Dollar decline dims car sales

Sheldon Williams, Gleaner Writer

President of the Jamaica Used Car Dealers Association, Lynvalle Hamilton, is anticipating that 2013 will not be as good for used car sales as 2012. Among the reasons are a hike in the costs to import vehicles and competition for vehicles from more developed countries, which now enjoy relaxed importation regulations.

Hamilton also believes that the Government's delay in signing an agreement with the International Monetary Fund (IMF) will have an adverse impact on automobile sales. He hinted that some dealers may be reduced to mere survival mode, what with the uncertainty of closing a deal with the IMF.

"We are not really expecting the same level of sales that we got last year. Last year was pretty good when compared to the previous year. The previous year was the worst we had in quite a long time. We do expect to see some good prices this year, but it won't be as good as last year," Hamilton said.

US-dollar deficit

He explained that the delay in the IMF deal has created challenges in obtaining US dollars, the preferred currency for suppliers. He told Automotives, "We use the US dollars to purchase vehicles. Some of the suppliers have opted to accept the pound or yen if we can find it. That is how bad it has got. Some say they will even accept Jamaican dollars.We hope the IMF deal will sign off soon so we can access some US dollars." Hamilton is not sure how long suppliers will continue accepting substitute currencies and emphasised the importance of stabilising accessibility to US currency.

"We have been having challenges with getting the US dollar and we are hoping that it will be sorted out because, if it doesn't, it will affect how we do business and how we stride in the industry," Hamilton asserted.

Hamilton also explained that the demand for older cars in other, more developed countries would inevitably lead to a hike in prices.

"We are also having stiff competition from the more developed countries like Russia, United Arab Emirates and Pakistan, which was granted a seven-year policy moving from a three-year policy. You have those countries allowing their citizens to import older cars, so with them going after those cars, it causes prices to go up," Hamilton said.

Notwithstanding the unpredictability of business for 2013, Hamilton reasoned that "we will be at a level where we can survive for this year, bearing any unforeseen circumstance".

On the new car side, Kent LaCroix, chairman of the Automobile Dealers Association (ADA), admitted that he is not expecting business to boom for 2013. He advised, "Anything that happens this year will depend on dealers tightening their belts."

Dim future

LaCroix said the value of the Jamaican dollar will prove pivotal to the outcome of doing business and warned that if it continues to decline, the future will be dim.

"We are hoping that the situation doesn't get any worse. If the Jamaican dollar keeps depreciating, that means we will reduce the number of vehicles we are going to order, and that in itself will cause problems with the Government in terms of the revenue they expect to get from duties. So the fewer vehicles that we order, the less revenue will be and, therefore, the revenue that is expected will not be achieved," he said.

"I don't see any improvement from last year. I think that anything that happens this year will be on the basis of dealers reducing the number of vehicles that they order and trying to maximise the profits that they can get out of the reduced number of vehicles."

LaCroix also explained that he anticipates a reduction in the demand for new cars, as more persons will be keeping old cars longer rather than opting for upgrades or replacements. "Customers are just not able to afford it," the ADA chairman said.