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Roadside Auto Dealers 'Must Pay Fair Share'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

NEW auto dealers yesterday said they were not opposed to Japanese used vehicle imports, and only wanted roadside dealers to "pay their fair share".

Rick Lowe, the Bahamas Motor Dealers Association's (BMDA) secretary, told Tribune Business that the sector's main concern remains the multiple roadside dealers who "act outside the law" through tax non-compliance.

"They have no Business Licence, so pay no Business Licence tax," he said. "They have no VAT registration, so make no VAT payments. They have no property, so pay no real property tax, and are using public land to run a business. If nothing else, they should be closed down until these issues are resolved." Mr Lowe said the BMDA and its members were only calling for 'a level playing field' for all auto dealers, a point echoed by the Association's president, Fred Albury.

Emphasising that he was not opposed to Bahamians importing used vehicles for their own use, or buying them from legitimate new or second-hand car dealers, he said: "The biggest concern is the unlicensed dealers bringing vehicles in and selling them on the side of the road and through social media.

"We're not against consumers bringing vehicles in for their own use, but if the Government wants to collect taxes from us they have to do something about these guys [unlicensed roadside dealers] and make them comply.

"If you want to be in the business, pay your fair share of taxes like everyone else."

Both men denied charges by members of the Bahamas Automobile Safety and Inspection Centre group that new car dealers were becoming "irrelevant" through failing to change their business model and adapt to reduced consumer incomes and changing tastes.

Mr Lowe pointed to the 60-65 per cent Excise Tax rate imposed on vehicle imports as the major culprit for pricing new autos beyond the reach of many Bahamians, together with the depressed economic environment experienced since the 2008-2009 recession.

"I'm not sure we're becoming irrelevant," he told Tribune Business," but we're being taxed out of existence. Take, for example, a $48,000 car where $18,000 of that price is tax.

"A $30,000 car would be a more reasonable number, but the Government seemingly thinks they cannot give up their revenue by lowering the tax rates. We feel strongly that government revenue from new car imports has dropped, and it will continue to drop unless there's a drastic turnaround in the economy.

"I can't see new cars becoming irrelevant," Mr Lowe continued. "We sell over 1,500 annually, but can that sustain the number of dealership franchises that exist? If it remains at current levels there's likely to be fall-out. But then how will the Government get its revenue?"

The BMDA secretary said the Government had yet to break-out how much revenue it earned on specific vehicle imports, but suggested its auto industry revenues might increase if it lowered rates/margins and sought to spur increased sales volumes.

"I think that's the case," Mr Lowe said. "Anybody could build the case that to lower taxes, more cars will be sold and more revenue will be collected.

"But they [the Government] don't seem willing to take the risk. Rather than that, it seems to be death by 1,000 cuts for them and our industry. It's a tough position, but our members provide sound jobs with benefits that may not exist. That's the reality."

Mr Albury, meanwhile, said his Auto Mall business and other new car dealers were already "reducing expenses as much as we can" and examining "where the market is headed" ahead of major global changes anticipated in the industry.

"It's a changing environment," he added, "and over the next five years it's going to change more as it's going to move away from combustion engines to electric plug-ins and hybrids. The whole auto industry is changing rapidly out there."

The BMDA president said the Bahamas needed to keep up with such changes to ensure "it doesn't become a bigger dumping ground than it is now" on vehicle quality.

He added that Auto Mall had responded to the downturn in new car sales by using its BMW brand to focus on the high-end customers who would remain in this segment regardless of how the economy performs.

The dealer has also focused on its service and parts segments, while also concentrating on sales niches such as fleet deals and commercial vehicles such as trucks and buses.

Comments

JohnDoe 4 months, 1 week ago

Is this the same Rick Lowe from the Nassau Institute, who believes in free markets because, if it is, you should know better? All I could say is that you fat cats must think because we poor we are also stupid. Mr. Lowe and Mr. Albury you both are entitled to your own opinions but not your own facts. As we debate, let's at least attempt to have an intellectual honest debate. Your statements above about VAT and real property tax are just not evidence based and you should know better. Every person that imports a car into the Bahamas pays VAT for that car. If that person has income of less than $100K per annum then you darn well know there is no requirement for them to register to reclaim VAT inputs. Real property tax is a function of property ownership not business ownership because many businesses lease space. So stop it and start compete.

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RickLoweBahamas 4 months, 1 week ago

But John Doe there is no free market if one group of business people have to pay taxes, register as a business, collect VAT, sell their cars from premises and not government property and follow the price control guidelines for selling cars and another group doesn't.

