The market for new cars in Jamaica has seen a marginal increase over last year but the outlook for the remainder of the year is grim, says head of the Automobile Dealers’ Association (ADA) of Jamaica, Kent Lacroix.

Lacroix told Sunday Finance that the improvement was due primarily to an increase in the purchase of cars by rental agencies and not due to an improvement in general consumer demand.

“The first quarter of this year has shown a little bit of an increase over the first quarter of last year. The increase is marginal, about two to three per cent over last year, but the rent-a-car market represents 60 per cent of the vehicles that were purchased,” he said.

“All told, the industry is not doing as well as we would have expected,” Lacroix added.

He said the expectations for increased sales are not strong because of challenges that affect the ability of the customers, including concession holders, business operators and regular buyers to pay.

Lacroix explained that even where government workers, who are concession holders, have made attempts to buy new cars, these attempts have been limited by the length of time it takes for the concessions to be approved — up to four months.

The fallout in the bauxite sector has also affected the market for new commercial vehicles, said Lacroix. With the closure of the plants, Lacroix said the overall commercial market for vehicles has been flat.

He added that issues of cash flow and availability of capital has also caused demand in the farming sector, another large market for commercial vehicles to contract.

“For the rest of the year we don’t expect to see an increase at all. We expect it to be very flat in relation to last year, which was a very bad year,” Lacroix said. “We certainly had hoped that the interest rates would have been reduced significantly. They have been reduced but that has not done much for the industry.”

The ADA president argued that interest rates on loans should have been reduced more equitably with those on investments, which are currently in the single digits.

“They have been reduced from 25 per cent to seven, eight, nine per cent,” Lacroix said of investment rates, while noting that where the loan rates are concerned, “the balance just isn’t there”.

Even though the group is lobbying the Government for a reduction in duties on motor vehicles, Lacroix said until that happens it is still very difficult for consumers to purchase vehicles with the duties as high as 100 per cent on the value of the item.

Despite this, Lacroix said the market for new cars is diversified, with the small increase in sales being spread across various dealerships.

“There are sectors that are doing well. There are brands that are doing well,” Lacroix said.

Among them are Toyota, which leads the market in terms of volume purchased, followed by Suzuki, Honda and Nissan.

“The SUV market is the one that is the most profitable because of the high demand for vehicles that are able to take on the roads in Jamaica,” Lacroix told Sunday Finance.