Happy for lifeline

Howard Campbell Observer senior writer

Friday, January 06, 2012

A natural disaster and demanding economic conditions put the local used-car industry under pressure in 2011, threatening to send it crashing into oblivion. An end-of-year gesture by the government, however, may have given dealers a lifeline.

Lynvalle Hamilton is president of the Jamaica Used-Car Dealers Association and principal at Auto Channel Ltd. His first year at the helm of the former was a tough one, as seven of its 51 members went out of business.

"It was one of the most challenging times the industry has faced," he said. "The reduction in duties just before the tsunami really saved the industry from going under."

In his budget debate presentation in May, former finance minister Audley Shaw that the common external tariff on motor cars would be reduced from 40 per cent to 20 per cent. Previously, Jamaica had one of the highest import duty structures in the Caribbean region.

The reduction resulted in Jamaica having one of the lowest import duty structures in the region.

Maybe the biggest challenge to the auto industry came in March when a 9.0 quake devastated sections of Japan, the largest source for Jamaica's used-car sector since the 1990s.

Japanese officials estimated that as many as 6,000 persons were killed by the disaster which put the brakes on commerce in that country. Local dealers for Japanese brands like Honda and Toyota said they were not badly hampered by the tragic event, as they were receiving shipments from Japan by late March.

Owners of used-car companies continued to feel the pinch, with 11 businesses calling it a day in 2011. Between 2009 and the end of 2010, 25 used-car dealers had closed down permanently.

The once-thriving industry which saw over 33,000 vehicles coming into Jamaica in 1996 declined to a worrying 4,000 in 2011. Hamilton blamed the high duties which dealers had consistently lobbied against for years, for the debilitating change in fortunes.

There was a silver lining in the cloud, however. In November, industry, investment and commerce minister Christopher Tufton announced that as of

December 1, the age of used cars imported into Jamaica would be moved from three to five years, while light commercial units would be moved to six years.

"That's really good news because it will cause prices to go down. That was a positive to end the year on," Hamilton said.