September has seen a rise in vehicle sales even as the contraction reached 7.1% year after year even though the same period last year, the contraction was at 23.9%. The contraction is as a result of the current recession.
The sale of vehicles increased to 9,410 units which is a 27% contraction compared to the sales of 13,058 vehicles which were sold at the same time last year. Even as the year to date sales went down, the month to month sales increased by 6.3% to 1,163 up from 1,094 units sold last month.
The sale of medium commercial and passenger vehicles went up and they could be the reason for the rise in total sales. The sale of passenger vehicles increased by 10, 8%, while that of medium commercial vehicles went up by 111, 7%. Simonis Storm said that an increase in the sale of the commercial vehicle acts as a sign that the economy is growing.
Since 2015, the sale of the vehicle on an annual basis has been on the decline. Simonis said that the contraction on installment credit lending by the commercial bank has an adverse negative effect on the motor industry. The motor vehicle industry is already struggling and the lack or delayed finances will make the situation even worse.
Analysts who have been keen on the motor vehicle industry have also noticed that the vehicle contraction has been worsening since 2016. They have attributed the decline to the current amendments to the Credit Agreement Act, increased interest rates and decreased government spending in general and on vehicles.
In 2014 and 2015, a high baseline was created as a result of fast growth in the private sector especially on credit extension and heavy government spending which lead to a growth in the economy.
Since 2007, credit to the private sector has been on the rise at a rate of 6, 4% but in July 2017, there has a decrease in the growth that has been previously experienced. Ebson Uanguta, the Deputy Governor of the central bank of Namibia announced in August that they were to reduce the repo rate to 6, 75% which is a 25 basis point.
Simonis showed appreciation for the cut in interest rate to 6, 75% but he said that there needed to be more cut to relieve the pressure on private sector credit extension. He said that the prolonged contraction already has a negative effect on the vehicle industry and if it continued, there would be more adverse effects.
