By NEIL HARTNELL
Tribune Business Editor
BAHAMIAN auto dealers are adopting an "if you can't beat them, join them" approach after new vehicle sales declined by almost 25 per cent for the first two months in 2018.
Fred Albury, the Bahamas Motor Dealers Association's (BMDA) president, told Tribune Business that his dealership was increasingly focusing on used car sales and other initiatives in response to changed buying habits.
He added that the International Monetary Fund's (IMF) assessment that the Bahamian economy has "turned the corner" was not being experienced by the auto industry, where sales were down 24.11 per cent for January-February 2018 compared to the same period last year.
"By and large, whatever the IMF is saying is not reflected in our industry," Mr Albury said. "It's going to be a while yet. The new car industry has changed considerably. Consumer buying habits are focused on these used, and they've found pretty good value on those and have shifted to those.
"With the new car industry there's going to have to be changes happening to the way we do business to attract customers in. What we're doing now is five-year warranties on new vehicles, better financing deals with the banks, focusing a lot on leasing programmes and commercial vehicles. A lot of reputable business places don't want used vehicles; they want to buy new ones."
Rick Lowe, the BMDA's secretary, told Tribune Business that March was "slow" following the weak start to 2018. He expressed concern that taxation-related uncertainty, connected to the Government's response to the European Union's (EU) 'blacklisting', might further slow the economy and have negative consequences for auto dealers.
"There does not appear to be a correlation between the IMF prognosis that the economy has turned the corner and new car sales," Mr Lowe told Tribune Business. "With the discussion of new taxes surfacing this could have a further negative impact on our industry." He again called for the Government to reevaluate price controls on the industry.
Mr Albury, meanwhile, said his Auto Mall business had begun to increasingly focus on the used car market in a belief that a major consumer segment would prefer to buy from established companies rather than "Joe Blow dealer" at the roadside.
"If you can't beat them, join them," he told Tribune Business. "We've been bringing in used cars as well. People feel more comfortable buying vehicles from a reputable dealer than 'Joe Blow' dealer. They don't mind paying a few dollars more."
The BMDA chief then returned to his oft-repeated call for the authorities to crack down on the numerous roadside auto vendors, arguing that they were exploiting a skewed 'playing field' by not having to pay any of the Business Licence fees, VAT, real property taxes, NIB contributions and other levies incurred by established dealers with physical premises.
Mr Albury said the impact was not confined to new car dealers and the Public Treasury, telling Tribune Business that used car companies with a physical presence were also "hurting badly" as a result of the explosive growth in roadside vendors.
"They've even saying they might close their doors and get out of this because they can't compete with the guy selling on the side of the road," the BMDA chief added.
"I don't know how the Government is going to make it collecting $600-$700 on these cheap cars coming in, when they have to pave the roads, pay the police and pay for the ambulances to take people to hospital.
"People have to realise they have to pay taxes to get the services they want. It's the crackdown on roadside vendors that will give legitimate business houses an opportunity to do better. I'm not holding my breath. There's a lot of laws on the books but nobody has the balls to enforce them out there."
Bahamian new auto sales have dropped by almost two-thirds since they peaked in 2007, as recession-battered consumers switched to lower-priced used vehicles in an economic environment marked by uncertainty, reduced incomes and lower growth.
The early 2018 slump follows a disappointing 2017 second half, which included a 31.17 per cent third quarter sales decline that wiped out the 6.7 per cent increase enjoyed in the 2017 first half. It, in effect, continues a sales decline that has now lasted for more than a decade.
"March started out really slow following the end of February," Mr Albury told Tribune Business. "Then we had a bit of a pick up out there. What we're finding is that high-end product, BMWs, Lexus and high-end Toyotas are doing well. The market has also shifted a lot from sedans to SUVs."