The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

New car dealers were yesterday said to be “catching hell”, with the industry’s third quarter sales likely down by 100 vehicles year-over-year following an especially slow summer.

Rick Lowe, the Bahamas Motor Dealers Association’s (BMDA) secretary, told Tribune Business that the industry would “be significantly short” of 2016’s full-year figures if trends for the three months to end-September persist.

He added that the 2017 third quarter performance would wipe out the modest first half improvement, which saw new auto sales rise year-over-year by 52 units or 6.7 per cent compared to 2016.

Fred Albury, the BMDA’s president, confirmed to this newspaper that the Association’s data showed many dealers were “having a rough time” over the summer.

He added that unless they had product catering to a specific niche, companies were “going to catch hell” in a market where sales have remained almost two-thirds below their 2007-2008 peak for nearly a decade.

“Things do slow down seasonally in the summer time, with people vacationing and getting ready for back-to-school,” Mr Albury said. “Our group [Auto Mall] has not seen too much of a slowdown out there, but some of the other companies are down considerably looking at the sales numbers we share, one in particular.

“It’s a bit rough out there. Unless you have a niche of particular product that people are after, you will have a rough time.” The BMDA president said his Auto Mall business had been assisted by its focus on providing buses for the public transportation sector, while other dealers had focused on meeting the demand for smaller, more efficient SUVs and cars.

“The market has shifted to smaller vehicles. Sedans have started to slow down considerably,” Mr Albury said. “Having that niche in the marketplace helps. If you don’t have a product in heavy demand with a price point that’s successful, you’re going to catch hell.”

Mr Lowe suggested that an active September for powerful hurricanes, coupled with ongoing concerns over the Bahamian economy’s health, had aided the especially poor third quarter performance.

“This quarter hasn’t been very good at all,” he told Tribune Business. “I think there’s been a lot of contributing factors, like people worried about hurricanes and the economy.”

Mr Lowe, who is also operations manager/a director for Nassau Motor Company (NMC), expressed concern that depressed sales for the three months to end-September 2017 would wipe out the first half gains.

“Overall, the year is on track to about equal with last year,” he explained. “But if the trend continues the way it was going for the last three to four months, we will be significantly short of last year overall.

“If we equal an average of July and August, we will be down by about 100 units [for the third quarter]. The first two quarters of the year we were up by 52 units. After this quarter, we might be down.”

The new car industry is significant because, as a ‘luxury good’, its products - and their sales volumes - provide a good insight into the overall Bahamian economy’s health and performance, especially consumer incomes and confidence.

The depressed economy, with high unemployment and reduced incomes, coupled with low consumer confidence, has been the main factor impacting new auto sales over the past decade.

Bahamian consumers have responded by keeping existing vehicles on the road longer, and have switched purchasing tastes towards less expensive ‘used’ cars.

Apart from these trends, other contributing factors working against new car dealers are a combination of buyer difficulties in obtaining bank loans; VAT’s introduction; already-high Excise tax rates; price controls; Business License fees; and real property tax increases.

All these forces have worked to push new auto prices beyond many Bahamians, and Mr Albury confirmed yesterday: “New car revenues are down considerably compared to 2008.

“We’ve been going through this for almost 10 years with no relief. It just keeps getting worse. In 2007-2008, the market moved around 5,000 units. Now, we’re lucky to be moving 1,500-1,600 combined.”

The BMDA president added that the market was being swamped by ‘used car’ imports, and reiterated his call for those selling vehicles by the road-side to be placed on a taxation and regulatory ‘level playing field’ with established dealers.

“The used cars are flooding in here like the rain that came down today,” Mr Albury said. “They’re just pouring in and nothing is being done about them. One only has to go down to the dock at Arawak Cay and look at the wrecked cars coming into the country, pouring over the borders.

“They need to look at the uncontrolled proliferation of used car agents selling on the side of the road and social media, as they are only contributing a few dollars to the economy and the Government is not getting its fair share of taxation.”

“I don’t know what it’s going to take; maybe 300,000 derelict vehicles at the side of the roads that will cost the Government to get rid of them. Maybe that will send out a message.”

Mr Albury said roadside/social media vendors avoid the taxes established dealers have to pay, and added: “We have to level the playing field as much as possible to make this sector of the economy work efficiently, and make sure it is contributing its fair share to the local economy.”

The BMDA president also suggested that the Government set “target dates” for the phasing out of regular, gasoline-fuelled combustion engines and the switch to hybrid/electric vehicles.

“I think they need to look at the industry, and what first world countries are doing, and put some target dates in for hybrid and electric cars, and think about phasing out regular combustion engines,” he told Tribune Business.

Mr Albury added that the Government had previously cut or eliminated import tariffs “to encourage the market to move in that direction”, but more needed to be done.

And while the annual Car Show is scheduled for the Mall at Marathon next month, the BMDA president was sceptical that it would produce a one-off sales boost.

“That might to help boost up the numbers,” Mr Albury added, “but based on the last couple of years there will not be a major impact. It keeps your name in the marketplace, and hopefully we will get a few sales out of it. We’re hoping for the best, but preparing for the worst.”