Allow us to sell without all these constraints and then we have a free market. Until then, those people in the business of selling used cars from Japan need to comply with the law.

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B_I_D___ 4 months, 1 week ago

Just remember...VAT rules are calculated on GROSS sales...not your profit or income...if you sell 10 cars, valued at $10,000 each, your gross revenue is 100K, you need to do VAT...even if your net profit may only be a few grand...

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RickLoweBahamas 4 months, 1 week ago

Correct. Do you think there are used car vendors that sell over $100,000 per annum? Do you think they are they paying business license tax on their gross revenue as well? Do you think they are following price control regulations and inspectors check them out as they do regularised businesses?

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ThisIsOurs 4 months, 1 week ago

The thing about it is, a lot of people don't go through the car lot, they complete their transaction online. So the new car dealers can try to stop the used car lots but just like the clothing retailers they have to realize they wont be able to stop the Internet.

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RickLoweBahamas 4 months, 1 week ago

As previously mentioned, as a consumer I have a right to spend my money however I wish. As long as the direct importer is only importing one car every few years what's wrong with that? Government then has to find a way to make up for lost revenue as well. I agree the internet is here to stay. Maybe people with contracts with suppliers that restrict the places they can sell that product will change, but for right now, companies are given franchises for restricted areas and are forbidden to sell outside that range/country. Will there be no franchises eventually? An interesting question with interesting outcomes for businesses and employees.

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JohnDoe 4 months, 1 week ago

What utter nonsense Mr. Lowe and quite frankly it pains me to keep saying that you guys must think we are stupid. I think you are an economist so you should know better. As noted above there are legitimate car dealers with business licenses and who pay business license tax, VAT and salaries but choose to merchandise their cars through a website and market over social media. Why should they not be allowed to operate just because their business model is different from yours. There are other persons that may sell a car every three/four months to help make ends meet who also pay all of the prescribed taxes. Why should they not be allowed to sell two or three cars a year. You act as if this activity of persons selling two or three cars a year just started this year when you fully well know this has been going on in the Bahamas and around the world forever. The primary difference is that in terms of quality, enjoyment, comparability, functionality, cost, maintenance and value for dollar the Japanese used cars provide greater customer satisfaction and is an excellent cost efficient comparable substitute for your overpriced cars. For the first time there is actually competition that benefits the consumers which has spurred significant dislocations in the historical supply-demand equilibrium. So stop this nonsense about lost taxes for government because as I explained to you last week due to the elasticity of demand government is actually earning more taxes now as a result of the affordability of the Japanese cars. What makes you and your peers so special and privileged to tell someone that they can "only import one car every few years". This is a classical case of a few privileged merchants attempting to manipulate the government to protect their interest at a cost and to the disadvantage of the average consumer. It will not stand.

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RickLoweBahamas 4 months, 1 week ago

Why do you have such a low opinion of yourself, thinking that I believe you are stupid? I don't even know who you are hiding behind a nom de plume. Discussions should be based on facts not conjecture. Can you prove government is earning more revenue? You keep repeating a mantra that is not substantiated. Follow developments in the region and terms laid down by governments in Jamaica or Trinidad for example. BMDA members are not privileged as far as I am aware, but one should not be able to operate a business on terms other than those laid down by the law. If so, the law must be changed to allow all businesses to operate without complying with business license tax, property tax if they own property, price control restrictions and VAT collection. At the end of the day the consumer is king, but lets compare apples to apples. I am all for reducing duties and regulations so the consumer has a real alternative.

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JohnDoe 4 months ago

You totally miss the point in that the consumer already has a real alternative and they are enthusiastically expressing their preference by spending their hard earned dollars to purchase Japanese used cars instead of your new cars. Over the past year, I have spent almost $75K to purchase a new car but I have also purchased a total of four Japanese cars, one for each of my children, and I have been beyond satisfied with my purchases. So I have no issues with the BMDA, however, for me like for most consumers the Japanese cars are plain and simply an excellent substitute for a new car.

