New car dealers yesterday told Tribune Business they “really took a bath” in October, with sales “the worst” in recent memory due to Hurricane Matthew and the struggling economy.
Data compiled from Bahamas Motor Dealers Association (BMDA) members showed that the industry collectively sold just 64 vehicles last month, a 38.5 per cent reduction from the previous year’s 104.
Rick Lowe, Nassau Motor Company’s (NMC) director/operations manager, branded the sector’s October performance as “the worst month I can ever remember in recent years.
“I don’t see anything going back as far as 2007 that was that low,” he added.
Fred Albury, the BMDA’s president, described the post-Matthew aftermath as “horrible”, with some vehicle brands experiencing month-to-month sales declines of more than 80 per cent.
“The numbers were way off because of that hurricane,” Mr. Albury, the Auto Mall chief, told Tribune Business. “October was a disaster; it was horrible, although this month seems to have turned back a little bit. The new car industry really took a bath.”
While the Auto Mall’s Hyundai, Toyota and BMW brands had enjoyed some fleet deals, and been “able to move some dead stock”, Mr. Albury emphasised that “it’s still very sluggish out there”.
“Two of the companies didn’t have to pay VAT,” he added of October, implying that two out of the Auto Mall’s three brands paid more in ‘input’ VAT than what they received on sales.
“We paid more at the border than we took in,” he continued. “It was only one of the companies we had to pay VAT for.
“Freeport continues to be a disaster. It came around a little bit this month. This is the worst I’ve seen, and we’ve been operating there since 1987.
“This is the absolute worst I’ve ever seen it, with the hit from the hurricane, and it was just dead before that,” Mr. Albury continued.
“Consumers are hurting, so they have down shifted to the used car market. They’re scared to buy new cars, especially with the state Freeport is in.
“We need to get this economy growing again to give people confidence and a means to spend.”
Mr. Albury said one new auto dealer, understood to be Chevrolet, suffered a more than 80 per cent month-over-month sales fall for October, with just three vehicles sold compared to 16 the previous month.
It was a similar tale for his Toyota brand, where month-over-month sales for October declined by two-thirds - from 15 vehicles in September to just five.
Month-over-month, new auto sales were off 58.4 per cent, falling from 154 in September to 64 in October.
The Matthew-induced downturn occurred after a 2016 third quarter in which new auto sales actually increased by 26.2 per cent year-over-year, growing from 366 in 2015 to 462.
For the first nine months of 2016, total BMDA member sales are slightly ahead of last year, running at 1,244 compared to 1,219.
While these numbers seemingly indicate that new car sales are levelling off post-VAT, and may be ‘finding their floor’, Mr. Lowe told Tribune Business that the 2016 third quarter numbers had been bolstered by ‘fleet sales’ to the police and government.
He suggested that when these purchases were taken out, the third quarter numbers would essentially be ‘flat’ with the 2015 comparable period.
Mr. Lowe also said the Government purchases gave a potentially “false reading” of the market, given that dealer profit margins on such sales were often thin, with credit that other purchasers were competing to access taken out of the financial system.
“It’s levelled off, but levelled off in the wrong direction,” Mr. Lowe told Tribune Business of new auto sales. “If it would have been at pre-VAT levels, we would have been able to eke out a living, but at post-VAT sales we can’t. It’s not a pretty picture wherever you look.”
Mr. Albury concurred, adding: “It’s only the fleet business and corporate business that’s keeping things going. It’s rough out there.”
BMDA members seemingly remain on course to finish 2016 close to last year’s 12-month sales of 1,564, having generated 1,373 with two months left in the year (November’s data yet to come).
However, the sector reiterated in a statement to Tribune Business: “Even though there was a slight increase in sales for the third quarter as a result of fleet sales to the Government, sales remain sluggish.
“Projections for the remainder of the fourth quarter remain sluggish as a result of Value-Added Tax, Hurricane Matthew and a generally depressed economy.”
The Bahamian new auto industry is also 63 per cent down on the halcyon days of 2007, when it sold a total of 4,185 units.
By Neil Hartnell
Source: Tribune
