Malawi Autos Report Q3 2015
BMI maintained a particularly bearish outlook for vehicle sales in Malawi in 2014. We expect to see somemodest growth in 2015 due to pent-up demand in the market, but we maintain that sales are likely to remainlow in volumes terms due to high inflation, the depreciating local currency, and high interest rates.
Food insecurity has caused the price of maize to climb, and resulted in long queues for the little that isavailable. An estimated 2mn people are in need of food aid within the country and, for the first time in sixyears, Malawi has had to import maize from neighbouring Zambia to meet its domestic requirements.
Public discontent is rising in Malawi, as inflation continues to soar, in large part due to the weak currency,as authorities have devalued the kwacha in preparation for the adoption of a floating exchange rate regime.
The government had tried to address the issue through tight monetary policy, but with little effect.
The principal market constraint for the passenger car segment is affordability. Indeed, much of the marketfor new vehicles caters to the wealthy elite and foreign nationals, and government contracts to a certainextent. As in many emerging markets, second-hand vehicles dominate the Malawian passenger car segment.
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