New year, old challenges - Auto dealers paint a not-so-rosy picture
Published:Sunday | January 2, 2011 | 12:00 AM
Brian Bonitto, Special Assignment Editor
A new year generally ushers feelings of excitement, renewal and great expectations. However, Jamaican auto dealers are viewing 2011 with some amount of scepticism.
"2011 is not looking good for the used-car dealers from where I sit," said Lynvalle Hamilton, president of the Jamaica Used Car Dealers Association (JUCDA).
Hamilton, who was elected in July last year, said there were several factors — both local and overseas — which helped him to arrive at this conclusion.
"We were hoping vehicle prices in Japan would have fallen, but we're not seeing that. And, based on conversations with our suppliers, this in not going to happen," he said.
According to recent United States media reports, the Japanese yen has strengthened against its American counterpart. This, therefore, makes it more expensive to purchase units out of Japan and would affect both new- and used-car dealers. One US dollar equals 83 Japanese yens.
Back home, Hamilton bemoaned the high import duties on motor vehicles which he said is crippling the sector.
"If there isn't a lowering of import duties, or if there isn't an amendment to the import policy which will allow us [used-car dealers] to bring in older cars then more dealers will be closing down their businesses. I recommend the government revamp the policy to include cars up to six years old," he said.
At present, government policy dictates used-car dealers can only import vehicles no older than three years.
"People are losing their jobs and most persons employed in the used-car sector are from the inner city. The negative effects are far-reaching," he continued.
While declining to give company names, Hamilton said of the more than 70 companies making up the group, 10 dealers went out of business last year. He said more would follow if current trends continue.
The JUCDA president said after holding several talks with the government, there was still no definitive word from them.
"I think they are waiting for us to die," he said. "I suggest the government reduce the import duties by 15 per cent or totally remove the Special Consumption Tax on imports. This would assist in increasing revenue for them."
Kent LaCroix, chairman of the new-car importers' group, ADA, also see local import taxes as a noose around the sector's neck.
Lip service
"It is unfortunate. And, the government is paying lip service to any discussions we may want to have with them with a view to reducing the duties. Both the consumers and them would stand to benefit," LaCroix said. "We, however, continue to discount our vehicles and bring in fewer and fewer stock. It's frightening!"
LaCroix, who is in his sixth year as chairman, said 2010 was not all bad for the 15 companies comprising the association.
"2010 was a much better year than 2009. We had peak periods as many car-rental companies purchased vehicles from the new-car dealers. This improved our numbers just a shade over 3,000," he said.
He said car-rental purchases were between 700 to 800 units. He, however, was not optimistic this occurrence would repeat this year.
In order to survive, LaCroix said new-car dealers had to be creative by shifting focus on servicing and spare-part sale.
For his new year outlook, LaCroix adopted a wait-and-see approach.
"It is difficult to analyse. But, it can't be much worse than 2010."