Zambia's strong economic fundamentals, such as substantial investment inflows to the mining sector, improving productivity in the copper sector, expansionary fiscal policy and a rise in private consumption, will prove beneficial to the long-term outlook for auto sales. Despite downgrading our 2013 real GDP growth outlook last quarter, we maintain our overall optimistic outlook for new vehicle sales in the country.
The new car segment in Zambia, although still small, will be supported by growth in financing. This will enable new brands to access the market and widen the competitive landscape.
The growth of vehicle financing and leasing in Zambia means it is becoming possible for more new car brands, even from higher price points, to access the market. As Nissan Motor doubles down on its efforts to increase its presence in the country and Volkswagen (VW) arrives with a new showroom, the availability of various forms of financing will support growth in the nascent new car segment, forecast by BMI to average 16% over 2014-18.
Volkswagen, which will open a showroom through FCM Motors in Lusaka on August 1, cited the growth of financing as a factor in attracting the brand to Zambia. As a brand with a 'price premium on our products', according to FCM sales and marketing office Maxwell Mutanda, it is important for customers to have access to finance. As such, FCM has partnered with Stanbic Zambia and First National Bank to offer various financing plans.
We retain our view that the Zambian economy will expand by 6.9% in 2014 up from an estimated 6.3% in 2013, thanks to strong private consumption, robust investment and resilient exports. We are currently forecasting the new vehicle sales market in 2018 to reach over 6,800 units, more than twice the size in 2012, when BMI estimates that only 2,639 new vehicles were sold.
The autos segment will also draw some strength from increased government and business purchases, which we believe will continue to account for the lion's...