The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian new car industry is “at the initial stages of recovery”, a leading dealer said yesterday, with the sector hoping this can be spread more equitably via the upcoming budget.

Fred Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business while the outlook for the industry “looks a little brighter” following 12 successive years of decline its rebound had not been spread unevenly.

While Tribune Business understands that industry-wide new auto sales are ahead of last year’s comparisons for the first two months of 2019, Mr Albury said the improvement had largely been driven by dealers with vehicles whose engine size is 1.5 litres or less.

While they are able to enjoy the benefits from the last budget’s tax cuts, which reduced Excise Tax rates on such vehicles from 65 percent to 25 percent, those solely with inventory above this engine size are facing higher rates that make them price uncompetitive.

With the industry having “made the case” for the reduced tax rates to apply to more vehicles, Mr Albury said the BMDA and its members were hopeful further reforms could be introduced with the upcoming 2019-2020 budget after the recent mid-year statement passed without incident.

He admitted that the new car industry was unlikely to again experience the heady days of 2006-2007, when new auto sales peaked pre-recession, but said there was “some optimism” among dealers that the market had bottomed out and is slowly starting to revive.

“There has been a bit of an uptick where the duty cuts applied, but it’s only shifted the focus to the 1.5cc category at the expense of those that don’t have them,” Mr Albury, who heads Auto Mall, told Tribune Business yesterday. “What has happened is that some of the dealers have been left out in the cold not having product in these engine sizes.

“It makes it a bit lopsided; some are in and some are out. We have requested that they [the government] look at raising the bar, or creating another category, to accommodate vehicles over 1.5cc (litres) up to 2cc but there was nothing in the mid-year budget.

“We’re hoping that once they have a full year of sales at 1.5cc or less they can see the impact of that. We’re trying to make the case once they see the returns of dealers that do have 1.5 litres are benefiting, and those that don’t are really hurting.”

Still, the BMDA president said the mood among consumers and the industry appeared to be improving in line with other parts of the economy. “It’s looking a little brighter out there, put it that way,” he said.

“There’s a bit of a feeling of some optimism that things are starting to turn somewhat... I don’t think we’ll see those days of 2006 and 2007 coming back like they used to be. I would say, though, that it’s in the initial stages of a recovery.

“I think the Government made the right move in reducing the import tax on small vehicles that are fuel efficient and bringing the price level down to a level middle class consumers can look at, and the banks are offering good funding programmes,” Mr Albury continued.

“Dealers have been very cautious in stocking heavily on inventory because they don’t want to be paying heavy interest on it, and they’re a bit afraid there might be other changes in duty rates so they’re holding back on importing certain models. But the bond, which came into effect with the last budget, has taken away some of that fear out there.”

Mr Albury said there had been a time lag between the 2018-2019 budget, and the effects of the duty slash for 1.5 litre vehicles and under coming through, due to the six-nine month ordering cycle Bahamian dealers typically faced with their manufacturers.

“It’s taking time for the different brands to shift product around and get the right product, at the right price, and move it,” he explained. “Some dealers had it at their fingertips, and other dealers had to go back to the manufacturer to make the case for it.

“It’s going to take more than a year for it to turnaround 100 percent for all the brands.”