Total vehicles sales in the country will this year decline by 13,9% on the back of the ongoing liquidity crisis and weak economic growth, a Fitch Group research company has revealed.
Sales for new vehicles were down 7% in 2016 to 3 393 units attributed to an increase in imported second-hand vehicles.
BMI Research in its Zimbabwe auto sectors report said 2017 is going to be another difficult year for the Zimbabwean automotive sector.
“We expect 2017 to be another difficult year for the Zimbabwean autos sector as the country’s ongoing liquidity crisis and weak economic growth outlook results in a fall of 13,9% in total vehicle sales,” BMI said in its report.
The country is currently having challenges with depleted nostro accounts which have resulted in difficulties having business deals outside the country.
According to the research, total vehicle sales are estimated to reach 24 000 units in 2017 and go further down to 20 000 in 2021 as the economy continues on a downward trend.
According to BMI, this ongoing US dollar shortage will continue to restrict the ability of households and businesses to source cash to pay for imported vehicles.
In seven months to August 2017, vehicle sales fell 10,4 %.
The Fitch company said the fall in private consumption growth will lead to a decline in household spending on both new and used cars. However an improvement in construction will slightly increase commercial vehicle sales.
“An uptick in construction sector activity will provide some relief to the commercial vehicle segment,” BMI said.
Overally weak domestic demand put downward pressure on vehicle sales growth. Muted growth in the infrastructure sector and an uncertain mining environment have been constraining commercial vehicle sales growth.
The state of the business environment and outlook, as well as the poor business environment is also expected to choke domestic vehicle production.
Last year, the Zimbabwe Revenue Authority said 6 000 vehicles were imported into the country in the first quarter of 2015.