Further, it is not that I have a low self-esteem, because as I said above, it pains me to keep saying that you guys must think we are stupid. It pains me because the BMDA members, in the face of overwhelming objective evidence that the Japanese used cars are legitimate substitutes for your new cars and therefore the local automobile industry and market dynamics have experienced a significant disrupting market event, your group continue to behave in the same manner, repeating the same behavior and for whatever reason expect the results to somehow be different. At the same time the BMDA appears to be blaming the consumer for choosing the Japanese cars, as if they believe the consumer is is not making a rational decision in selecting a Japanese car. The issue is not roadside vendors, the issue is that your industry has experienced a significant disrupting market event which requires the BMDA to do something different to adjust to the new reality. Instead you blame the consumers and blame the roadside vendors and ask the government for special protection from competition. If there were no roadside vendors your fate and results would be exactly the same. So it really pains me to keep saying that you guys must think we are stupid because there is another alternative explanation to describe the BMDA repeating the same behavior and expecting a different result but I prefer to give you guys the benefit of the doubt.

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RickLoweBahamas 4 months ago

Sorry John Doe but it is you that misses the point. The article is about businesses operating illegally, not individual consumers who wish to spend their money however they wish. I am certainly not asking for special protection, just equal application of the law. Shumpeter's Creative Destruction is real and industries change. One is able to adjust or close down with all the disruption that goes with that. But that's the way it is.

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ThisIsOurs 4 months, 1 week ago

Well the government already gets 65% duty. Have you considered changing your model so that you are selling good quality used cars at reasonable rates 3000-6500? You would make your profit on volume rather than spread. And "reputation". I have a friend who's bought two Jspanese cars in the past five years and I've had coworkers who've done the same. My friend got his car because one of his friends told him about a great experience with a particular car dealer. These cars run and look like new cars. The only issue was the wait for parts. But you could solve that too, capital isn't a barrier...

Oh, and he bought both online, spotless interior, not a scratch on the paint, no shaking,all the lights and indicators working absolutely no problems

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RickLoweBahamas 4 months, 1 week ago

Good points. We looked into the used car business from Japan and found that all the odometers were turned back. i.e 100,000 kms was turned back to 50,000 kms. Many of the models are different than our supplies provide. Parts are often on back order if available and even more expensive than regular parts. Not to mention suppliers offering to provide false invoices. I wonder why? Why do you assume capital is not a barrier?

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ThisIsOurs 4 months ago

Well the dealer he dealt with didn't try to adjust invoices, my friend gave what he was willing to pay, the guy did a search and came back with a couple options, he selected and got a pretty good car.

Re capital: well:) a few reasons, 1. Name recognition 2. Access to family money 3. White Bahamian (being honest) 4. Monied Networks. not saying any of these would automatically qualify you for funding or get money into your hands but they would probably open the doors quicker

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RickLoweBahamas 4 months ago

There are some good deals to be found I understand.

Did they get a certificate of title and determine if the mileage was turned back to disguise the true number? Was there a condition report? A warranty?

To be fair being white is not a panacea. Besides there are many wealthy black Bahamian families as well. Do you think there are more wealthy black families than the small number of wealthy white families now? That would be an interesting statistic.

What I do not understand is why more people do not pool resources to start businesses.

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ThisIsOurs 4 months ago

No, none of those checks were made, it's a trust system. I'm not a mechanic but I will say if I could get a car for under 5,000, the car was in good running condition and could get me around the island and I found out the mileage was 100,000 vs 50,000 km, I really wouldn't care. Now if I got it and discovered something was wrong with the engine that's a whole different story. Would I prefer to have a mechanic inspect the car before purchase with a warranty that I could get my money back if something was wrong? Sure. But if that adds 3,000 to the price it does me no good. For some people adding 200 to the price knocks them out. I don't believe the government understands that, I think they believe people have magic money, something weird happens to these guys when they take office and get comfortable. They seem to forget and they get angry at the public for asking questions.

Why don't people pool money? Working together is a learned behaviour and I guess everyone been trying to survive so long. Most Bahamians are in survival mode.

If the wealthy black to white ratios ever approach equality, someone just puts Brent Symonette on the scale and everything tips over lol.

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RickLoweBahamas 4 months ago

Thank you. Do you think there are more black millionaires than white millionaires? A decent public transit system would go a long way here.

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BahamasForBahamians 4 months, 1 week ago

RickLowe and Fred Albury can both go to UBP hell with this topic.

I'm not sure why the media houses are even giving these baffoons all of this coverage.

The wider majority of Bahamians have already demonstrated their stance on this - just take a 5 minute drive around Nassau.. The greater amount of "new car sales" or purchases from new car dealers here are Government offices and fleet purchases. The average Bahamian can no longer afford the prices Fred and Rick are subjecting us to. I'm willing to say if there are 1500 new cars sold as Rick is saying... of them: 1200 are government offices / fleet purchases. Another 250 sales most likely comes from predatory loan sharking at Commonwealth Bank of which the loan holder is probably paying for 5-7 years on a depreciating asset.

