The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian auto dealers were yesterday said to be "unsettled" despite a 7.59 per cent year-over-year sales increase for the 2017 first half, with one saying: "I don't think anybody's on the gravy train."

Rick Lowe, the Bahamas Motor Dealers Association's (BMDA) secretary, told Tribune Business that the increase masked uncertainty caused by sales trends that were difficult to predict.

He added that unpredictable sales created inventory difficulties for an industry on seven-month ordering cycles, and said a deeper look at historical trends suggested the 2017 figures were no indication of recovery.

BMDA data released yesterday showed that new auto sales were up 33.55 per cent for the 2017 first quarter, having risen from 316 units in 2016 to 422 this year.

But Mr Lowe, who is also director/operations manager at Nassau Motor Company (NMC), and the BMDA suggested that much of the first quarter increase was due to fleet sales to the Government and car rental companies.

He added that the 11.69 per cent year-over-year decline in second quarter sales, which fell from 462 to 408, was likely due to the Car Show's postponement. This cost BMDA members, and new auto dealers generally, their typical annual spike in sales.

"While general elections tend to slow the economy, the dip from April through June is quite dramatic, causing some uneasiness among the BMDA membership," the BMDA statement said.

Fred Albury, the BMDA's president, added: "It's difficult to project orders seven months out when sales are so erratic."

This sentiment was echoed by Mr Lowe, who told Tribune Business that orders were based on sales trends. He added that these were difficult to predict based on the industry's year-to-date results, creating the danger that dealers could order too much or too little inventory with no time to adjust, based on the industry's seven-month ordering cycle.

"There's no sort of trend that you can detect," he told this newspaper. "I think the trends are a little unsettling.

"I think that if you strip away these fleet sales, we would be down in both quarters. If fleet sales were taken out, we would be down considerably."

Mr Lowe said a look at historical sales comparisons suggested that Bahamian new car sales have yet to recover almost a decade on from the 2008-2009 worldwide recession.

In particular, 2017 second quarter sales were the lowest for four years. The 408 new vehicles sold in 2017 were exceeded by 462 sales in 2016, 500-plus in 2015 and the 677 units moved in 2014.

Asked whether the 2017 first quarter and first half sales data indicated new care sales were on the road to recovery, Mr Lowe replied: "I personally don't think so. I think the trend is the other way. It's not a positive trend when you go back a few years.

"In terms of recovery, we've got to see a rebound in the economy. I think that generally speaking the industry is in very, very tough straits. I don't think anybody is on the gravy train these days. It's indicative of the economy, generally speaking."

Mr Lowe added that fleet sales were not hugely profitable for Bahamian auto dealers, as gross margins were typically somewhere between 5-10 per cent on each unit.

Bahamian auto sales are a 'bellwether' for the economy's health, given that they are an expensive, luxury good that is sensitive to fluctuations in disposable income, consumer confidence and economic downturns.

Mr Lowe said sales figures "raise a serious question as to the impact on government revenue", pointing out that there is "a huge difference" between 65 per cent Excise Tax on a used car and the same levy on $15,000-$18,000 on a new car.

Mr Albury, meanwhile, reiterated his complaint that the continued influx of older used cars was depressing new car sales.

He added that vehicles were "being sold by roadside vendors who are not compliant with licensing and other tax requirements that legitimate retailers have to pay", impacting both the environment and government revenue.

"Hopefully now that the elections have been settled the country will see an economic rebound to help rebuild lost market share with a more definitive growth pattern," the BMDA statement said.