The Tribune

• Supply chain shortages worsened by shipping woe

• Industry president: Inventory at 25% of normal level

• Others say sales off 50%; ‘can’t sell what don’t have’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Motor Dealers Association’s (BMDA) president yesterday said the industry is taking “hits all around” with his own new vehicle inventories now just 25 percent of pre-pandemic levels.

Fred Albury, also the Auto Mall’s principal, told Tribune Business that Bahamian dealerships may order ten vehicles from their suppliers and be “lucky to get two to three” as a result of supply chain disruptions and backlogs impacting the sector worldwide.

With factory fires continuing to impact the availability of key vehicle micro chip components, and manufacturers backed up by pandemic-related lockdowns and other health measures, he revealed that a doubling of shipping container costs has further added to the setbacks facing auto dealers and the wider Bahamian economy.

“It’s hits all around,” Mr Albury disclosed to this newspaper. “Allocations are very tight. You might order ten vehicles and be lucky to get two or three. They’re trying to share out globally what product might be available. It’s going to be tight until the end of this year.

“The impact is that we don’t have any inventory to sell, so we’re trying to reduce expenditures where we can. That’s the long and short of it. We cannot sell what we don’t have. We have people interested in buying, but we just don’t have it.

“It’s a double-sided whammy. With the pandemic, everybody went into contracting their inventory and, while we were doing that, this micro chip inventory shortage came along. Now we want to build inventories back up and we cannot do it.”

Mr Albury said alternative supply sources, such as the US used car market, have also tightened considerably. “Right now, the US dealers are not selling and are not giving any discounts,” he added. “Auction prices are higher on some used vehicles than new.

“My inventories all around are scraping the bucket at the moment. Normally my inventory would be $4m-$4.5m in new vehicles, and we’re down to probably $1m. The upside is that the bank is not making money off me because I’ve paid off the overdraft, and I now have money sitting in the bank for new vehicles.

“It is what it is,” Mr Albury continued. “We have to make the best of it. We’re bringing in used vehicles from Japan like everyone else does, and are focusing on the service and parts department. We’re also doing body work repairs, which is a new service. That’s been very active because insurance companies prefer to deal with the dealer. If there’s a problem they’ve got more recourse.

“We started a year-and-a-half, two years ago becoming an agent for a brand of tyres. The issue we now have with that is we used to pay $5,000-$6,000 a shipping container out of Taiwan, but that has now jumped to $10,000-$12,000.

Ben Albury, Bahamas Bus and Truck’s general manager, confirmed his dealership was grappling with similar issues when it came to having the vehicles sought by consumers “in a timely manner” as well as increased product costs. Overall sales are down by around 50 percent.

He added that the industry’s current status was “the complete opposite” of where he and other executives thought it would have been, having anticipated that there would be too much product and too little demand for it. Instead, he said there was high demand and too few of the right vehicles to satisfy it.

“That’s been an ongoing challenge for me for months,” Ben Albury said of supply. “It’s terrible. I used to project my orders, depending on where they are coming from, from four to six months out, and now they are taking anywhere from six months to ten months. 

“Nobody can give an accurate assessment. The reports I get every week on when to expect product is garbage. I don’t read them any more. They indicate that a vehicle will be available by a certain date, and I get it two, three and four months later.

“It’s having a large impact. We have a lot of pre-sales with people paying deposits. Some are understanding, and realise this is happening globally, while others are not. It’s brought a different type and level of stress to day-to-day functioning.”

Ben Albury said the inability to meet demand was worse for “fast-moving inventory” such as SUVs, jeeps and pre-owned vehicles. He added that prices for the latter have risen substantially due to increased purchaser demand as the market moved away from new vehicles in favour of lower-priced product.

“Shipping is going up daily,” the Bahamas Bus and Truck general manager said. “You have containers due to come at a certain time, and they cannot make the boat. The cost of a container used to be $5,000, and now it’s $13,000. It’s insane.

“The impact is what it always is: The inconvenience and then the bottom line. The inconvenience of not being able to get the product in a timely manner, and then the increased cost. In the US, the price of pre-owned vehicles has gone up about 35 percent. It will be even more here because it is compounded by duty and shipping charges. 

“It makes it impossible to bring any used product in from the US, and in Japan they are having similar increases, although maybe not to 35 percent. It’s definitely not making life any easier. It’s very tough. Sometimes I’ll have a shipment come in and have an improved month because everything goes, and then I’ll have a shipment delayed and have very little.”

Ben Albury said the disruption was likely to persist until next year, adding that food stores, hardware stores and other sectors of the Bahamian economy are facing similar issues. “I hope it’s over sooner rather than later,” he said.