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'Nobody On Gravy Train' Despite 7.59% Auto Sales Growth

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.

Comments

DaGoobs 5 months ago

The last new car I bought more than 10 years cost me around $20,000 at the time. You can't get a new car for $20,000 from any of these new car dealers and the Nigerians who have taken over the used car lots want too much for a used car even up to 10 years old. The only way you can get a reasonably priced car is to import it yourself from Japan and these guys want to close that off and force you to buy their over priced used cars. Who is looking out for the small man in this country when it comes to buying small or reasonably priced cars? The government needs to decide if it is going to rely on custom duties or VAT (whether at 7.5% or 15%) as its main form of taxation supplemented by other taxes or whether it wants to get serious about income tax? Bahamians are seriously underpaid in this country as against the cost of living here, whether it's unskilled labour, skilled labour or professionals. We don't mind bringing in expat workers and then paying them grandiose salaries, moving costs coming and going, work permit and residency fees, school fees, rent or living costs, annual bonus, cost of new car or rental car, gasoline allowance, medical insurance, to name a few. What does the Bahamian worker get? Salary, maybe a pension, maybe medical insurance, maybe an annual increase or bonus, maybe a company car, maybe a gasoline allowance and that's pretty much it. Some of these expats live off the extra benefits and bank or repatriate their full salary. The Bahamian? Usually living pay check to pay check trying to stay ahead of the bill collectors and barely able to save anything. Thank God for a bank loan to cover the high end new car cost but don't lose the job or the car is gone.

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John 5 months ago

Is this man ever satisfied? He admits realizing a 7.5% sales growth in a depressed and declining economy and is still groaning and moaning. Other businesses have shut down. Many are on the verge of closing. Drive through some of the inner areas of New Providence and witnesses the number of people struggling to get something to eat. Their lights are off and they tote water from the government pump. Cars are a luxury to many. New cars are affordable by only a few. But in their favor many of the car companies have started importing the small Japanese cars that sell for around $5,000.00. Is that what is driving your car sales by 7.5%

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killemwitdakno 5 months ago

Target new drivers with affordable cars. Help persons who never had a new car to sell their old one towards getting a new one. Offer selling their old one for them.

If the lots could bring in cars duty free , then individuals might opt to buy locally as opposed to paying duty individually to import. If you get such a deal, profit margin on each should drop in exchange for increase in units sold.

Utilize the electric car incentive. Pre-ordereoectric cars. Pair with local custom retailers.

Promote the benefit of saving yourself the headache of importing and having someone to blame for issues.

Aim to raise the standard of living whilst bringing down the cost of living..

If everyone wants Japanese cars, then you're in the wrong business. Have an upgrade club where you can ride a different car every two years. Integrate the Japanese car dealers as part of the program.

Educate on bank car loans available.

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birdiestrachan 5 months ago

Those Japanese cars are looking better and better every day, one just has to get use to driving a right hand drive car. Never mind Rick Lowe he is rich enough. nothing devalues faster than a new car.

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