Used-car dealers cry for help
Hoping to stave off a potential collapse of the used-car industry, the association, which represents its interests, is beseeching the Government to add a year to the age limit of cars it can import.
President of the Used Car Dealers' Association, Ian Lyn, said that if the Government allows the extra year from three years 11 months to four years 11 months, then it would result in savings for the working-class Jamaican and increased tax revenue for the Government.
"If the Government were to do this and allow us to import a 2005 vehicle, then the cost of that vehicle would be US$3,000 less than a 2006 vehicle and US$5,000 less than a 2007 vehicle. That will bring the cost of vehicles to the price range of J$700,000 to J$1.1 million," he said.
Currently, the cost of vehicles has driven away consumers from car lots.
According to Lyn, a 2007 vehicle now costs $3 million while a 2006 vehicle costs $2.1 million. These costs have resulted in used-car dealers importing 8,000 vehicles in 2009, which was a huge drop compared with the 20,000 imported in 2008.
"The number-one problem faced in 2009 was the slow reaction to our demands from the Government in having an intervention in the sector. Everywhere else in the world, in other countries, they were getting cash bailouts and a reduction of taxes," he said.
To be fair to the Government, it did introduce a duty rebate of 20 per cent last year, which ends in March. However, Lyn said that it benefited car dealers who had bonded-warehouse facilities. These facilities allowed dealers to pay taxes to the Government after they had sold their vehicles.
He said the majority of used-car dealers paid their taxes to the Government upfront, therefore more was needed.
According to Lyn, membership in the Used Car Dealers' Association has dropped from 140 in 2009 to 94, a fact which points to the squeeze the industry is facing.
Lyn said he received calls from his members every day, saying they won't be paying any dues, shrinking his organisation. He predicts that the industry will lose 40 more members if the Government doesn't reach out. He is, however, optimistic, and says the lowering of the banks' interest rates is positive.
In recent times, banks such as Scotiabank (20 per cent) and FirstCaribbean (19.75 per cent) have reduced their rates. National Commercial Bank is expected to announce a lowering of its rates for used cars to around 17 to 18 per cent.