The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The auto industry has held talks with the Government about adjusting the 25 percent duty threshold to enable more dealers to have "a horse in the race", it was revealed yesterday.

Fred Albury, the Bahamas Motor Dealers Association's (BMDA) president, told Tribune Business that the industry was hoping the Minnis administration will amend the 1.5cc engine size threshold to allow more vehicle models to qualify for the lower excise tax rate - a move it believes will benefit consumers as much as the sector.

He added that the industry was looking for the changes to be introduced in either February's mid-year budget or the 2019-2020 budget that must be unveiled by end-May, with the reduction from the typical 65 percent tax rate slashing as much as $10,000 off new vehicle prices.

Confirming that dealers with vehicle models of 1.5cc or less had already been reaping the benefits, Mr Albury told this newspaper: "For those who have product at 1.5 litres, yes, we've experienced a boost, but there are those dealers that have none and they're experiencing misery.

"There has been some consultation with the powers that be to consider some adjustment or another category of vehicles. We're requesting that there be some adjustment. A lot of dealers have vehicles with 1.6 litre engine capacity, so either bump it up a little bit or create another category for 1.5cc to 2cc vehicles with some adjustment there.

"That way all the dealers have a horse in the race, and consumers would have a lot more choice. It would enhance new car sales and the Government would realise more revenue from the industry. Whether it's the mid-year budget or full-year budget I don't know. It's up to them."

Mr Albury said the Government had indicated it wanted to see the full impact of the 2018-2019 budget reforms take effect first before making any further adjustments. These moves, which took effect from July 1, cut the excise tax rate for vehicles with engines below 1.5cc to just 25 percent, compared to the previous 65 percent.

The cut was enacted to make new, smaller and more fuel efficient and environmentally-friendly vehicles more affordable for Bahamian consumers, and Mr Albury said the early signs were encouraging - but only for dealers with product at or below the 1.5cc threshold.

"We're only three to four months on," the BMDA chief added, "but I can say that it did give a boost to sales for those with product at 1.5 litres, but it has considerably impacted dealers with nothing in that range.

"At Executive Motors we have a small new SUV called The Rush below that threshold. It arrived right after the change, and gave us a boost to the extent that we pre-sold on every shipment coming in.

"If that is something to measure things by it has had a tremendous impact. The consumers have embraced it and moved forward with it. But there are dealers with 1.6cc engines that are just as efficient but suffering badly. I'd like to see everyone have a horse in the race to keep the doors open."

Rick Lowe, Nassau Motor Company's (NMC) director/operations manager, told Tribune Business it was anticipating a New Year boost once inventory with engine sizes below 1.5cc started to arrive on New Providence in earnest. He added that the Excise Tax rate cut from 65 percent to 25 percent represented as much as a $10,000 saving per vehicle for consumers.

"Had we known [of the Budget changes] we could have pre-ordered and have stuff here and available," he said. "Now the factories are changing over so new inventory will not start to come until January and February.

"We've got one or two models coming in, and are very happy because we have probably more vehicles than anybody else in that 1.5cc range. We have quite a selection, and in most instances there's a $10,000 difference in price. We're kind of looking forward to it. I don't think the other retailers have as many models as we do in that 1.5cc range."

New auto industry sales, though, have remained relatively flat with 2017 comparisons during the 2018 second and third quarters. Mr Albury said July had been "a horrible month" for sales, but the sector "bounced back" in August while September and October were "OK".

He said that while his BMW business had also benefited from the taxation rate cut, there were other dealers - Bahamas Bus and Truck, Friendly Ford, Tyreflex and Sanpin Motors - that currently have nothing that benefits from the 25 percent duty rate.

"Hopefully something can be done for 1.5-2 litres that helps and encourages people to get fuel efficient vehicles," Mr Albury added. "1.5cc is encouraging, but it would be even more encouraging to keep the dealers profitable out there."