• BMDA president targets 300 increase for 2021
• Sector will be ‘100% back, or close’, by late 2022
• Optimistic all dealerships will survive COVID-19
By NEIL HARTNELL
Tribune Business Editor
A top auto dealer yesterday predicted new car sales could increase by over 25 percent this year “subject to no lockdowns” as the industry targets the 2022 second half for a full COVID-19 rebound.
Fred Albury, the Bahamas Motor Dealers Association’s (BMDA) president, forecast to Tribune Business that sector-wide sales could increase by up to 300 vehicles year-over-year if The Bahamas avoids imposing the drastic measures that forced its closure for three to four months in 2020.
Conceding that he and other auto dealers face “a rough ride” during the 2021 first half, due to a depressed tourism industry and wider economy still struggling to emerge from the pandemic’s devastation, Mr Albury said there were “bright spots” for the sector amid the general gloom.
With service and parts sales remaining relatively strong as customers opt to keep their existing vehicles on the road, the BMDA chief said December auto sales had been boosted by the year-end deadline imposed by the government for Dorian-ravaged Abaco and Grand Bahama residents to import/purchase cars duty-free. That deadline was subsequently extended to end-January 2021.
He added that the high-end market remained strong, with his Auto Mall’s BMW brand generating ten sales in January - nine of which were all-cash deals, with only one financed. Mr Albury attributed this to new arrivals in gated communities such as Lyford Cay and Old Fort Bay establishing themselves in The Bahamas, but acknowledged that it also highlighted the widening gulf with middle and lower class buyers.
“All I can say to that is: Is your crystal ball as good as mine? It depends on no more lockdowns,” Mr Albury replied, when quizzed about the strength of the new auto market’s likely rebound in 2021. “We did 1,114 units last year, and my forecast for the market would be 1,400 units subject to no lockdowns.”
That would represent a 25.7 percent year-over-year increase for new vehicle sales among BMDA members if the BMDA’s prediction comes true. However, Mr Albury’s forecast would sill be more than 400 units or 22.6 percent short of the 1,809 vehicles that the industry collectively sold in 2019.
It would, though, put a sector that the government relies upon to generate significant VAT, import duty and other taxes back in line with 2018, when total vehicle sales equalled 1,379. Mr Albury, though, voiced optimism that the new vehicle industry would return, or be close, to pre-COVID sales levels by the 2022 second half depending on the COVID vaccine roll-out and strength of tourism’s recovery.
“Next year, 2022, is an election year so the Government will try and pull everything out of their hat to get the economy going before an election,” he told Tribune Business. “The second half of 2022 should be back, if not at 100 percent of pre-COVID, then close to.”
Rick Lowe, the BMDA’s secretary, and Nassau Motor Company’s (NMC) director/operations manager, was “not as optimistic” as Mr Albury, suggesting that the industry would perform satisfactorily if it matched 2020’s figures.
He added that the sector was effectively in “a vortex”, as it is still subject to price controls and has to pay the upcoming annual business licence fee based on gross turnover rather than net profits. As a result, Mr Lowe said the government was getting more from auto dealers than their own investors and shareholders.
“You’re in a vortex,” he explained. “You have to pay that. The Government is getting more out of the business than the business. You still have to pay the taxes. It ain’t fun. When you’re sitting on a ton of inventory, it ain’t fun. A lot of cash flow, a lot of bond money is tied up. It is what it is.”
Mr Albury, who disclosed that Auto Mall’s new vehicle sales were down 55 percent year-over-year for 2020, echoed Mr Lowe by confirming that dealers were “sitting” on a lot of auto inventory they had been unable to shift during the pandemic’s height. He estimated that many will not have placed orders for six to seven months, and are unlikely to make fresh ones until five to six months into 2021.
“My prediction is that the first half of the year is going to be on the slow/slow side,” the BMDA chief told Tribune Business. “The pickings are one/one; here and there. The first half of the year is going to be a rough ride, and hopefully in the second half we will start to see a kick up with more hotels opening and more encouraging news here.
“We’ve been doing OK with fleet business, and because the Government put a timeline on the duty and VAT-free vehicles related to Abaco and Grand Bahama there was a mad rush of people seeking vehicles for those locations.
“I think we did maybe 16 to 18 vehicles in December because of that. Our BMW operation has been very strong for the month. We did ten sales, of which nine were cash deals and only one was financed. The high-end stuff is still moving, and we’re having high-end clients building houses at Lyford Cay, Old Fort Bay and Ocean Club Estates that are buying stuff like this,” Mr Albury continued.
“We’ve had some sales from some companies, and some high-end clients in Eleuthera that have taken on orders. It’s the low end and middle class that have been greatly impacted.”
Emphasising that The Bahamas must keep control of its COVID-19 infection rates, and ensure that it keeps out the so-called “mutant” strains that have emerged in the likes of the US, UK and Brazil, Mr Albury voiced optimism that all auto dealers have sufficient financial strength to survive the pandemic although he predicted there may be mergers and consolidations.
“You might see some consolidations, but with the money that is behind the operations we’ll all survive,” he added. “Sanpin, Bahamas Bus and Truck and Friendly Ford, that’s basically the same shareholders.
“At some point in time you might find it easier to consolidate some aspects of the business. Quality, Executive and Omega at the Auto Mall have only one service and parts department for all three companies.”