Jetcon finds workable sales formula

As Jetcon Corporation’s sales rebound, nearing pre-pandemic levels, the used-car dealer is settling for now on what Managing Director Andrew Jackson calls “a nice formula that works” — the right brands and enticements.

In its latest earnings report, Jetcon recorded revenue of $209 million for the April-June second quarter, more than double last year’s inflows in the period, but still about $12 million shy of the $221 million in revenue from second-quarter pre-pandemic sales in 2019.

“We’re almost there, although the 2019 numbers were higher and these margins are definitely lower; but in terms of units sold, we are almost back there,” Jackson told the Financial Gleaner.

He says last year’s second quarter, being the peak of the lockdown, bears no comparison. The pandemic lockdowns started in March. Jackson says, and sales numbers “started dipping in April, then a big drop in May before getting a little better in June”.

Sales in the April-June 2020 period was only $86 million.

To get customers back to the lots, and ready to buy, Jackson said Jetcon opted to sacrifice its margins in order to grow volume sales and maintain market share. The company was able to pursue the strategy because of the high levels of inventory on its lots, which gave car buyers a choice of models, he said.

Jetcon has traditionally traded the Subaru range of vehicles, along with Mazda, and Nissan. Toyota and Honda were only carried in small numbers. But it’s now adjusting for survivability, in line with market conditions.

“We basically diversified our inventory, adding a lot more Toyota models, especially the Probox, Vitz and other lower-end cars. The customers reacted well to that,” Jackson said.

With the increased sales, Jetcon eked out a second-quarter profit of $6 million, outperforming the comparative 2020 period in which it made a loss of $6.8 million. Half-year profit, January-June, amounted to $17.6 million, a turnaround from a loss of $7 million in the year-prior period.

Jackson credits both Jetcon’s stock of in-demand brands and its marketing and advertising campaign for the gains.

Computer chip shortage

One of the worrying issues for the used-car trade is the shortage of computer chips needed for the control systems of new cars, and the impact it will have on new cars rolling off the assembly lines. If automakers supply fewer new cars, then the expectation is that car buyers will change out their vehicles for new models with less frequency, thereby leading to lower supplies and higher acquisition costs for pre-owned vehicles.

In that scenario, he said, dealers like Jetcon that carry high inventory are better poised to ride out the supply gap.

“When persons hold on to their cars longer, the shortage pushes up the price. Over the last two months, we are seeing increases of up to 50 per cent out of Japan. With our inventory, we can hold off on purchases until the market stabilises,” he said.

Jackson remains concerned about the uncertainties linked to the COVID-19 pandemic, but is upbeat about the prospects for business in the coming periods, saying sales up to the second week in August were 48 per cent ahead of 2020.

“The promotions will be maintained for the rest of the year. We think we’ve found a nice formula that works,” he said.

neville.graham@gleanerjm.com