• Industry ‘needs crystal ball to function’ with product delay
• But sector’s sales for 2022 first half increase 159 to 833
• Dealer reports 95% of shipment ‘pre-sold’ before arrival
By NEIL HARTNELL
Tribune Business Editor
Bahamian auto dealers yesterday said industry-wide sales would be “20 percent higher” than the actual 159 year-over-year increase for 2022 to-date if vehicle supplies matched pre-COVID levels.
Operators spoken to by Tribune Business described the sector as facing a glass half-full situation, with overall sales for the first half up 23.6 percent year-over-year and trending towards levels attained in 2019 prior to the pandemic’s arrival.
However, manufacturing capacity shortages and supply chain bottlenecks have left virtually all Bahamas Motor Dealers Association (BMDA) members - albeit perhaps at different times - with insufficient auto inventory to meet market demand. One dealer revealed that, of the supply he is receiving, some 95 percent of vehicle shipments are pre-sold before they even arrive in The Bahamas.
Ben Albury, the BMDA’s president, told Tribune Business that “you really need a crystal ball to function” due to the difficulty in predicting when, and how many of the initial vehicle order, would arrive in this nation. He added that manufacturers had warned supply chain disruption, and the resulting imbalance between inventory availability and demand in The Bahamas, will likely last for another 12-18 months until end-2023 at least.
BMDA members collectively sold some 833 vehicles during the 2022 first half, a near-24 percent rise on the 674 transactions during the same period last year when The Bahamas and the world were emerging from COVID restrictions. For the three months to end-June 2022, new vehicle sales were ahead by 17.3 percent year-over-year, with the gross number just shy of pre-pandemic levels hit in 2019.
Disclosing that he was enjoying “a stellar month” for July at his business, Bahamas Bus and Truck, compared to prior months, Ben Albury told this newspaper: “The worst part is knowing what the potential is and the lack of resources to satisfy that. It’s very frustrating when you’re getting phone calls, inquiries and people knocking at your door requesting product, and you don’t have it or will have it in a few months.
“What becomes the most stressful part of it is that you have to lay out incredible amounts of money in deposits, and you used to lay that out with the understanding that there would be product delivery within a certain timeframe. Now you’re laying out hundreds of thousands of dollars sometimes on deposits with so much uncertainty on if and when you will see that product.
“That’s what’s most stressful; laying out this money to get inventory and, if it doesn’t come, how do I get a return in a timely fashion? You’re saddled down, and have to be extremely careful with cash flow. If you get product, you are able to get a return and pay your bills. Right now it’s just impossible to gauge your business,” Ben Albury continued.
“What a lot of manufacturers are doing is encouraging you to be very aggressive in your ordering, and if you order 50 you might get ten, but that’s a scary way to conduct your business. Sometimes it’s scary to have a big batch of those shipments and you have to pay for those things. You really need a crystal ball to function.”
The BMDA president said “you’re definitely cutting things close from time to time” by paying huge deposits for vehicles that were likely to be delayed, or orders that may be cancelled entirely, hampering cash flow amid uncertainty over whether dealers will ever see a return on their investment. He added that sometimes choices had to be made between placing large vehicle orders and “having enough money to make ends meet”.
“Some of my suppliers have now gone to about eight months, some of my other suppliers have gone up to 10-12 months delivery,” Ben Albury added. “It used to be four months from the US and probably six months from Japan. The Japanese are still holding fairly good for their production, but the US markets we deal with, honestly it’s non-existent.”
He cited his experience with Wrangler jeeps, which informed Bahamas Bus and Truck that one model it had ordered was cancelled, but encouraged the local dealer to stick with another variety it could provide. “I stuck with this order, and started to tell people what was coming, and now ten days ago they sent me an e-mail cancelling the entire order,” Ben Albury said, leading to consumer as well as dealer frustration.
His namesake Fred Albury, the Auto Mall’s principal, told Tribune Business that “if anything it has gotten a bit worse” with manufacturing hold-ups and supply backlogs. He disclosed that a Zoom call this week with Toyota, one of his brands, had reinforced problems such as a lack of raw materials for hybrid vehicles as well as shortages of micro chips for audio and safety devices.
“The impression I walked away with is this is going to continue well into 2023,” Fred Albury said. “Some of my big fleet users want to order 40-5o vehicles and I cannot get them out there. It’s like that across-the-board with all manufacturers. The demand is there, the demand is high.
“When my ships arrive I’m 95 percent pre-sold. When the land at the port, it’s a matter of getting them off, getting them prepared, cleaned, licensed and registered and out the door. On my Toyota Rav 4s, I’ve got deposits on limited inventory until November. You may order ten, and I’m lucky if I get three or four a month. That’s the issue.
“We have the buyers, but don’t have the product. I think if we had the product sales would at least be 20 percent more than what we have right now. If it’s not one thing, it’s the next.”