Jetcon hits billion-dollar milestone, but sees sales challenges ahead
Preowned car dealer Jetcon Corporation hit a new milestone with record profit and annual revenues that topped the billion-dollar mark in the company's 24-year history.
"We've wanted to pass it for a very long time," said Managing Director Andrew Jackson, who told the Financial Gleaner that he is aiming for a repeat in 2018, but is concerned that a new regime for used-car imports could be costly to dealerships and end up hurting sales.
For year ending December 2017, Jetcon grew sales by $319 million, or 37 per cent to nearly $1.18 billion, while net profit climbed 55 per cent to $154 million.
"It's something that we can do again, but it's definitely going to be more challenging," he predicted.
In February, the Jamaican Government introduced a new pre-inspection system for vehicle imports under which a Japanese agent would authenticate the vehicles prior to shipment. The new system is meant to curtail fraudulent misrepresentation of odometer or mileage readings and the age of vehicles - issues that end up affecting the final price paid by car buyers.
Dealers would have to pay for the pre-shipment inspections.
"The effect of them is that prices will go up. We could see prices increase by about $100,000 per car. We're working on holding the prices but it's going to be a challenge," Jackson warned.
To counteract the effects on Jetcon's top-line performance, Jackson says he is looking to sell more cars, while predicting there will likely be an opening to increase market share as the new system is expected to push some traders out of business.
"We do expect to see some fallout in the industry. We expect that with the new regulatory environment, some of the players, especially the smaller ones, will find it difficult to survive. We think we have some advantages, and from that standpoint we are making ourselves ready for that eventuality," he said.
Jetcon has about 300 vehicles at Sandringham Avenue and Dumbarton Avenue facilities, according to Jackson, who said that level of inventory means he won't have to face those pre-inspection charges immediately. But when he does, he said Jetcon does not plan to pass on all the additional charges to customers.
"Apart from the increased costs of the vehicles, it is also costlier to ship them. Then there is the question of delays. We have inventory that can cushion us for three to four months," he said.
"Initially there will be some effect on our margins. We may have to cushion some of that. The hope is that with our increased market share we will be able to recoup those costs," the car dealer told the Financial Gleaner.
In a statement accompanying its newly released financials, Jetcon said sales in December were lower than expected, due to delays in vehicles being cleared from the wharf, but notes there were improvements the following month.
"The fact that there was serious congestion is well known. The fact that we had a good January tells us that December is not an indication of what is to come but rather was just a blip," he said.
Jetcon is also looking to enter the export market and is finalising plans to start operating under the Special Economic Zone, or SEZ, regime by April. In the meantime, the company continues to market research on Eastern Caribbean sales locations and partners.
Jackson expects to start exporting preowned cars to Barbados and St Lucia sometime between July and September.