By NEIL HARTNELL
Tribune Business Editor
New car dealers are warning that the government’s tax earnings from the industry will be severely reduced with 2021 orders expected to be up to 70 percent off compared to pre-COVID levels.
Fred Albury, the Bahamas Motor Dealers Association’s (BMDA) president, told Tribune Business that his Auto Mall enterprise had stopped ordering “for four to five months” immediately after the pandemic hit because lockdown restrictions and the devastating impact on consumers meant it was almost impossible to offload existing inventory.
And supply chain interruptions, including fires at factories producing micro chips that are essential components in several vehicles, are set to create a supply shortage that threatens to further worsen the drop-off in new vehicle imports to The Bahamas sparked by low customer demand and dealers focusing on clearing excess inventories they still hold.
“When this thing started we had inventory coming in for four months that we couldn’t do anything about,” Fred Albury said. “It meant that inventory built u, and because of that we stopped ordering. We stopped ordering for four to five months. I anticipate this lack of inventory coming in is going to stretch for the next three to four months.”
The BMDA chief spoke out after the Arawak Port Development Company (APD), owner/operator of the Nassau Container Port, revealed on Friday that vehicle import volumes have dropped by up to 90 percent as its half-year profits fell by almost 36 percent compared to pre-COVID.
Dion Bethell, APD’s president and chief financial officer, told Tribune Business just 38 vehicles were brought in by a vessel that called yesterday compared to the 300-400 cars that were normally brought in by a single carrier pre-COVID-19.
Interpreting this as a sign of both reduced demand and the excess inventories that many dealers are still trying to clear from 2020, Mr Bethell forecast that import volumes across all APD’s categories will remain subdued and below pre-pandemic levels for the rest of its 2021 financial year that closes at end-June.
Illustrating the heavy toll inflicted by the pandemic on multiple sectors of the Bahamian economy, Mr Bethell disclosed: “A big vessel came in today with 38 cars. Usually they’re at the 300-400 car mark. Prior to COVID-19 the average amount of cars on a vessel used to be 300-400, and the vessel today had 38.”
He revealed that vehicle import volumes for APD’s 2021 second quarter, which covers the three months to end-December 2020, were down by 44 percent compared to the prior year’s COVID-free numbers.
Fred Albury, suggesting that the Bahamian market was also “saturated” with Japanese used vehicle imports, said of APD’s figures: “I feel that for the next three to four months that’s what they can expect. I feel maybe by the end of the third quarter going into the fourth quarter we should see some sort of recovery, and some stable supply of inventory and regular shipments coming in as we build a regular cycle.
“I would say are orders for the year will probably be down by 60 percent. Our main focus has been to cut expenses, reduce inventory, keep cash flow going and reduce our overdraft at the bank so we can save on interest. So far we’ve done pretty good.”
He added that “high-end” vehicles such as his dealership’s BMWs were still selling, but the depressed mid-market demand meant the Government will suffer “a considerable impact” to its VAT and Excise tax take from an auto industry that has traditionally been among its major revenue earners.
Ben Albury, Bahamas Bus and Truck’s general manager, echoed his namesake as he told Tribune Business: “Our ordering has been impacted similarly. I’ve cut my orders by 70 percent. I’m basically just ordering enough to still be considered a dealer. As a dealer, you have certain obligations and have to sell a certain amount of orders per year to remain in good standing.
“I’m doing what I have to do to maintain supplier relationships and that’s about it.” Ben Albury said Bahamas Bus and Truck, which used to order between 120-150 new vehicles per year pre-COVID, was now down to about 40 for the current year.
Acknowledging that new vehicle orders have been “sporadic” due to the dominance of used cars in recent years, he estimated that it took 15-20 sales of the latter for the Government to earn the taxes generated from the purchase of a new auto.
Arguing that auto dealers are “getting hammered” on new vehicle sales, Ben Albury estimated that these were down 80 percent compared to pre-COVID as opposed to just a 30 percent decline for used vehicles.