By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

New car dealers yesterday expressed "grave concern" over the 31.17 per cent third quarter sales decline, warning: "God helps us if this trend continues into 2018."

Fred Albury, the Bahamas Motor Dealers Association's (BMDA) president, told Tribune Business it was "not a pretty picture" in the industry, with the recent Car Show - normally a sales booster - proving "quite depressing".

And he made a call, likely to be controversial in some quarters, for the Government to further tighten regulations on used car imports, expressing concern that the Bahamas could become a "dumping ground" for aged vehicles that ultimately become an environmental and health hazard.

Mr Albury likened autos more than 10 years-old to "flat screen TVs and microwaves", suggesting that they were just as easily discarded when they broke down, and added that the Government was missing out on a significant revenue raising opportunity.

"There's a tremendous concern," he told Tribune Business of the near one-third drop in new car sales for the three months to end-September 30. "Sales are down considerably.

"We're not sure if this is because of the hurricane situation [Irma and Maria], and people got scared and tightened up. But it is of grave concern going forward.

"If this trend continues, God help us in 2018. We'll see the demise of some of these dealers. Either we're going to fade away or become a used car dealer like everyone else, bring in cars under my personal name, sell them on the side of the road and not pay any taxes."

Mr Albury's latter comment was made partially 'tongue in cheek', but there was little disguising the concerns over the new auto industry's continuing inability to rebound from the 2008-2009 recession almost a decade later.

The 31.17 per cent third quarter sales decline wiped out the 6.7 per cent increase enjoyed in the 2017 first half, pushing year-to-date sales for the first nine months down by 7.42 per cent compared to 2016 figures.

Mr Albury said BMDA members had been anticipating a recovery every year for the past four-five years, but none had yet materialised.

"I'm keeping my fingers crossed that was due to the hurricanes out there," he said of the third quarter plunge. "It's not a pretty picture out there; not a pretty picture at all.

"We had the Car Show a couple of weeks ago, and there was a lot of window shopping, but very few [sales] materialised up there. We're still following up on it, and there is some activity; people came in and looked, got invoices, spoke to the banks and have to follow up on documents.

"But it's nowhere where it was a few years ago," Mr Albury continued. "It was quite depressing up there to see an industry that I've helped to build for all these years, and the business, to see it slipping away.

"There's not much you can do about it. We'll have to see what 2018 brings around for us, but I don't think it's going to be much better than 2017. I think everyone is just in the mode of trying to keep their doors open and heads above water."

The BMDA president expressed scepticism over whether Baha Mar's full opening in 2018, and estimated 5,000 hires, would make a substantial enough impact to drive higher GDP growth and consumer spending.

"Hopefully this new government will have wrapped itself around the economy somewhat, and start to do things that spark some confidence and encourage people to buy new cars as opposed to cheap used cars," Mr Albury told Tribune Business. "It is what it is."

The new car industry is significant because, as a 'luxury good', its products - and their sales volumes - provide a good insight into the overall Bahamian economy's health and performance, especially consumer incomes and confidence.

The depressed economy, with high unemployment and reduced incomes, coupled with low consumer confidence, has been the main factor impacting new auto sales over the past decade.

Bahamian consumers have responded by keeping existing vehicles on the road longer, and have switched purchasing tastes towards less expensive 'used' cars.

Apart from these trends, other contributing factors working against new car dealers are a combination of buyer difficulties in obtaining bank loans; VAT's introduction; already-high Excise tax rates; price controls; Business License fees; and real property tax increases. All these forces have worked to push new auto prices beyond many Bahamians.

Arawak Port Development Company's (APD) just-released 2017 annual report exposes the dramatic shift in consumer demand towards used vehicles, and its impact on new auto dealers.

Disclosing details on the bulk vehicle import business it obtained in December 2014, APD said: " The port began receiving an average of 1,200 to 1,400 cars imported monthly from the Asian markets, which did much to offset a sluggish economy and an underperforming construction industry.

"The aim is to enable the release of 120-150 vehicles per day consistent with staff quota. This new business has involved close co-operation among the agencies, stevedores, APD and the Customs Department."

Mr Albury yesterday estimated that 95 per cent of these vehicles were "cheap used cars", whose minimal valuations meant they contributed little to the Public Treasury in terms of tax revenues when compared to more expensive new vehicles.

"The hurtful part is that the Government gets very little revenue out of it," he told Tribune Business, "and these cheap used cars not only impact new car sales but also the banks, the body repair shops and the insurance companies, who sell less comprehensive insurance.

"When you sell used cars there is a lot of trickle down to other industries, but these used cars are like flat screen TVs and microwaves. When they break down, you throw it away. Who has to clean it up? Us.

"When you buy a car that's eight to 10 years-old, you drive it for a year and, if you have an accident and the repairs are worth more than the vehicle, you throw it away and buy another one."

Mr Albury said the preference for used cars meant there was less lending by banks, while the inability to obtain comprehensive insurance meant drivers were less likely to seek out body shops for repairs following an accident.

With abandoned and/or derelict vehicles littering many Nassau communities, the BMDA chief again called for the Government to introduce an environmental levy; reduced age limits for imported vehicles; and/or a licensing system to restrict the number of autos persons can import in their own name.

These suggestions are likely to be resisted by some, on the grounds that they are 'anti-competitive' and will hurt 'the small man', but Mr Albury has repeatedly said all he and BMDA members are seeking is a regulatory and taxation 'level playing field'.

"The Government, given the need for revenue, is missing an opportunity here, and it's going to cost them more in clean up fees to get these used cars out of the country and disposed of in an environmentally friendly way," he told Tribune Business.

"We've put the wheels in motion to create some dialogue with the Ministry of Finance on this issue as it's having a tremendous impact all around, not just on the industry.

"The banks are not lending money. That's why bank fees are going up because they're not earning interest. Whether you like it or not they have to keep their doors open, as people are not borrowing money. That's out of a bank manager's mouth. That's the long and short of it."

Mr Albury also warned that the Bahamas would lag in introducing new auto technology that was environmentally friendly, such as hybrid and electric vehicles, if new car dealers continued to be swamped by used autos and went out of business.

"It's the new car dealers that keep the country on the cutting edge of technology," he said. "If we close our doors we will just be importing these cheap used cars. The Bahamas and other jurisdictions will become a dumping ground."