By NEIL HARTNELL
Tribune Business Editor
Auto dealers believe new car sales will remain 30-35 per cent below pre-Value Added Tax (VAT) comparatives until the 2016 second half, with one saying: “Consumers have gone into hiding.”
Fred Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business he saw market conditions changing little for the next nine months after the banks again “tightened up” on credit.
He said commercial vehicle sales, and fleet deals for the Government and businesses, had helped to “keep the doors open” at his own Auto Mall dealership amid the slump in passenger auto demand.
The BMDA president expressed hope that the auto market would emerge from one of the deepest slumps he has witnessed in late 2016, via an end to the Baha Mar “fiasco” and the injection of election campaign money into the economy.
“We’re still down about 30-35 per cent,” Mr Albury told Tribune Business of BMDA members’ total new car sales.
“There has been no change from the first half of the year, and the way things are looking I don’t anticipate it changing even though in some cases the prices have come down on small models.
“I don’t see anything changing in the last quarter of the year. I anticipate the same for October, November and December, and well into the first half of 2016. Consumers have just gone into hiding.”
Mr Albury’s comments imply that the auto market’s post-VAT recovery may take longer than originally anticipated, as he had previously expressed hope that a turnaround would occur in the 2016 first half.
The BMDA president had told Tribune Business earlier this year that some dealerships may be forced out of business should the current post-VAT sales pace be maintained.
And Mr Albury’s reference to the change in the bases used for calculating Excise Tax, which has sometimes “reduced” auto prices or ensured they remained neutral post-VAT, indicates this has done little to stimulate the industry.
“The banks have tightened up and rightfully so with the economy being the way it is,” the BMDA chief added, “ so getting money is not as easy as it used to be.
“You can see a lot of used cars are being sold. We anticipated this, and hopefully things will change as the economy picks up slowly, but for now it’s the same old, same old story since the beginning of the year.”
While Bahamian auto dealers are hoping the market has ‘bottomed out’ and will get no worse, Mr Albury said dealers had to “try to find your niche in the marketplace”.
Auto Mall, which encompasses the Executive Motors (Toyota) and Quality Auto (Hyundai) dealerships, plus BMW, has itself focused on Government, fleet and commercial vehicle sales to pick up the slack.
“Middle income earners have shut the door on spending, but BMW had very strong sales last month with 10 vehicles and a couple of others going out,” Mr Albury added. He attributed this to BMW’s relatively attractive pricing, which is benefiting from the US dollar’s strength against the euro (the manufacturer is German).
“We’ve got a waiting list on our buses for tour businesses and jitneys, and similar on the touring side,” the BMDA president said. “It’s the normal sedan vehicles that have slowed down considerably.
“Thank God we do have the commercial stuff that’s keeping the doors open so we can turn the corner on this situation.
“The rest of this year will continue to be the same, and the first half of next year is forecast to be the same. We’re being cautious and trying to keep expenses under control,” he added.
“When you’ve been in this business long enough, you see these cycles. It’s just that this one’s a pretty deep one.”
Mr Albury, though, said this was not the deepest Bahamian auto industry recession he has ever witnessed. He argued that the ‘liquidity crunch’ experienced in 1987 was worse.
He expressed hope, though, that a resolution to the $3.5 billion Baha Mar dispute would boost both consumer confidence and spending by the 2016 second half
“Hopefully by then the Baha Mar fiasco will be behind us and we will be getting into election mode, as money circulates at that time one way or another,” Mr Albury told Tribune Business.
“The Government will realise they have to do something to get the economy moving forward if they are to have a chance of being re-elected.”