The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian new car dealers yesterday warned that the Government’s latest tax proposals would further drive consumers towards used autos, with the constant reforms creating “turmoil” in the market.

Rick Lowe, operations manager at Nassau Motor Company (NMC), said all but one model in the Honda/Chevrolet dealer’s fleet would see price increases as a result of the Christie administration’s plans to revert the industry’s tax base back to cost from engine size.

“It’s going to raise prices rather dramatically on every vehicle we sell,” he told Tribune Business. “The only vehicle that will not go up is the Chevy Spark; that’s the only one that will remain at 65 per cent.

“Everything else is going to go up. I don’t think it’s logical. We’re going to force more people into the used car market. It’s going to raise the cost even more. The people trying to get financing now may not be able to get it, as they will be thrown out of the market.”

The current auto industry structure has the Excise Tax rate based on engine size.

It is:

• Vehicles with engine size 2000 cc and under, 65 per cent

• Vehicles with engine size greater than 2000cc but smaller than 2500cc, a rate of 75 per cent

• Vehicles with engine size greater than 2500 cc, a rate of 85 per cent

The Christie administration is now proposing to switch the basis from engine size to vehicle value, back to where it was pre-2010. The three-tier structure is:

• Under $10,000:65 per cent

• Over $10,000 but less than $40,000: 75 per cent

*Over $40,000: 85 per cent

Ben Albury, Bahamas Bus and Truck’s general manager, backed Mr Lowe’s view that the proposed duty changes would benefit the used car market at the expense of new car dealers.

This was because used cars were more likely to fall into the proposed 65 per cent duty bracket, while new cars would mostly fall between the $10,000 to $40,000 price points and attract a 75 per cent rate.

“One hundred per cent of new vehicles fall between $10,000 and $40,000,” Mr Albury said. “It’s still not a structure that’s going to facilitate people purchasing new vehicles. This change will not have a very big impact overall.”

The Bahamas Bus and Truck executive said it was vital to encourage Bahamians to buy new vehicles.

Apart from being more fuel efficient and environmentally friendly, Mr Albury said consumers were able to obtain better bank terms and interest rates, and have better collateral, if they acquired new cars.

And he reiterated his call for more consultation and advance warning from the Government on proposed auto industry duty changes, arguing that this was the only way to maximise benefits for all - government revenues, auto dealers and consumers.

“If you’re going to make changes you can’t keep stepping back and forth, making a change every couple of years, because it sends the market into turmoil,” he told Tribune Business.

“The BMDA has tens of millions of dollars in inventory, and every time you change that - change the structure, change the rates - it affects inventory.”

Mr Lowe, meanwhile, pointed out that the proposed changes were likely to increase the Excise Tax rates on commercial vehicles - which had been lowered from 85 per cent to 65 per cent - back up to 75 per cent.