Driving around devaluation
In May this year the Jamaica Chamber of Commerce (JCC) outlined its concerns over erosion of the Jamaican currency’s value, noting that “at January 1, 2016, the average rate was US$1 to J$120.24. At May 19, 2016, this had declined to US$1 = J$125.33, representing a decline of 4.2 per cent since the beginning of the year.”
Since then the Jamaican currency has lost about another dollar in the exchange rate to US currency. New car prices are typically quoted in US currency, the conversion to Jamaican dollars made to determine the price. However, while this has resulted in new car prices going up proportionately chairman of the Automobile Dealers Association, Kent LaCroix, says there has not been much of a ripple effect on sales.
The head of the new car dealers organisation said “there has been a small effect, but not that significant. It is not something we are worried about right now.”
A number of new vehicles have been introduced into the Jamaican market with some fanfare since the start of the year, indicating a measure of confidence in the commuting public’s responsiveness. Among them are the redesigned Toyota Fortuner (the 2.7 litre two- wheel drive starts at $8.412m, the 2.7 litre four-wheel drive at $8.971m and the 3.0 litre diesel four-wheel drive at $9.210m); the revamped Honda Accord (starting at $5.985m); and the Jaguar F-Pace (starting price $11.7m).
In addition Magna Motors, dealers for Hyundai in Jamaica, opened a new dealership on Hope Road in April, while Toyota Jamaica’s Old Hope Road full service outlet was opened in February. In June Howard Foster, Toyota Jamaica’s Sales and Marketing manager, told Automotives that the recently opened branch is "doing very well. A lot of our customers say they love the convenience. It is doing better than planned, and it is early days yet."
Toyota Jamaica is not the only new car dealer to be seeing strong returns on investment in new showrooms. KIG, which counts the Subaru and Ford brands among its stock, opened a Hope Road location in October 2015. Judith Denton, KIG's Sales and Marketing manager, told Automotives it is these two brands which have benefitted significantly from increased sales at the new showroom.
While the Jamaican currency has been declining, LaCroix pointed out that movements in other currencies have to be taken into consideration. When this is done there is “a balance”, so the increase is not as prohibitive as it might first seem.
The effect of a sudden slide in value may not come as an extreme shock to purchasers who ordered vehicles before the devaluation, as this is taken into consideration when the price of the new vehicle is being worked out. LaCroix said if someone is prepurchasing a vehicle possible currency movements are factored in at the time payment needs to be made to the supplier.
“We consider the possibilities very early,” the ADA said.
Jamaica continues to favour the SUV vehicle segment. Although smaller SUVs such as the Suzuki Vitara, Mitsubishi ASX and Honda HR-V have come into the market, LaCroix said they have not cannibalised the market share of larger SUVs such as the Toyota Rav-4, Hyundai Tuscon, Suzuki Grand Vitara and Honda CR-V. “If any sector of the market has been affected by these smaller SUVs it is the cars,” LaCroix said.
However, he said more people are factoring in fuel consumption when buying new vehicles. Whereas before purchasers would see, like and buy a car, more of them are considering fuel efficiency in making up their minds.
Still, sales continue as LaCroix said “there is more concern, but not to the point where they will not purchase.”