise.
The continued shift to the second-hand market is evident, particularly as the weaker Namibia Dollar has resulted in continued new car price inflation, which has caused consumers to shift to the used car market. Consequently, demand for financing at commercial banks for used cars continues to grow.
These supply-demand dynamics have seen used car prices increase and in May the average transaction value for a used car financed through WesBank grew by 7 percent.
Figures from the National Association of Automobile Manufacturers of South Africa (NAAMSA), which include Namibian sales figures, show that the new vehicle market continues to decline.
According to NAAMSA figures, total industry sales of new vehicles declined by more than 10.3 percent in May. Within this, respective drops of 12.9 percent and 5.3 percent were seen for passenger cars and light commercial vehicles.