The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamas Motor Dealers Association’s (BMDA) president yesterday expressed fears that Hurricane Matthew will be “another nail in the coffin for new car sales”, with its impact carrying through into the 2017 New Year.

Fred Albury told Tribune Business that the storm’s impact on consumers, and their disposable incomes, was likely to make an already-bad situation “horrible” for struggling new car dealerships.

The Auto Mall’s principal said that with most Bahamians focusing on home repairs and restoration in the Category Three storm’s aftermath, the consistent decline in new auto sales post-VAT implementation was likely to be exacerbated.

“It is a concern,” he told Tribune Business. “Right now, everybody is in recovery mode. There are some situations, like in Freeport, because cars were damaged up there, where we had a couple of buyers come in and purchase vehicles already.

“But people are going to be more concerned with putting a roof over their head than buying a new car. It’s going to be another nail in the coffin for new car dealers for the time being.

“It was bad before. Now I think it’s going to be horrible. I think this will carry on in the New Year.”

Tribune Business revealed back in July how new car sales for the 2016 first half were down by 8 per cent year-over-year, a decline that followed a 38 per cent drop-off in 2015.

The plunge is even more stark when the raw numbers are compared to pre-2008 recession levels. Some 4,200 new vehicles were sold in 2007, compared to the 1,564 that BMDA members moved in 2015 - a decline of 66.8 per cent or two-thirds in nine years.

Mr Albury told Tribune Business that it was in the Government’s own interests to help counteract the decline in new car sales, given the impact on its import duty and VAT revenue earnings.

He pointed out that the Public Treasury’s yield per vehicle had drastically declined as consumers showed an ever-increasing preference for used auto imports, which generated lower tax revenues because of their cheaper prices.

The BMDA president again urged the Christie administration to clamp down on the numerous roadside auto vendors that have sprung up throughout New Providence, arguing that they enjoyed a competitive advantage over established dealerships by paying little to no taxes, while also incurring minimal overheads.

“There’s no control on the new car imports coming in by the individuals set up alongside the road,” Mr Albury told Tribune Business. “I can’t compete with that out there.

“Hopefully, with a mid-year Budget coming in January, they will take another look at that situation. I’m sure the drop-off in new car imports has got to be impacting their revenue considerably.”

He added that the solution to New Providence’s “saturation” with used vehicle imports was “not rocket science”, but required a Government “with cahunas” to implement it.

Mr Albury again urged the Bahamas to follow the lead established by the likes of Jamaica, Barbados, Trinidad and other Caribbean nations that had been “flooded with used cars”, and “tighten up on the age restriction” for vehicle imports.

The Bahamas has already placed a 10-year age limit on vehicle imports, but Mr Albury again called for the Government to reduce this further to five years, in line with the region.

“As politicians are more concerned with votes than revenue at times, it’s going to take someone with cahunas to get the job done,” he told Tribune Business. “But that is the way to deal with it.”

Mr Albury acknowledged that many Bahamians might oppose a five-year age limit, fearing they would be unable to afford auto purchases, but he argued there was sufficient supply of five-year old vehicles to keep prices keen.

And he suggested that the benefits from such a move would outweigh the negatives, in terms of ensuring automobiles on Bahamian roads were more efficient, reliable and environmentally friendly.

“The outcry might be that consumers can’t get cheap used cars, but that’s not the case,” Mr Albury explained. “The market’s saturated with five year-old vehicles.

“It’s the initial point of entry where you enhance the value, and the newer the car is, the more efficient and environmentally friendly the vehicle is as well.

“For the first five years, the vehicle holds a good value, but in its sixth and seventh years, the value drops drastically. The Japanese look for markets like ours that have no controls in place.”