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Updated: Jetcon segues into new car sales

Published:Friday | November 24, 2023 | 11:08 AM

Andrew Jackson, managing director of Jetcon Corporation Limited.
Andrew Jackson, managing director of Jetcon Corporation Limited.

Bracing for a year of record losses, Jetcon Corporation Limited, a long-standing used car dealer, is adjusting its business model to focus on the sale of new vehicles, for now. The inclusion of a new operating segment comes as the dealership...

Bracing for a year of record losses, Jetcon Corporation Limited, a long-standing used car dealer, is adjusting its business model to focus on the sale of new vehicles, for now.

The inclusion of a new operating segment comes as the dealership struggles to regain traction in the auto market; and is additional to its diversification into solar equipment trading.

Auto sales have been slipping at the three-decade-old company following a near return to normal business on the downside of the coronavirus pandemic.

Jetcon’s founder and Managing Director Andrew Jackson blames the high interest rate regime that the central bank turned to at the end of the summer of 2021 to tamp down on inflation.

It’s made borrowing more expensive for consumers. And that, in turn, has served to hurt businesses that rely on their customers having easy access to affordable credit to procure expensive items such as motor vehicles.

Jackson says he has tried various strategies to draw car buyers back to his showrooms, but with limited effect.

“This has been going on for more than a year, with no reprieve from high interest rates. This is worse than during COVID,” he said, having just released new financial results showing a fourth straight quarter of losses dating from December 2021.

Year to date, January to September, sales at Jetcon have plummeted by nearly 40 per cent, from $807 million to $508 million; while its losses have climbed above $12 million year-to-date, $7 million of which was racked up in the third quarter ending September.

In the most recent quarterly period, July to September, the company’s sales dipped by half to $144 million, from $301 million, and five per cent of the reduced total related to solar equipment.

The decline in used or preowned vehicle sales marks a rollback of gains made last year, when the auto trader had seen a return of annual revenues back above the billion-dollar mark after sales flatlined at $629 million at the height of the pandemic, which was half the levels that prevailed in the years prior to the health crisis.

Jetcon has invested around US$2.5 million in the new car venture to date.

It will be setting up a showroom at the company’s Sandringham Avenue complex in Kingston, which Jackson expects to finalise “by late 2024 into early 2025.”

New car dealers are required to have at least 10 per cent of their imports as spare parts inventory, and Jetcon is in the process of growing that inventory.

The company ‘s decision to adjust lanes emanates from feedback from customers saying it was currently easier for them to procure financing for new car models over pre-owned vehicles, even if the total cost of the new car is higher.

“On a new car, the customer can get a loan for 10 years at 8.5 per cent. [But for] a five-year-old Mazda CX5 with similar specs, they could only get a loan for five years at 10 per cent,” Jackson said.

“At that rate the loan payment for the Mazda would be higher than that of the new car, making a new car more affordable,” he said.

Jetcon won’t exit the used car market, however, not yet, but will wait to see what unfolds for pre-owned sales when the central bank’s high interest rate regime changes. There is no indication yet as to when that will happen, but when it does, unravelling the high lending rates within the marketplace will take even more time.

Jetcon has already begun the pivot to new car sales through a Chinese brand called Beijing X55, made by Beijing Automotive Industry Corporation. The small SUV carries similar specs to the Honda CRV, the Corolla Cross and the Suzuki Vitara. Test units were brought in midyear and put through their paces on Jamaica’s roads, Jackson said. It costs around $5.5 million; a price that appears to be the ‘sweet spot’ in the market right now, the car dealer noted.

All units from the first shipment of Beijing X55 vehicles have already been sold, while the second is due to arrive in Jamaica in early December, with some of the units already presold, Jackson said.

A third shipment is also on order.

Before the end of the year, Jetcon will also be testing out another Chinese brand, the Blaval. The subcompact, which is about the size of a Toyota Vitz, will be the first solar-electric car on Jamaican roads, if it tests well. The car has about 240 kilometres of range, and a full day’s charge from the solar panel on the roof is good for another 25 km.

“We’re getting two for testing. We’re going to subject them to Jamaican conditions to see how they hold up, and thereafter we’ll take a decision on bringing them in,” Jackson said.

The company also continues to build out its other new business line. It’s in the process of procuring inventory and staff to man the new solar photovoltaic systems division, which will operate as a wholesale supplier of equipment.

Jetcon will be selling solar panels, inverters and stackable lithium-ion batteries to installers and retailers. There are no plans to do installation.

In the meantime, while the new plans unfold, Jetcon is trying to sell down the remaining used-car inventory on its lots.

“Right now, we’re down to about 200 units,” said Jackson. “Back in the day, before COVID-19 we used to carry as many as 700 used cars in our inventory,” he said, while reaffirming that Jetcon had no plans to exit the used-car market segment.

It still has a substantial amount of inventory on hand, valued at $419 million, which is down from $470 million a year ago, but around 15 to 20 per cent of the stock relates to solar equipment.

No new used-car shipments have been ordered, Jackson said.

“We’ll definitely continue with used cars. There’s a market for it and that’s where our expertise is. We’re going up a learning curve with the new cars, but by the time we’re done we’ll have three business divisions,” he said.

business@gleanerjm.com