2012-10-22 02:13:51 - Botswana Autos Report Q4 2012 - a new market research report on companiesandmarkets.com

Constrained economic growth prospects temper our vehicle sales forecasts in Botswana this quarter. Botswana registered a 3.2% year-on-year (y-o-y) increase in GDP in Q112 on the back of better performance in the mining sector, according to figures released by the Central Statistics Office. However, economists surveyed by Reuters have lowered their annual economic growth forecast to 4.1% from 5.2% and 5.1% from 5.4% in 2012 and 2013 respectively, while the IMF projects 3.3% growth in 2012 and 4.6% in 2013.

We maintain our view that the impact of protracted global economic uncertainty on Botswana´s exportorientated economy will weigh on growth in 2012 and 2013. We believe domestic pressures will see aggregate demand constrained through 2012 and 2013. High unemployment and heavy

 

 

public sector wage cuts will see disposable incomes squeezed.

We are forecasting that real GDP expansion will come in at a relatively constrained 4.2% and 5.4% respectively. Meanwhile, the government´s strong commitment to fiscal consolidation, notably through public sector wage cuts, offers little in the way of encouragement for the consumer over the short-tomedium term.

Like many other African countries, Botswana´s domestic new vehicle market makes up just a small percentage of the country´s total car fleet, as used cars dominate the landscape. Although the used car segment is still popular in many African markets, sales of new passenger cars in Botswana grew by over 20-30% in 2007, 2008 and 2010, although they did dip in 2009 owing to the effects of the global financial crisis. BMI estimates that growth in 2011 came in at 10.6% and believes that the level seen in previous years may be difficult to achieve again, with average annual growth of just 8.1% forecast between 2012 and 2016.

We expect commercial vehicles to outperform the car segment, owing to growth in key industrial sectors such as mining and construction. As the government looks to diversify the economy away from a dependence on diamond exports (accounting for 70% of total exports, according to the latest trade statistics), we would expect further growth in these other industries to generate further demand for commercial vehicles. We forecast growth in the total commercial vehicle segment of more than 20% in 2012 and 2013 as companies looking to move into these sectors invest in fleets, slowing to a more sustainable average of 15.3% for 2013-2016.

One development that should support increased vehicle ownership in general, however, is a road improvement project. In August 2011, the OPEC Fund for International Development agreed to loan the government of Botswana US$40mn to help fund a project to improve 827km of roads in rural and semiurban areas. The World Bank will contribute a further US$186mn towards the total US$385.12mn budget, with Botswana´s government providing the remaining amount.

Another piece of encouraging news is that the chief executive of Kalahari Energy has declared that Botswana has the potential to become a major energy corridor, reports Engineering News. CEO Steve Martin has said that Botswana´s government needs to increase its support for the state-owned Botswana Power Corporation in order to facilitate the country´s transition to a significant regional energy trader.

Our Infrastructure team has upgraded its medium-term outlook for Botswana´s construction industry growth, based on the exceptionally strong growth seen in 2011. Real growth of 17.5% is forecast for 2012, driven primarily by ongoing investment into the electricity sector, with annual average growth between 2012 and 2016 forecast to come in at 10.8%.

South African state-owned rail operator Transnet Freight Rail, meanwhile, will undertake a feasibility study for a proposed railway link between Botswana and South Africa, reports Engineering News.

With no domestic mass production, the new vehicle market is largely composed of imports and, based on the most recent available statistics, Japanese brands are the most popular. The Transport Communications Unit released a report in July 2011 showing that Toyota Motor accounted for 40% of imported new vehicles in 2009, followed by Nissan Motor in second, Germany´s Volkswagen in third and Mazda Motor in fourth.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

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