By NEIL HARTNELL
Tribune Business Editor
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.