Total vehicle sales are down for the year in Namibia, and the decline reflects a slowdown in South Africa, which saw a 17 percent drop in new car sales in July, Motorburn reported.

In Namibia, the falling demand for vehicles is attributed to several factors including changes in credit policies, higher interest rates and inflation, reduced government spending and a weaker economic climate, according to Windhoek-based research firm IJG Securities, The Namibian reported.

Total vehicle sales are down 18 percent for the year in Namibia. New auto sales in South Africa fell 17 percent in July 2016.

Vehicle sales are trending down year-on-year, and this is likely to continue, IJG said.

South Africa’s 17 percent sales decline in July is the biggest since 2009 at the height of the global economic recession, according to the country’s National Association of Automobile Manufacturers, Motorburn reported.

“Despite the rand’s recent strength, what we’re experiencing now are the after effects of the currency’s weakness in months prior,” said Simphiwe Nghona, CEO of WesBank Motor Retail in a prepared statement.

Despite the overall decline, certain classes of vehicles have seen sales increase in Namibia. For example, passenger vehicles sales increased 1.6 percent. Extra heavy vehicle sales grew by 37.5 percent for vehicles used in the construction and mining industries. However, there were sales decreases in light, medium and heavy commercial vehicles, according to Simonis Storm Securities.

A carbon emission tax imposed in July 2016 may have contributed to the decline in new vehicle sales. The tax is applicable only to passenger vehicles, sport utility vehicles and lighter vehicles.

In Namibia, Toyota and Volkswagen dominate passenger car sales, with Toyota selling 31.7 percent and Volkswagen selling 24.2 percent, Ford with 15.4 percent, and Isuzu with 12 percent.

From 2014 to mid-2015, vehicle sales were robust, driven by a strong consumer base, expanding fiscal and monetary policy and wage growth, IJG said.

Namibia’s Credit Agreement Act was amended July 20, enforcing a mandatory 10 percent deposit on all passenger vehicles and reducing the maximum repayment period to 54 months. This will further drive down vehicle sales and growth, IJG said.

South African auto sales have been affected by distressed household budgets and low economic growth, Nghona said.

The percentage of South Africans living below the poverty line has actually decreased, according to the 2011 Poverty Trends in South Africa.

But new vehicles being financed are 14.6 percent more expensive than before, according to WesBank data.

“With the average new car being financed over 72 months, these fast-rising prices will have a notable effect on monthly budgets,” Nghona said. “Those consumers who eventually return to the new market will also find that they may have to downgrade their vehicles to remain within budget.”