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Levies drive up prices - Hamilton disputes warranty proposal

Published:Sunday | September 21, 2014 | 12:00 AM
Used motor vehicles for sale on display. - File
A mechanic surveys the engine bay of a vehicle. - Contributed
Lynvalle Hamilton, president of the Jamaica Used Car Dealers Association. - File
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Sheldon Williams, Gleaner Writer

Jamaica Used Car Dealer Association president, Lynvalle Hamilton, has explained that second-hand cars are expensive because of the duties and GCT imposed on purchases.

"If you are bringing in a car you have to get an invoice from a Singapore or Japanese company, and then you have to take that to the Trade Board for approval. Once you get that approval, then the dealer can ship the car," he explained. When the cars arrive, documents are taken to a broker.

"And then you have to make sure all monies are paid to the supplier for the original documents to come here. Some people can pay 50 per cent to the supplier and they will ship it, but they hold the original document until you pay the balance," he said.

After the supplier is paid for the car, there is duty equal to or more than the cost of the vehicle.

Sales plummeted

He said the sale of used cars to Jamaica has plummeted this year because of international competition. "For the past eight months, dealers have been finding it very difficult to clear their lots," he said. "Places like the United Arab Emirates and Russia import more than 20 times what we import on a monthly basis," he pointed out. He agreed that financial institutions are more favourable to new-car purchases. "Banks are more lenient towards new cars. They will give seven to eight years for repayment but (in some cases) four years for a used vehicle, and that contributes to the negative sale of used vehicles."

Hamilton said for dealers to stay in business, mark-ups are necessary. "You have staff to pay. Sometimes you have dealers who go to banks and get loans and they have to repay the loans." He said the new motor vehicle import policy will exacerbate costs. "They want you to give warranty on things where there is no basis for it. Consumers are going to feel it," Hamilton warned.

Warranty

"This will mean higher costs for the consumer. There is no way we can be in business and are being asked to factor additional expense and that expense is not factored in the price of the car," he argued.

"We have been asked to give warranty on front end parts and electric parts, and auto parts dealers don't give warranties on these; we think it's unreasonable," Hamilton said.

He said the system may be open to abuse. " We know that if you give a year warranty on a vehicle that is being driven at a place in Jamaica where the roads are very bad, every month the customer is going to want us to change front end parts. Any sensible dealer would have to sell the car at a certain price so they can survive," he said.