The Tribune

By NEIL HARTNELL

Tribune Business Editor

A BAHAMIAN auto dealer yesterday said May 2012 was "my worst month in probably four years" for new car sales, despite the industry as a whole seeing a 5 per cent rise in completed deals.

Ben Albury, general manager of Bahamas Bus & Truck, told Tribune Business that floor traffic at the company's showroom and lots had "dropped off" considerably following the May 7 general election, with the predictable knock-on effect on sales.

He suggested that consumer confidence may have been hit, at least temporarily, by uncertainty over the new government's economic policy direction and its statements that it might be unable to fulfill much of what it promised in its 2012 general election manifesto.

Mr Albury's comments came despite the Bahamas Motor Dealers Association (BMDA) yesterday reporting a collective 5 per cent year-over-year sales increase for May 2012.

For the five months to end-May 2012, the BMDA said collective new car sales were up 13 per cent over the same period in 2011, standing at 1,115 units compared to 988 vehicles sold last year.

However, the BMDA conceded that the year-to-date 2012 performance remained "a long way off" from what the industry achieved during the same period in the peak 2007 year, when 1,969 new autos were sold. The Bahamian new car industry is still some 43.4 per cent off its pre-recession high.

What the BMDA statistics, together with Mr Albury's comments, seem to indicate is that the pace of recovery is uneven, with some dealers doing better than others. Tribune Business previously reported that due to the favourable exchange rate between the Won and US dollar, and the fact that their smaller engine sizes pushed them into the lowest Excise Tax bracket, the Korean vehicle brands - the Hyundai and Kia - were faring better than other vehicles and dealers in the Bahamian market.

The BMDA's statement yesterday effectively confirmed this, with the Kia and Hyundai accounting for a market share of 55 per cent in terms of all vehicles sold.

Along with the anemic economic environment, all the issues plaguing the Bahamian new car market remain the same. They include the difficulty prospective buyers are having in qualifying for commercial bank loans; the change in the Excise Tax structure (the rates and what determines them); and the increasing competition they face from the proliferation of used car dealers (and the natural gravitation of hard-pressed consumers towards these businesses).

And Mr Albury told Tribune Business that he, along with other BMDA members, wanted the Government to give the industry advance warning of when it planned to change Excise Tax rates, expressing fears that many dealers would lose out financially if taken by surprise.

Recalling Bahamas Bus and Truck's recent experiences, Mr Albury said: "We were holding well up until the election, and anticipated business would improve afterwards. It happens each time - things slow down prior election, then things pick back up."

Suggesting that the 2012 election attracted a record level of spending by the political parties that contested it, Mr Albury said he had expected some of that money to remain in circulation within the Bahamian economy, and "business to pick up, but it hasn't".

He told Tribune Business: "I've seen floor traffic drop off, which normally translates into sales. The traffic has slowed down, and when that happens sales reflect it.

"Last month [May] was my worst month in probably four years. It was pretty serious." This newspaper was told by other sources that fellow BMDA members had seen a similar post-election drop off in consumer traffic in sales, but this could not be confirmed yesterday.

Trying to explain the decline, Mr Albury told Tribune Business: "A lot of people are waiting to see what, if any, of the 100-day plan will be done. After the election the Government spent a lot of time saying they might not be able to do a lot of things they promised to do. That may have resulted in a lack of confidence."

And he added: "June was marginally better, but then again our profit margins have been greatly reduced trying to move inventory affected by the duty changes, as well as things slowed down by the lack of business.

"Because the market has been so sporadic, it's been very difficult to control inventory levels. One month we do well, the next month we do nothing. It's been very difficult for me to put rhyme and reason behind it, or scientific facts. It's been shooting the dark, and hoping you hit something. I'm still not resting at night."

Mr Albury also called for the Government to "forewarn" the BMDA and wider auto industry when changes to the Excise Tax rates and structure were in the offing.

Recalling the 2010-2011 Budget, when the Excise Tax rates were changed, Mr Albury said he was left with inventory on the dock - imported prior to the announcement - that he was unable to clear at the previous, lower rates. He was forced to pay the new, higher rate, which forced Bahamas Bus & Truck to find extra money, impacting cash flow.

He pointed out, though, that a reduction in auto industry Excise Tax rates also held negative consequences. Dealers with large amounts of inventory already in stock would be faced with rival, newer imports that were cheaper due to the lower duty rates, thus making it difficult for them to offload older stock.