• New car dealers exceed 2021 sales in first 10 months
• Increase seems ‘contradictory’ due to vehicle shortage
• Some see ‘pipeline opening up’ amid mixed ‘23 outlook
By NEIL HARTNELL
Tribune Business Editor
Bahamian auto dealers yesterday predicted new vehicle sales will close 2022 some 15-20 percent ahead of last year after the industry overcame “outrageous” shipping cost hikes and inventory shortages.
Ben Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that the industry had collectively beaten 2021’s full-year sales within the first ten months of the current year.
Revealing that the sector “did just over 1,500 units” for the year to end-October 2022, as compared to last year’s 1,468 for the full 12 months, he disclosed: “As of the close of October, the BMDA has already collectively surpassed the total sales recorded in the 2021 calendar year. I am expecting a 15-20 percent improvement over last year.”
While the industry is entering a third year of supply chain backlogs, meaning local dealers are unable to receive the full vehicle orders they place, Ben Albury said this is counter-balanced by their ability to “sell everything we can get” due to persistently strong consumer demand.
The Bahamas Bus and Truck general manager, noting that his company’s auto sales have increased by 30 percent compared to 2021, added that “the pipeline is starting to open up” on vehicle supply with manufacturers now far more responsive to orders placed by this market.
He added that slowing US vehicle demand, likely due to rising interest rates as the Federal Reserve seeks to combat inflation, would potentially further help The Bahamas by freeing up more vehicle supply for this market. And, despite fears of a US and wider global recession, Ben Albury said any fall-out for The Bahamas is “a little ways off” yet given that the visitors attracted to its high-end tourism product are among the least likely to be affected by any downturn.
“In my business there’s been some loosening up as far as what I see in the pipeline,” the BMDA president said of supply chain woes that have persisted since 2021 and the world’s full post-COVID emergence. “It hasn’t replenished me in terms of supply, but I can see things in motion.
“Before [COVID] I would put in an order and typically it would take four months, but I have been six months into it and saw nothing. But, right now, I’m placing orders and in a relatively reasonable amount of time I’m able to see the original bill of delivery and VIN (vehicle identification) numbers. In my business, things seem to be getting in order. Before they were sitting in the system waiting for capacity.
“It sounds contradictory when you say you are having supply chain issues but your sales are up. I was very well stocked when this thing happened, and placed orders very aggressively. I would, for example, place orders for 100 vehicles when I wanted 50, and might get 30. I was very aggressive on that, and pretty much what I get I sell instantaneously. Bringing in $500,000 worth of cars, you don’t want it sitting there for ever.”
New auto sales are frequently seen as a bellwether indicator of how strongly an economy is performing, especially on consumer demand and access to credit, because these are treated as luxury goods that are extremely susceptible to economic downturns.
Turning to the BMDA’s sales performance, Ben Albury added: “We’re not setting a record or banner year by any means, but in this post-COVID climate we are not looking at the yardstick of what we did in the last ten or 30 years. A lot of the comparison is from COVID to now.
“I’m seeing the pipeline open up now, and inventory start to come in. That’s a key component missing to go even faster than what we have. Driving around, I passed one of my competitors a few weeks ago and they only had one vehicle in the showroom. I passed by again a few days ago, and it looked like they were fully stocked with a full inventory. I’m happy to see that becoming the norm.
“My outlook for 2023 is definitely better than 2022. I don’t feel comfortable predicting beyond that. Predicting a year out is hard to wrap your head around, but with the steady increase in sales over the last seven to eight months I feel confident and see some consistency, which is very encouraging.”
The BMDA president’s optimistic outlook comes despite a 100 percent increase in vehicle shipping costs post-pandemic, which have been driven by factors such as higher global oil prices, supply chain backlogs and container shortages. “I’m paying double what I paid previously,” he said, explaining that the cost of shipping a “compact” car had risen from $1,700-$1,800 to around $3,350 presently. “It’s not a very big car at all, but the price is outrageous.”
However, unlike his namesake, Fred Albury, the Auto Mall’s principal, told Tribune Business there was “no sign yet” that vehicle shortage woes are easing and he predicted the situation may last until the 2023 second quarter. “Even then it won’t be back to normal,” he warned. “There are some models I just cannot get.
“Toyota is coming out with a new Crown in February, and they’ve said: ‘Don’t even think about trying to order them right now. The Rav 4, the Prado, those are tough to get. I just recently had a high official in from Hyundai, and they promised us some increased production. Suzuki has been having issues as well. I’ve had orders submitted for six months, and they’ve not even got pushed through. It’s still very, very tight out there.
“Usually if a shipment arrives it’s about 85-90 percent pre-sold. Sales have been built on what we have, but it’s just not enough..... Sales are definitely up and Toyota is leading the pack of all the brands at the moment,” Mr Albury confirmed. “I think on the Toyota side we’re going to be up 25 percent over last year.
“The main thing is we’re getting some product there. I order 50 units and, on average, get about 35. Toyota has been really good on forecasting and allocations. They monitor it and every two to there weeks I have to give them a report on what our sales are. If you are selling, you are getting. If you are not selling, you are not getting. They’re not going to give a market a ton of cars to just sit there.
“If we can get the product we can make the sales. BMW is doing extremely well. We’ve had probably our best year ever in BMW. It’s the same thing there: Getting product and allocation. We’re moving a lot of product so we’re getting a lot of allocation. There’s been a demand for the high-end product out there.”
Fred Albury confirmed that auto prices, and dealer costs, have been hit by shipping increases. “We’ve seen the prices on some Hyundai product that have gone up $700 to $800a vehicle, which represents 40 percent of the vehicle costs. That’s just shipping prices. I think next year is going to be very much along the lines of what 2022 has been. It’s going to be a fight for inventory.”
Ben Albury, meanwhile, said auto sales were being aided by increased availability of credit. “The banks have got a little different attitude in terms of willingness to expose themselves to reasonable risk,” he told Tribune Business, “and give financing and terms to people ready to go.
“We’re starting to see the financing side get a little easier to work with. That’s been a little challenging. People go for financing and get discouraged in a lot of cases.”