Their interest is obvious - lining their own pockets.

They don't care about the poor/average Bahamian - who's budget can no longer fit the overpriced / terrible quality vehicles they have at their lots.

I've said this before and I'll say this again - If Hubert and his gang are gullible enough to feed into the coffers of these UBP descendants who prefer profit over people - they will plunge head first into opposition come 2022.

The question now is - Does the FNM think the cartel (Rick Lowe and Fred Albury, Sanpin, NMC, etc) is worth spending its political capital? Especially so early in the term?

Are they really willing to sacrifice popularity amongst every Honda Fit, Nissan March, or Suzuki Swift driver to please these two guys? Two guys that are already rich...

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RickLoweBahamas 4 months, 1 week ago

If you had the confidence you display with spouting false verbiage you would identify yourself so we can have an honest discussion.

Your conjecture does not fact make.

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BahamasForBahamians 4 months, 1 week ago

Not interested in having any discussion with you.

After seeing the predatory practices your car lot and family car lots have inflicted upon common Bahamians - the time to discuss is over.

I'm fine with the way things are now. Finally free from your 50,000 car loans and 80,000 pick up trucks.

If Hubert has the balls to give in to the demands you guys make, we the Japanese Car Driving Association (Average Bahamians) will see to it that he's made obsolete like your car lots.

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RickLoweBahamas 4 months, 1 week ago

Ever thought about a career as a comedian?

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joeblow 4 months, 1 week ago

I guess florists will soon complain about roadside rose vendors!

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ThisIsOurs 4 months, 1 week ago

The lesson is, we all need to prepare to compete with the internet or go the way of the dinosaur. Possibly the only people who will be protected are doctors, nurses, hair dressers, nail technicians, mechanics...something has to break sometime, they'll have to adapt to new car types though...., policemen, soldiers, hmmm...on the other hand armed forces might need to worry:)

lawyers accountants, technologists, admistrators, managers, secretaries, teachers, retailers etc are fair game

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RickLoweBahamas 4 months, 1 week ago

Agreed. It will be an interesting future. How will we as individuals earn money if there are no local businesses? How will government take tax dollars?

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ThisIsOurs 4 months ago

The government will find a way, it always does.

There will always be local businesses I think they'll just be doing things differently. For example there are many local business using the Internet now to their benefit

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sheeprunner12 4 months ago

The truth is that the Old Guard mercantilist oligarchy is watching their last economic frontiers being eroded by the ordinary/average Bahamians who have the internet at their disposal ....... But this may usher in the final phase of real Independence ....... economic independence.

That is why we are enslaved to imports today ...... the Bay Street Boys (aka Rick Lowe dem) have made the Government lazy by depending on customs duty as their main form of tax income ........ As a result, the average Bahamians cannot feed themselves, clothe themselves, entertain themselves and employ themselves ....... This is economic slavery.

IT IS TIME FOR ECONOMIC INDEPENDENCE THROUGH SELF-PRESERVATION AND CREATIVITY OF THE 99% MAJORITY.

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BahamasForBahamians 4 months ago

Rick - I Hope you read this message!

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RickLoweBahamas 4 months ago

I thought you didn't want to discuss anything with me BetterForBahamians? But I did read the message and replied. Just so you know LOL

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BahamasForBahamians 4 months ago

Rick - I am still not interested in a discussion with you! just ensuring you didn't overlook @sheeprunner's topic. perhaps you can discuss with him.

He's 100% correct though - good luck challenging him.

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RickLoweBahamas 4 months ago

So BahamasForBahamians you don't want to discuss anything with me but you want to discuss this one little thing. Go figure? You really should consider a career in comedy, 'cause you are funny. I did respond. You do realise I am a Bahamian.

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RickLoweBahamas 4 months ago

If only Government would take our advice on import taxes. We've filed request after request to lower import taxes on vehicles. It would be better for everyone. But of course successive governments have indebted us taxpayers to the hilt so they do not seem to want to reduce import taxes. Maybe they do not want income taxes? I wish any of the majority black population (99% as you say) great success in business. In fact I wish anyone in business great success. Without successful businesses reasonable jobs won't be available and I don't see how everyone 100% of Bahamians will own their own business, but....

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