The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian auto dealers are hopeful that the industry has “bottomed out” after collective sales increased by 7.1 per cent in 2016, a figure that was inflated by ‘fleet deals’ with the Government.

Despite total member sales rising by 111 year-over-year, from 1,564 units in 2015 to 1,675 last year, the Bahamas Motor Dealers Association’s (BMDA) president and other dealers said they remained “cautious” on the sector’s near-term prospects.

With new auto sales still almost two-thirds below where they were at the 2007 peak, Fred Albury told Tribune Business: “I would say they’ve bottomed out; I wouldn’t say they were trending up.

“That little bit of an increase, the police probably purchased about 80-100 vehicles last year, new cars and jeeps. I would say things have bottomed out, and hopefully we will not see anything going below that, but we definitely need some incentives to get it going out there.”

New auto sales hit ‘a low’ in 2015 as the market adjusted to Value-Added Tax’s (VAT) implementation, and the BMDA said it expected ‘normal’ sales - those to individuals and private sector businesses - to remain flat in 2017.

“Sales to individuals and businesses remain depressed, and projections for 2017 are flat with limited possibilities for growth,” the Association said in a statement.

“New car sales tend to be a benchmark that a lot of modern economies use to measure the strength or weakness of an economy. Based on the present situation that the local new car industry is in, it dictates that some measure of assistance is required to jump start our economy.”

Referring to the 7.1 per cent increase in industry sales during 2017, the BMDA added: “Total new car volume in 2015 was 1,564 units, while 2016 increased by 111 vehicles for a grand total of 1,675 new units.

“The increase is primarily from fleet sales to the Bahamas Government over the last six months of 2016.”

Reflecting the BMDA mood, Fred Albury, the Auto Mall chief, said: “I’m trying to be very cautious at the moment. I need to see some positive things happen. In October we had the hurricane, but September was horrible.

“I’ve been pushing inventory out the door, new 2015 models, just to make some money. We’re just about done with them. We’re to get the 2017 models in.”

His stance was backed by Ben Albury, Bahamas Bus and Truck’s general manager, who told Tribune Business that industry sales would have been lower than 2015’s ‘rock bottom’ figure last year had it not been for the fleet sales to government.

“If it were not for that, the numbers would be below what they were the year before,” he said. “I’m pretty positive of that.

“That’s not something we expect to get next year [2017]. It was quite a few last year, and it’s not something you continually get.

“If we don’t turn a profit this year, it’s going to be very upsetting because I don’t see the fleet sales coming next year,” Ben Albury added, explaining that his company’s financial year-end was end-March.

“My first two quarters were horrible, horrible. The third quarter was strong, and this quarter has started off not looking promising.

“After March, if this thing doesn’t get any better by then, and this year-end report is not much better, we’ll have to see what happens. We’re keeping our toes and our fingers crossed.”

Ben Albury said there was little for the new auto industry to become excited about, saying: “There’s nothing I see in the short-term that’s going to create any increase in business at this point.

“It’s been flat for the last couple of years, and I don’t see anything on the horizon to change that. The economy is recovering sluggishly, and not recovering at the same pace as other economies, and until we get our act together things will remain the same.

“It seems like investor confidence is pretty low, and financing is still difficult. We can see the amount of people looking for jobs at places like Baha Mar, which is being bombarded with applications for employment. That speaks a lot to where we are as a country.”

The Bahamas Bus and Truck executive expressed scepticism over Baha Mar’s planned April 21 “soft opening”, questioning whether this date had been set for the Government’s election purposes, and if the property would close again afterwards to facilitate the construction completion.

“Getting the place up to par may require more work than they’re letting on,” Ben Albury suggested. “And people will have to be employed there for a year and a half before the banks are going to lend them money.”

Baha Mar’s recent history, involving the Chapter 11 bankruptcy filing, 2,000 lay-offs and receivership/provisional liquidation proceedings were likely to remain “a point of concern” for lending institutions, he suggested, until the project was shown to be sustainable.

Apart from the VAT and Business Licence fees that were “still killing us”, Ben Albury said Bahamas Bus and Truck was still owed “hundreds of thousands of dollars in duty refunds”, while Tax Compliance Certificates were “an enigma I can’t seem to get my hands on”.

“I don’t get the feeling that the Government’s in tune with what’s going on in the business community, and protecting this industry and helping us to move forward for the benefit of everyone,” Ben Albury told Tribune Business.

“The more people we employ, the more in taxes they will get. It’s mutually beneficial. The Government doesn’t seem to have a true understanding of what’s going on and how difficult they’ve made doing business in this country.”

He also questioned the Government’s own financial health and cash flow, saying: “The problem is that I don’t think most people know how broke the Government is...

“The challenge we have getting paid by them, and with TCCs, it casts doubt on the financial position they may be in. I don’t think we know the full situation.”

The BMDA’s statement also urged the Government to create a ‘level playing field’ for the industry by cracking down on the ‘road side vendors’ of imported vehicles, adding that this would also aid its tax revenues.

“The BMDA is concerned about the large influx of cheap used cars being imported by individuals and sold along the road side, whereby Government is being deprived of taxes that are imposed upon the legitimate car dealers such as Business License fees, property taxes, end VAT receipts and NIB contributions,” it said.

“All of these taxes are paid by legitimate local car dealers, but are evaded by individuals who import more than one unit for personal use.”

Fred Albury called on the Christie administration to copy other jurisdictions, where persons seeking to import ‘used’ autos needed to obtain a permit from the Ministry of Finance or other relevant government agency.

“If someone comes for a permit for more than one car a year, they’d be considered to be a business,” the BMDA chief said, resulting in them having to pay the same taxes his members do.”

He suggested that only dealers be allowed to import used vehicles, and added: “That will give the Government some control over the used cars flooding in. We just need to look at some of the other jurisdictions, and not reinvent the wheel.”