The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian auto dealer yesterday told Tribune Business he was facing a ‘double whammy’, with a 15-20 per cent drop in year-over-year used car sales meaning they were unable to compensate for new model woes.

Ben Albury, general manager at Bahamas Bus and Truck, said that used (second hand) autos had traditionally compensated dealers when new car sales dropped, due to lower prices making them more affordable to Bahamian consumers.

Yet, currently, both new and used car sales at Bahamas Bus and Truck were down significantly compared to 2011 levels.

“Things have still been poor, New and used car sales are down overall,” Mr Albury told Tribune Business. “They don’t seem to be increasing, but I’m hoping we’ll see some turnaround in the near future.

“People just aren’t able to qualify for financing, and floor traffic seems to have slowed down some. Typically, when new car sales go down used car sales increase, but we haven’t seen that either.”

Mr Albury suggested the failure of used car sales to pick up might be due to increased competition within the sector, with New Providence seemingly saturated by used car dealerships and lots appearing on almost every street and corner.

Arguing that the Government was not properly regulating the used car market, allowing persons to use it as a ‘side job’, with Customs also losing out on revenues, Mr Albury told Tribune Business: “I’d say we’re probably down 50 per cent over last year in new car sales. Used car sales are down 20-25 per cent due to an absence of buyers and lack of financing.”

He explained that Bahamas Bus and Truck’s new vehicle fleet had been hit hard by the 2010-2011 Budget’s increased tax rates/altered structure for the auto industry.

Given that SUVs and trucks were its staple, Bahamas Bus and Truck had suffered heavily from all its inventory being pushed up into the higher duty brackets, making them more expensive - and less competitive - with other models.

Tribune Business understands that collective Bahamas Motor Dealer Association (BMDA) industry sales are ahead of 2011 for both the first nine months and 2012 third quarter.

However, yet again these figures are being distorted by the Korean brands, Kia and Hyundai, which are benefiting from a favourable US dollar exchange rate and lower prices. Their relative inexpensiveness has made them a big hit with price-conscious Bahamian consumers, and together the two brands account for more than 50 per cent of the new car market.

“Two brands control 55 per cent of the market,” Mr Albury told Tribune Business. “There are a dozen brands in the market, and it doesn’t leave much for the other 10 to fight over in a market that is actually shrinking.

“A few years ago that might have been sustainable, but you have two brands taking over a much smaller market.”

He added: “We’re doing everything we can. We’ve launched a marketing campaign, done everything we can to reduce prices, restructure the business in terms of management and employees. We’re turning every knob we can to figure out how to do business.”

Mr Albury said it was to the Government’s “advantage” to look at reforming the auto industry duty structure, as lower inventories meant less imports that translated into less revenue.

Estimating that new car sales could rise 50 per cent if something akin to the old structure and rates were implemented, the Bahamas Bus and Truck executive said someone who knew the industry and government revenues “could hit the sweet spot that works to everyone’s interests”.

“It’s not a good thing to be in the auto industry. I wish I was selling something else,” Mr Albury said. “Unless you’re selling liquor or numbers, it seems like you’re in a tough position.”

Bahamas Bus and Truck had reduced new car prices 15-20 per cent on some models, and 10 per cent on used cars.

Mr Albury said used car sales relied on volume to generate profits because the margins were lower, and the price cuts in this segment had made them dangerously thin. His main hope was to eventually convert used car customers to new ones.

Patrick Knowles, Tyreflex’s managing director, backed Mr Albury’s position, confirming to Tribune Business yesterday that the dealer’s new car sales were also down year-over-year for 2012.

Suggesting that this newspaper speak to the Kia and Hyundai dealers instead, he said: “The market is so crazy. It is so far out of whack as far as new car sales are concerned.

“I know my side is down from last year. From what I see with the numbers movement, there’s still a decline and the only positive factor is the Korean cars.”