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Pre-Inspection Offer Sparks Used Auto Price Hike Fears

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A JAPANESE firm's offer to conduct pre-export inspections on used vehicles destined for the Bahamas would likely result in increased consumer prices if accepted.

A copy of the proposal by EAA Company Ltd, which has been seen by Tribune Business, suggests that the inspections would be "self-funding" and paid for by vehicle exporters - not the Bahamian government.

"The exporter of the vehicle is charged directly by EAA for the costs of the inspection," the proposal says. "This method means the Bahamas Government is not required to divert any financial resources in support of the programme."

But placing the financial burden on used car exporters will almost inevitably be passed on to Bahamian purchasers, resulting in increased costs and auto prices in that segment - although it is unclear how much any increase will be.

Proponents of pre-export inspections for used vehicles imported to the Bahamas will argue that they are worth it, and necessary, to protect the welfare of Bahamian consumers and the environment, as well as the interests of local dealers and other stakeholders - including the Public Treasury.

They say that, at present, the Bahamas has nothing to certify the roadworthiness of used vehicle imports, creating potential health and safety problems for consumers, and a potential environmental hazard from the wrecks dumped on New Providence roadside. Buyers in such instances do not receive 'value for money', and the 'saturated' market created by the influx of used auto imports also depresses sales/prices and government revenue. However, many Bahamians have interpreted the joint public-private sector trip to Japan this weekend, which will assess EAA's facilities and offer, as akin to a 'conspiracy' between the Government, new auto dealers and banks to price vehicles out of reach of 'ordinary' Bahamians.

This has erupted into a lively debate on The Tribune's website in response to this newspaper's revelation of the Japan trip. One reader, 'happyfly', said: "Japanese imports are popular because there has been a long history of credible imports from that market place, which is more than anyone can say about the local vehicle market place.

"[This] is just another example of these small communist-minded cartel members trying to prop up their monopolies without addressing the reason why people think it's a better deal to buy a car from a stranger in Japan and ship it half way around the world rather than from a dealer down the street from them."

Another, called 'DreamerX', said simply: "They are doing this because the Japanese imports direct by consumers is hurting the big local car dealers." And 'avidreader' added: "If they can cut off this line of supply, or at the very least make it more difficult to import used vehicles from Japan, they will be able to say 'mission accomplished'."

These views received push back from, among others, Rick Lowe, the Bahamas Motor Dealers Association's (BMDA) secretary, who posted: "As a member of the Bahamas Motor Dealers Association I am not aware of any relationship with Government that works to our advantage. They are, in my view, a detriment. In fact, as a business we are very highly taxed and regulated.

"My personal position is if people want to buy Japanese vehicles online it is their money. I certainly oppose people operating a used car business [for resale] without being subject to the same laws, taxes and regulations the BMDA members face. Just as a matter of information, on a new vehicle that lists at $46,982, the Government receives approximately $17,488.75 in taxes ($13,797.20 duty; $3,104.65 VAT; and $586.90 Business License Tax). Maybe this is why the Government would want people to buy new cars."

He later clarified: "I absolutely agree that not everyone can afford a new car, and I have no issue with individuals spending their money how they wish. My issue is with unlicensed used car businesses selling by the road side. Can we display our cars on the side of the highway with a cell to call to purchase?"

Dr Renae Ferguson-Bufford, the Bahamas Bureau of Standards and Quality's (BBSQ) director, and who is leading the delegation, said it would report to Cabinet on its return whether the Government should take up the EAA Company Ltd offer.

"We are going to EAA Company Ltd in Japan to observe the inspection sites, and then hopefully report to Cabinet our findings; yeah or nay, etc," she said.

"We trust that this will be a positive step on the way forward in terms of quality inspection services of import vehicles for the Bahamas and, by way of extension, also for the CARICOM countries."

Describing its offer as a 'public-private partnership' with the Bahamas, EAA Company's proposal said: "The used motor vehicle pathway from Japan to the Bahamas provides the required vehicles in an achievable price range.

"These imports, however, represent a risk in terms of road safety, environmental concerns and difficulties in reuse and recycling. The associated economic effects of all these combined are substantial."

EAA Company said it already provided pre-inspection services to similar countries, and could provide such services in all countries that export vehicles to the Bahamas - even outside Japan - if the Government wanted.

It said its inspections ensure "that the vehicles imported are safe, and of good quality" and "that they are a worthy investment rather than a liability, and not the instrument of fraud for unsuspecting buyers".

Arguing that its inspections "stop the problem at source", EAA Company added: "This is operated in a private-public partnership, where EAA supplies the facilities and staffing in Japan, working under the Bahamas government mandate enforcing the inspection process.

"Importantly, this is a self-funding programme, where the exporters pay for the service. EAA are also interested in investing back into the Bahamas, with the development of local training/inspection programmes."

Dr Ferguson-Bufford said Jamaica's experience suggested that inspecting vehicles 'upon arrival' in a country was not the best method, given that they came in "sight unseen".

She added that Jamaica had encountered "problems with model year verification", with vehicles described as several years younger than they actually are. The "rollback" of mileage odometers was another common problem, and pre-inspections are also seen as vital in uncovering "radioactive and microbial contamination, and a history of damage/repairs".

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