Jamaica Gleaner
Published: Friday | November 30, 2012
Home : Business
Used-car dealers escape tax pinch
Kent LaCroix, president of the Automobile Dealers Association. - File Photos
Marcella Scarlett, Business Reporter

Not all car dealers are feeling squeezed by the hike in car import duties, which largely impacted sport utility and other large vehicles.

President of the Jamaica Used Car Dealers Association (JUDCA), Lynvalle Hamilton, said that the change in the duty structure did not affect members as those larger vehicles "were never big sellers for us".

The Common External Tariff on vehicles with engines larger than two litres was raised on June 1, from 20 per cent to 30 per cent - effectively a 50 per cent increase, which new-car dealers say has driven sales down by 30 per cent.

But used-car dealers have been spared because the large vehicle market is a segment in which they no longer play.

"Basically, the consumers are going after cars that are smaller than two litres, because these vehicles usually have better prices that the consumers can afford," said Hamilton. "Moreover, the vehicle under two litres are very fuel-efficient."

Comparing business in the first half of the year to the second half: "Things have not changed," the JUCDA president said. "We are basically doing the same amount of business as we were doing before because the duty change has not affected us much, because we don't sell a lot of vehicles that was affected."

Used-car dealers usually trade in vehicles with engine sizes of 1.3 litres, 1.5 litres and 1.6 litres. The Nissan Tiida, for example, is "a very fast mover because of its price and it is a sedan", said Hamilton.

Also the used-car dealers are heavy sellers of hatch back cars such as the Diahtsu Boon, Toyota Passo, Honda Fit and Mazda Demio.

"There was a time when we were selling bigger cars but because of the duty structure we found that this didn't make much sense, because the prices for the used cars was nearly as high as the new cars; so what you found was that people were just not willing to buy a used car for those prices," he said.

doing twice as good

Collectively, JUCDA dealers have sold approximately 6,500 vehicles between January and October.

"For this year, we sell between 600 or 700 cars per month. When compared to last year, we are doing twice as good, and the end of the year should be even better because this time of year is usually the best time for us," Hamilton said.

Last November, used-car sales got a boost when the Government adjusted its import policy to allow the sale of older vehicles - five years for car and six years for light-weight commercial vehicles.

The policy shift resulted in 10 new used-car dealers entering the market, Hamilton said.

"Right now, we are not doing as well as we use to do but we will survive. Some dealers are doing better than others but, overall, everybody will survive," he said.

Meantime, president of the Automobile Dealers' Association (ADA), Kent LaCroix, says new car sales have fallen from an average of 540 vehicles per month to 435.

"Because we are not able to move the cars as quick as we used to, we have cut back on our orders. Right now, we are having many promotional sales because we are trying to move the stock," LaCroix said.

In order to manage their future inventory and cost of storage, dealers have reduced the size of their orders.

"An order usually takes about six months to be delivered, so we have a lot of stock now, because what is being delivered now was ordered before the duty change when business was good - and you can't cancel an order or even change it," the ADA president said.

"We have reduced the size of all orders since then, because we don't want to be stuck with a large inventory that is not moving. We know we will be selling fewer cars next year," LaCroix said.


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