Magna Jamaica to double investment in Hyundai market
Magna Motors Dealership Jamaica Limited, which has ambitions to become a top motor vehicle seller domestically, will double its current investment in the Hyundai dealership on the road to that goal.
The company says it plans to expend an additional US$10 million ($1.2 billion, of capital by 2017, matching the amount already spent since its entry in Jamaica last year.
But to get anywhere close to pole position in the market, Magna Jamaica will have to overcome the formidable positions held by Toyota Jamaica, whose brands eclipse others in popularity locally, as well as other top dealers. Still, Magna Jamaica's Managing Director Juan Vargas believes the company can begin chipping away at the SUV segment.
However, Vargas is not saying how many vehicles his company has been able to sell since its debut, nor the target sales over coming years.
Trade Board Limited, which has comprehensive records on all vehicles imported into Jamaica, said it needed several days to pull the current data together, so it was not immediately clear what market share the brands currently hold.
New Hyundai showrooms were unveiled on Wednesday, which means that Magna can now more comfortably display its offerings and relocate its sales force from the compact space they shared with the service centre staff at Balmoral Avenue in Kingston. Still, those showrooms, developed on leased property at a cost of around $6 million, are temporary.
Vargas said the service centre, which is state-of-the-art, was completed in "four short months" after landing the Hyundai dealership.
To date, the company's investment in rolling out the dealership has topped $1 billion in local currency.
"Right now, there is more than US$10 million that was not in the Jamaican economy before. We have that in inventory, infrastructure and training. We're looking to double that since the new state-of-the-art facility, that will be our permanent base, will cost more than US$5 million," Vargas said in an interview after the official opening of Magna's showroom at 27 Old Hope Road.
The US$5 million referenced is to be invested in more permanent showrooms for Hyundai.
Still, the dealership is without a bonded warehouse. Jamaica Customs Agency says Magna has approval to clear vehicles directly from the wharf, while noting that the dealership is in the process of acquiring planning permits for the warehouse premises.
It's understood that Magna is now awaiting KSAC approval, after which Jamaica Customs will assess the property and pass its own judgement on whether it is suited for the purpose of warehousing the vehicles.
It will be located on property leased by Magna in Kingston.
Vargas confirmed that the company is yet to set up its bonded warehouse, but said it should be in place by mid-year.
"Our understanding at the beginning is that if you don't have five years as a business in Jamaica, then you can't set up a bonded warehouse," Vargas told the Financial Gleaner. "Since that, we have gone through the regulatory process and we expect that in another two months at most we will be using that facility," he said.
Hyundai is the fourth-largest motor car manufacturer in the world behind Toyota, VW, and General Motors.
In Jamaica, where the brand has been sold since the 1990s - Key Motors was the local distributor until Magna Motors of the Dominican Republic won the dealership - it's unclear how much its popularity has grown over time.
Vargas says Magna will be offering the full range of Hyundai motor vehicles, including the Grand i10 in sedan and hatchback, the Accent, Veloster, Creta, Tucson, Santa Fe Sonata and the H1 panel van.
Cementing the brand in Jamaica "will take time", he acknowledges, but adds that the company expects to leverage business through offerings such as its five-year warranty and competitive prices.
"We have a good price that is affordable; and in Jamaica, where the SUV is king, we have at least three types that can satisfy every customer," the managing director said.
So far, the company's infrastructure comprises the new Old Hope Road showroom and the six-bay service facility. But once the Kingston operations are fully under way, Magna Jamaica plans to establish another facility in Montego Bay. The expansion is included in the US$10m programme.
Magna's Jamaican entry has had controversial moments. The then Opposition Spokesman on Industry and Commerce Karl Samuda - now the minister in charge of the same portfolio - launched a broadside against Magna in Parliament.
He charged that the new Hyundai dealership was depriving the government coffers of revenue, saying they had not made proper arrangements to import cars into Jamaica. Magna Motors has a free zone arrangement through Kingston Wharves Limited, where they are allowed keep motor vehicles at the wharves for re-export to the region.
That arrangement had led to concerns of potential leakage of duty-free cars into the Jamaican market, but both Magna and Jamaica Customs have given assurances that all requisite duties are being paid.