WHILE motor vehicle sales in the United States are still drifting with COVID-19's prolonged impact on its economy, local used-car dealers appear headed into the most lucrative period of business since 2020.
A buoyant vice-president of the Small Business Association of Jamaica (SBAJ) and former spokesman for the used-car dealers, Garnett Reid, told the Jamaica Observer's Auto magazine yesterday that things are looking up; he is seeing a 67 per cent increase in sales for the fast-approaching Christmas season.
“What I am facing is that people are coming in to the office to order used-car vehicles from Japan and Singapore. They are coming in and they are making their deposit. Right now, I can see myself in with a 67 per cent increase in sales,” he said.
“I ask them why are you buying a car? They say that they prefer to buy a car than to use public transportation, in terms of the buses and the taxis, where they put their lives at risk. They prefer to go to the bank, get a loan, purchase the vehicle and pay off their loans and protect their space, that is number one,” Reid continued.
“For rentals, we have seen a high increase in bookings. In other words, America has fairly opened up, Jamaica is opening up and returning residents are coming in for the festive season,” he added.
However, Reid, who is managing director of Caribbean Auto Sale and Rent-A-Car Caribbean & Tours, said that there is still one threat to the tremendous turnaround that he is forecasting, and that is the movement of the US dollar.
“What face us now, though, is that the devaluation of the Jamaican dollar is hurting the sector. What we are trying to do is that, as dealers, we are facing high interest rates and we know that the price of cars will be increased. But, although the price is increasing, what people are doing is that they are not buying the 2016, 2017 and 2018 models, they are buying the 2012 and 2013 motor vehicles,” he pointed out.
“They are not buying the new ones much, anymore. They just want a vehicle to move around: Service the vehicle, move around, pay less money and then move on with their lives,” he stated.
“If we could give them the 2015 and 2016 vehicles, with the dollar moving from $156 (to the US$), it is going to drive the cost of vehicles up. So they are not buying the 2015 to 2019 vehicles. Some will, but the majority are now buying the 2012 and 2013 vehicles because they are much cheaper,” he explained.
“But, generally, dealers' hopes are bright for the Christmas, I can tell you that. Bright or the Christmas. People are buying up vehicles. People are importing vehicles. In other words, if the car is too expensive on the lot, they prefer to come to me and I import it for them which is much cheaper. They pay like $200,000 to $300,000 less than the normal price,” he said.
Asked whether similar interest has been shown in electric vehicles (EVs), Reid said his customers are not showing much interest in the EVs.
“My customers are not talking about electric vehicles (EV). In other words they are only talking about gas vehicles. Nobody is talking about electric vehicles right now. What the Government needs to do, they need to promote it, have seminars, educate the Jamaican people about the electric vehicles and hope that maybe next year, or year after, that people will show an interest, but right now that is a no no,” he stated.
On a global scale, after a 15 per cent decline in 2020, the motor vehicle industry had expected light-vehicle demand to rebound between nine and 13 in 2021. However, the continuing fallout of COVID-19 has presented several forecasting challenges.
This has led the experts to maintain a wider-than-normal two percentage points in their forecast range, to reflect continued COVID-19 risks and supply chain constraints from a microchip shortage. The forecast now is that the global recovery will not normalise demand until2023.
Light-vehicle sales in the United States were forecast to move from 14.6 million in 2020 to 16.0 million-16.2 million in 2021. However, the main risks to these forecasts include incorrect assumptions about the US economy's recovery, a resurgence of COVID-19 infections, delays in vaccine distribution, and the potential effect of the microchip shortage.
However, some experts insist that there are also reasons to be more optimistic about auto sales. For instance, low inventory could hold back sales, and the vaccine would enable the economy to come roaring back to normal in the new year.
The industry has seen severe lows before and has recovered, including following the depths of the Great Recession in 2009, when auto sales bottomed out at 10.43 million – the worst auto sales rate per capita since at least 1951.
There is also the fact that the current fleet of cars on US roads is at a record age of around 12 years, and strong credit access and cheap gas prices may encourage people to trade in their older vehicles.