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Dealer 'wiped out' by auto duty changes

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

A former leading used car importer said his business had been “wiped out” by the previous ‘engine size’ duty structure, telling Tribune Business he had shifted focus to his steakhouse restaurant venture.

Brent Fox said his Village Road-based Buck’s Fire Grill Restaurant, located at the site of his former Montague Motors business, had created 15 jobs.

While Bahamian new car dealers have expressed concern over the Government’s decision to go ‘back to the future’ over the industry’s Excise Tax structure, reverting back to landed cost, Mr Fox said his business had been effectively wiped out when the previous Ingraham administration switched its basis to ‘engine size’ in 2010.

That move introduced a tax rate of 65 per cent for passenger vehicles with an engine size of 2,000 cubic centimeters (cc) or less, but increased the rate facing most other passenger vehicles and trucks from 60 per cent to 85 per cent/

“We went out with the increase the first time. We were doing well until the Government raised the duty rates. What little profit we used to make was wiped out there, so what the Government is doing now really has no affect on us because we were already wiped out,” said Mr Fox.

“That’s the way it is. Everyone is looking to make extra money and pile it on the shoulders of the businessman. The businessman can’t pay anymore taxes.If the businessman has to pay higher taxes then he can’t operate, and he has to let his employees go. I had to let all of Montague Motors’ people go.”

As for his latest venture, Mr Fox said Buck’s Fire Grill Restaurant was hitting its stride. “We’re doing OK, the business is doing fine,” he added..

Bucks is being promoted as a totally new restaurant concept, where Texas BBQ and smoke house meets Latin and Caribbean flavour, with a tropical dining room setting and a full bar.

With the Government taking the auto industry’s Excise Tax structure back to landed cost from engine size, some new car dealers have voiced concerns that Bahamians will increasingly be driven back towards the used car market.

That sector’s performance appears to be mixed, however, with one dealer telling Tribune Business the market was too saturated with Japanese car importers and many consumers were financially challenged.

Jay Allen, owner of Allen’s Auto, said that while there was interest in the used car market, many consumers simply did not have the financing.

“People who want pre-owned cars are coming in but they simply don’t have the money,” he said. “They can’t meet the requirements of the banks. When it comes to the banks and pre-owned vehicles a lot is required of thecustomer, and one is their financial contribution to what is needed to make it happen.

“The banks control how they lend their money and who they deal with. Some of the banks aren’t too favourable with who they deal with. The high demands consumers have to meet kills 85-90 per cent of the potential sales.

“The banks are much more favourable to new car sales, but the customers may prefer a good used car. There are people drifting in but nothing on the scale of what it was like eight to 10 years ago.”

Mr Allen added: “I think this market is too saturated. The Government should watch who they allow to open car businesses. I just try to be distinctive. The market is really saturated with Japanese cars. I only deal with American cars. I try to stock within a certain year with my cars.”

Another used car dealer, who did requested anonymity, said his business was doing “exceptionally well”.

“I can’t speak for the other dealers but we do exceptionally well given the climate,” the dealer added. “It’s due to our business model of zero down for Government workers, but then again that could change. The change in Customs restrictions could be affecting why people buy more used cars instead of new cars.”

Comments

john33xyz 11 years, 6 months ago

Government needs to stop these dealers from bringing in cars with names like "Ford" and "Chevy" etc. which people think are American but then find out they were made at the plants in Brazil and Mexico and all over the place and you CANT get parts for them.

positiveinput 11 years, 6 months ago

Increasing the duty rates on importing vehicles was never a good idea. Reliable transportation will always be needed in a household/company and in some more than one is needed, so to keep the import rated low would have been the best choice. By doing so quantity imported would increase thus resulting in import duty profit increasing over-time. With more vehicles being imported, the import of more fuel, vehicle service parts/accessories and body parts would increase thus further adding to import duty profits. Related to that, The Road Traffic Dept. would see an even greater profit within this same industry. Much can be done to increase the Government's Income Profit. However sad to say those who can make the choices aren't asking or feel to proud to get resolutions from people who can help. Instead they rather get ideas from amongst themselves. Hint hint - ideas come as good or bad, resolutions erases a problem.

Down to crime related problems (auto theft) can easily be decreased along with retrieving outstanding traffic tickets fees, so whenever the related Ministry wishes to get a solution, just send a link (P. O. Box for a fully step-by-step message).

bismark 11 years, 6 months ago

what the government needs to do,is stop all of these crooked africans setting up used car dealerships,used tire dealerships all over the place,this should be reserved for bahamians only.

positiveinput 11 years, 6 months ago

With the use tire issue, I suggest that the government not allow such shops to operate. The Bahamas does not make tires, therefore such items should be discounted greatly with import duty or better yet, be duty free. Reason being is that the life-span of a new tire, much less a used tire cannot be determine. To add insult to injury, the use tire shops has no staff educated in mounting a used tire. All the guys there know to do is replace a totally worn tire with a partially worn tire, then inflate it to whatever pressure they desire. That is totally wrong and unsafe. Ever notice two out of every ten cars that drive in front of you seems to be wobbling. That is because a used tire remaining life span could never be estimated. Adding to that mounting and over OR under inflating the tire adds to it being unsafe. These tires are known to run hot from normal driving and twisting (making your vehicle wobble), peeling (flapping against your vehicle causing damage) and in some cases blowing out (bursting unexpectedly) while driving. Now imagine one day during a family outing you experience such action, resulting in your vehicle loosing control and crashing. Yet, you consider number houses to harm a family more?

larry 11 years, 6 months ago

i agree with "bismark" Bahamians first but you have our brothers for a few dollars would front businesses for foreigners.

leonardo85 9 years, 5 months ago

The auto dealers are having to go through many complicated situations due to this issue. The government should not impose more taxes on the dealers and http://fastmotionautotransportllc.com/n…">auto shippers or else, they would be under huge financial pressure.

isabella 9 years, 5 months ago

Other dealers must be feeling worried too, they are now going through a bad phase and they should be given all the assistance they need to overcome this situation. The http://grede.com/">auto body parts suppliers should also be given the support they need to grow.

Marthasmith 9 years, 5 months ago

Seeing so many dealerships struggle is really sad, but perhaps the cars they chose to sell are also to blame for the market fall. Going for http://gullwingmotors.com/">classic Aston Martin would make them stand out on the market, thus bringing in more potential customers. Iconic cars will always sell better!

karina 9 years, 5 months ago

It really feels bad to learn that a good business was so badly affected by this decision. However, such dealers should open another business and offer http://leasetolandstar.com/independence…">owner operator trucking jobs, this way they would be able to grow fast.

leonardo85 9 years, 4 months ago

Such changes are bound to affect those who belong to this industry. However, the auto dealers should not lose hope and they should also try to branch out in other directions. They should opt for http://www.meinekefranchise.com/">auto repair franchise which offers good business opportunities.

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