Spare parts shortage hits used-car trade
Published:Friday | October 22, 2010 | 12:00 AM
Mark Titus, Business Reporter
A chronic shortage in used-car spare parts is hobbling the auto trade in Jamaica, with some dealers confirming they have stopped selling used parts, shifting instead to stocking for new vehicles only.
One industry spokesperson said some dealers have left the parts trade altogether.
The unavailability of used-car parts in Japan, the major source, is being blamed on the decision by big parts dealers, Alex Imports, Bert's Auto Parts and Sunshine Auto, to pull out of the used-car parts trade. Another big Kingston-based dealer, Mitchell's Auto Supplies, is also to phase out that aspect of its operation as soon as current stocks have been sold.
"There is a shortage in supply, and we have now placed our focus on expanding our new parts and accessory business," Kirk Forbes, branch manager at Alex Imports in Kingston, said.
"You simply cannot get parts as you used to get them in Japan and it is not economically viable for us to pay hotel and airline costs to send an employee there unless our supply can be constant."
New supply source
Forbes hinted at a possible source of supply which could result in Alex Imports remaining in that line of business for a while longer, but would not divulge the details.
Past president of the Motor Repairers Association of Jamaica, André Hylton, is not hopeful that there will be any return to consistent supply.
"The industry in Japan has grown to the extent that there are not enough cars being junked for parts, because used cars are better sold to lucrative markets in Africa, New Zealand, Australia and other parts of the Caribbean," Hilton told the Financial Gleaner.
"The suppliers of spare parts can't get those parts because they are just not available anymore," he said.
He said the situation has led to some dealers closing down, while others have switched to stocking new parts.
But the situation does not appear to bother Hylton, who is of the view that the used parts business should be the exception, not the norm.
"I don't think used-parts business is good for any country," he said.
Meanwhile, chief executive officer of Sunshine Auto, Errol Brennan, said the erratic supply of used parts, coupled with costly foreign exchange, effectively forced his company out of the used-parts trade.
"I have stopped selling used parts almost two years now because it is too erratic," he said, "The consistency is not with the used parts like the new parts, and you cannot do the two of them profitably."
According to Brennan, the high rate of foreign exchange was also a deterrent.
"US$100,000 could give you two or three containers, depending on what is packed in it, but the record keeping that can be done with the new parts cannot be done with the used, so, in terms of accountability, I was handicapped," he pointed out.
Asian suppliers
Japan is the world's number one source for spare parts and, along with Singapore, has been frequented by local auto-parts traders over the years. Japan is said to produce more than 70 million cars every year, with a 50/50 split between the domestic and export market.
Some 15 years ago, in a move to force vehicle owners to trade in units older than four years, the Japanese government created a system that saw more taxes being applied to older models. This led to the phenomenal growth in the export of Japanese used cars, with the trade having flourished in Jamaica until recently.
"Jamaicans have been buying those used cars and holding on to them for 10 to 15 years," said Hylton.
"Now, there are no parts for those vehicles in Japan anymore because they are now obsolete, even as the demand remains high here."
He explained that most vehicle-parts manufacturers, in succeeding years, reduce the number of a particular part they make.
While new president of the Jamaica Used-Car Dealers' Association and managing director of Auto Channel Limited, Lynvalle Hamilton, said he was not aware of a shortage of used-car parts locally, he told the Financial Gleaner that he understood the challenges involved in sourcing parts for motor vehicles over 10 years old.