The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A well-known Bahamian auto dealer yesterday estimated that 2014 auto sales could decline 30 per cent year-over-year, based on what he described as “one of the worst January’s ever”.

Ben Albury, Bahamas Bus & Truck’s general manager, told Tribune Business that while many had speculated vehicle sales would increase in the months leading up to Value-Added Tax’s (VAT) implementation, this had yet to happen.

Disclosing that his dealership typically sold an average 30-40 autos per month post-recession, Mr Albury said just five vehicles had moved for January to-date, with only 10 days to go before month’s end.

This is likely a further indication that consumers are ‘maxed out’ following the Christmas holiday spending, and Mr Albury described it as “a very scary time to be in business” with VAT’s implementation less than six months away.

“I think it’s going to be a disaster, to be honest with you, from a lot of different aspects,” he told Tribune Business of his expectations for 2014, citing the continued uncertainties surrounding VAT and its July 1 implementation deadline.

Questioning both the Government and private sector’s ability to successfully implement the new tax, from a human resources, systems and operational perspective, Mr Albury said: “Right now, we don’t even have the final legislation.

“I, as a businessman, have nothing tangible to hold on to that shows how my business would look.”

He added: “Under the FNM, I was told to import my vehicles based on engine size. After the PLP came in, I was told to import my vehicles based on market value. Now, I’m being told duties will be reduced, but VAT will be levied.

“VAT is not being explained to me in a way that I understand how a warranty will work, how a trade in will work, how my stock will work.

“In six months, I don’t know how it’s going to work, and there is no way to prepare for it with millions of dollars in stock and millions of dollars en route.”

The Bahamas Bus and Truck general manager added that many wealthy Bahamians had informed him they were trying to get money out of this nation, due to VAT-related fears and a lack of confidence in this nation’s economic future.

“What scares me is: Is there going to be a knee jerk effect which causes, or triggers, the devaluation of the Bahamian dollar,” Mr Albury told Tribune Business.

“Businessmen that had major projects on line are putting those projects on hold because they’re worrying about the effects of VAT.

“It’s a very scary time to be in business, especially given the lack of confidence I have in their [the Government’s] ability to implement VAT in that time.”

Suggesting that the Christie administration appeared to have “pretty closed minds” when it came to VAT alternatives, Mr Albury added: “If they’re going to reconsider it, look at other means of taxation, now would be a good time to mention it.

“I’d like to see what the Government’s doing to cut spending and reduce costs. You don’t have to be an economist to see that until the Government properly manages its monies nothing is going to fill that void..

“We could tax ourselves out of business and nothing is going to change; just more money will be poured in there.”

While other Caribbean nations, such as St Lucia, had experienced a spike in auto sales as consumers rushed to buy prior to VAT’s implementation, this has yet to take effect in the Bahamas.

“People aren’t buying anything. It’s not happening,” Mr Albury said. “This month is on target to be one of the worst January’s ever. If what’s happened so far is any indication, it’s going to be extremely rough.”

Mr Albury told Tribune Business that Bahamas Bus and Truck’s “bread and butter”, the $5,000-$7,000 used autos, which normally generated rapid sales turnover, were not moving due to the difficulties buyers were having in obtaining financing.

His only purchasers currently were wealthy clients who could afford to pay cash for $50,000-$70,000 vehicles from their own equity. Yet with few persons able to afford such autos, this meant volumes were down.

“Most of my entry level or budget inventory is just not moving,” Mr Albury added. “I’ve sold five cars for the month, and in December I did almost 30 and that was a slow month.

“Pre-recession we were doing 50-80 vehicles a month, and since the recession we’ve been doing 30-40 a month. That is very scary. Towards the end of last year, for the first time in my 18-year career, we did not sell any vehicles for a two-week period. That’s the first time I’d seen that.”

Looking ahead to the remainder of 2014, the Bahamas Bus and Truck chief added: ‘It doesn’t look very good. I would say you could probably see a 30 per cent decrease [in sales] easily, based on the market alone.”

Suggesting that the Bahamian auto market had slipped behind where it was several years ago, Mr Albury said: “I was speaking to one of my co-workers, and from what he’s been told, this is everywhere.

“That does not make me sleep any more at night. I rely on Bahamians being successful, and other industries to finance them to come to me for more vehicles.”