Jetcon boosts inventory in sign of market confidence
Jetcon Corporation has invested heavily in new inventory, signalling buoyancy in the used car market.
As the company positions to sell more autos, its bottom line is also expanding with a near doubling of net profit to $23 million in the June quarter. This compares to $12 million in the comparative period in 2015.
At the end of June, the value of cars on Jetcon's lot grew to $236 million, up from $84 million since December 2015.
Managing Director Andrew Jackson says the investment on inventory was a deliberate strategy to put the money from the company's initial public offering to the best use in a bid to ensure an adequate supply of vehicles for the high demand summer period. The car dealership listed on the junior market of the Jamaica Stock Exchange near the end of March.
"After we did the IPO, we found ourselves with a lot of cash," said Jackson. "This is not something we are always accustomed to, but we had a number of options - the quickest and most feasible option was to pump up our inventory, which also means pumping up our sales," he said.
Revenues spiked 39 per cent in the quarter to $195 million. For the six-month period, revenue climbed 45 per cent to $343 million, compared to $236 million at half-year 2015. Profit at half-year doubled from $18 million to $36 million.
Jetcon is reporting that sales for July is ahead of June in volume and revenue, and Jackson is predicting that the second half of 2016 will be even better. The company is also banking on regular business from the Jamaica Constabulary.
"July and December are our peak months, so we boosted our inventory to meet that demand. Plus, quite frankly, we were also hoping that the police contract would have been out by then," Jackson said, describing the reason for the inventory build-up.
Jetcon is known for smaller second-hand cars such as the Mazda Demio, the Toyota Passo and the Vitz, with the larger cars coming from the Subaru line. But for the six-month period under review, Jetcon changed tactic by expanding the range and sizes.
"We did also increase the range of cars, especially those we didn't carry - that is to say, some of the bigger cars and small SUVs," Jackson said.