By NEIL HARTNELL
Tribune Business Editor
Bahamian auto dealers yesterday said they are targeting a 15-20 percent sales increase for 2020 amid expectations that the sector could enjoy its best year in more than a decade.
Ben Albury, Bahamas Bus and Truck’s general manager, told Tribune Business his company hoped to at least match 2019’s sales pace with business volumes having barely slackened since Hurricane Dorian struck.
Acknowledging the “unfortunate circumstances” created by the category five storm, he revealed that Bahamas Bus and Truck had at one point been almost “overwhelmed” by the demand for replacement and construction/commercial-type vehicles in its aftermath.
“Personally, I’m excited about the prospects for this year,” Mr Albury told this newspaper. “We could use it. We’ve had some rough years in the automobile industry and it’s really been taxing, but if we have a couple more good years we can hire more staff and keep things going.
“I’ve hired a few people from Abaco to assist them and have just kept plugging. It’s still early days, but I’d hope we’d grow at the same pace as last year. I’d hope to see at least a 15-20 percent increase over last year as a whole if current trends continue.”
Mr Albury added that sales had begun to “pick up” in August just prior to Dorian’s landfall in Abaco and Grand Bahama, and that momentum has largely been maintained through the storm’s aftermath and into early 2020.
“Due to unfortunate circumstances as it relates to Hurricane Dorian we’ve extremely busy with people displaced from Abaco and Freeport who need a vehicle here, need a vehicle over there, and construction companies and non-governmental organisations (NGOs),” he explained.
“When the storm happened it was the furthest thing from my mind; I’d not considered that thousands of vehicles would be destroyed or damaged. I feel that of all the dealerships here we have one of the most diverse product lines, and are heavy in construction and commercial-type models, delivery vehicles, all of which are very lucrative right now because a lot of people need them for clean-up and rebuilding.
“We were very fortunate to have good inventory levels when it happened to satisfy a lot of the desires out there. A lot of it was luck. It was unfortunate it happened the way it happened, but it’s where we’re at,” Mr Albury continued.
“People that have come to me, we’ve tried to co-operate and work with them as best we can to sell them a vehicle that is excise tax-free and VAT-free, and assist with the price. When it’s an NGO or a charity we try and assist them on a cost-plan basis because they’re doing good work and we want to help them.”
The Bahamas Bus and Truck chief told Tribune Business that the dealership was trying to get the message out to Grand Bahama and Abaco residents, and businesses, within the Dorian disaster zones that they could purchase vehicles from it excise Tax and VAT-free once all the paperwork was in order rather than trying to import directly from the US.
“I predicted after Dorian, in a meeting with staff, to prepare for a busy six to 12 months,” Mr Albury said. “Just before Dorian things began to pick-up. We had a very good August, and through September and October I would say we were overwhelmed it got so busy.
“I thought I was going to lose my mind at one point. We’re still very busy, but it’s manageable. That’s going to continue for a while. We have a lot of people now in a different place, and they have to try and get back on the road and get some normalcy.”
His optimism was backed by Rick Lowe, Nassau Motor Company’s (NMC) director/operations manager, who predicted that the Bahamian auto industry could be poised for its best year since 2008 which coincided with the worldwide recession’s start.
He added that overseas suppliers had finally “caught up” with taxation changes that have significantly lowered the price of vehicles with smaller engine sizes that are more fuel efficient and environmentally friendly, enabling Bahamian dealerships to stock more these in-demand autos.
“If the recent three months is a trend it should be a year of getting back to reasonable profitability,” Mr Lowe told this newspaper. “Our inventory has finally caught up. We had a big shipment in last month, and it’s already all gone. We knew we had names on them, so buyers were waiting.
“There’s been a big pent-up demand waiting for inventory at reduced levels of duty. It’s been pretty good. It’s still not at 2007 levels, but I haven’t been this positive for a long time. It’s a good thing for a change.”
The Government slashed the excise tax rate for new autos with an engine size of 1.5 litres or less by 40 percentage points in the 2018-2019 budget, dropping the levy from 65 percent to 25 percent. Besides aiding the sector and individual dealers, it was intended to encourage consumers to switch to smaller, more fuel efficient and environmentally friendly
Then, following industry representations on behalf of dealers who had no inventory in that category, the Minnis administration enacted further reforms to “level the playing field” between dealers by cutting the Excise Tax rate for vehicles with engine sizes between 1.5 and two litres to 45 percent.
And it has also enabled Bahamian auto dealers to defer Excise Tax and VAT payable at the border on imported vehicles until such time as they are sold through the use of so-called “bonded” facilities.
Describing these reforms as “a tremendous help” to the industry and its consumers, Mr Lowe suggested it had also likely resulted in greater revenues for the Public Treasury by facilitating increased vehicle sales.
“It’s helped with cash flow,” he added of the “bonded” facility, “but has also helped with inventory levels. We can stock a few more cars, give people a slightly better selection. From that point of view it has been really good. It’s really been beneficial for all the dealers that have product in that range.
“It’s sort of proving what we’ve been suggesting to the Government all along that lower import taxes would mean higher sales. I’m hopeful, very hopeful, that if prevailing trends continue we should have a very positive year. It’s been a long time waiting for it; since 2008 really. We’ve had the odd year, but have never reached those 2007 levels.”
Both Mr Lowe and Mr Albury agreed that new auto dealerships still have a long way to travel before they reach 2007 sales levels, which peaked at around 4,500 autos compared to post-recession lows of 1,500 to 1,600 annually.