New cars hit top gear as pre-owned market runs out of gas

With only a month of outstanding data left to close the year on reports from the Port Authority of Jamaica on auto imports, used-car dealers are singing the blues while new-car dealers are rushing to satisfy new demand as Jamaicans step up to SUVs. . .

Share with a friend With only a month of outstanding data left to close the year on reports from the Port Authority of Jamaica on auto imports, used-car dealers are singing the blues while new-car dealers are rushing to satisfy new demand as Jamaicans step up to SUVs or, at the very least, a crossover vehicle. Sales and marketing manager at Toyota Jamaica, Michael McGrane, attributes the increased sales of new cars to the choices available to consumers. He says the rise of the mid-sized SUVs, which he estimates to be about 80 per cent of new car sales, has been boosted by a large increase in supplies since 2019.

Up to November, some 41,438 motor vehicles had rolled off the ports and into showrooms. With a month to go in the reporting, the total number of motor vehicle imports have already surpassed the yearly totals for 2020 to 2022 and may also eclipse the 43,113 vehicles that passed through the port in 2018, based on this year’s monthly average of about 3,500 motor vehicles. Additionally, July and December are usually the months when the highest numbers of vehicles are imported.

There is a 3:1 ratio of pre-owned motor vehicles imported versus new motor vehicles. The total number of new motor vehicles imported annually has historically been about 8,000 to 10,000. The Automobile Dealers Association, the umbrella organisation representing new -car dealers, is still tabulating the numbers for this year, but representative Kent LaCroix says they should be ready in another week.

All new-car dealers consulted for this story were upbeat about their 2023 sales and optimistic about 2024. Not so with used car dealers. While there has been an increase in the number of motor vehicles imported, used-car dealers are reporting a decrease in the number of cars rolling off their lots.

That dynamic has resulted in at least one used car dealer, Jetcon Corporation, jumping into the new car market, and is now straddling both streams, while trying to work down its inventory of unsold preowned vehicles. Jetcon Managing Director Andrew Jackson says he will remain in the used-car market as well but was minded to pivot because consumers now see new cars as the better option due to changing preferences and more favourable financing terms. The switch by Jetcon came amid a 40 per cent plunge in sales over nine months of last year.

Meanwhile, the new Beijing X55 SUV added to its line-up is finding buyers, and two more shipments were ordered based on the demand, Jackson said. For other used-care dealers, it is also a balancing act, according to President of the Jamaica Used Car Dealers Association Lynvale Hamilton. He says while he cannot give exact numbers, there has been a noticeable decrease in number of cars moving off the used-car lots.

At the same time, he says the performance of the used-car market is partly due to constraints on the categories of preowned cars that can be imported. For traders who can import older cars, such as the nine or 10-year-old vehicles used as taxis, there has been an increase in the number of units sold; but for those who can only import vehicles up to six years old for domestic use, that segment of the market has fallen. New-car dealers are benefiting from the fact that they have given more choices to consumers.

Magna Motors, dealers for Hyundai, had taken the lead in offering greater variety in the SUV market with the likes of the Tucson, Creta, Santa Few, Creta Grand, Palisade, and lately, the Venue. Sales and marketing manager at Magna Motors Etmour Williams says Jamaicans preferring SUVs has been the trend for a while, with more and more car consumers stepping up to SUVs to deal with the terrain and the roads drivers must navigate. “While a few years ago we were considered the player with the most options regarding SUVs, what we see now is that other players, such as Toyota, are offering more,” Williams said.

Toyota’s Michel McGrane agrees, citing the erstwhile tendency of new-car dealers to stay with a narrow range of motor vehicles. “In previous years you had the RAV 4 and the CRV as the two top dominant factors, but now you have the CRV, the HRV, the BRV, and the Kia Seltos, the Kia Sonnet, Kia Sportage and the Toyota Raize, the Toyota Yaris Cross, the Toyota Corolla Cross and the Toyota Rav 4,” McGrane said, adding that banks seem to favour new car sales as there is less risk to their loans and a better deal overall for customers. “As a result of that, the banking terms for a new-car sale is much more favourable.

For example, (banks allow) up to 10 years, no deposit required, and the interest rate is significantly lower,” McGrane added. The more favourable banking arrangements and customer preferences have elicited an optimistic note from another new-car big hitter, ATL. Group marketing manager Christina Taylor says sales of their expanded line were good for 2023 and should be better for 2024, especially given the new duty arrangements for European motor vehicles.

“We do expect and anticipate that sales continue to rise based on Jamaica’s overall economic growth, banks offerings to counter higher interest rates, and that Jamaica Customs will begin to accept our manufacturer invoices to apply the EU duty break. This will highly impact brands such as Audi, Porsche, and BMW whereby customers can benefit from the duty break,” Taylor said. Still, the new-car sales market was beset by delivery delays during the year.

Indications are that global shipping delays and a shortage of computer chips triggered a shortage of new cars, beginning in 2021, and lengthening waiting lists by up to six months. “That may have been true in early 2023, but it’s certainly not the case now,” Toyota’s McGrane said, adding that the wait for the popular hybrid Toyota Rav4 is now down to about five weeks. ATL’s Taylor says it is a mixed bag.

“While we do still have fluctuations in availability, stock has normalised somewhat now but with longer waiting times for high-demand units. The average wait time for a premium brand is about three to six months, but with the volume brands, lower, with about two to three months wait time for certain models,” Taylor said. As was the case for 2023, McGrane expects that business will be robust for new-car dealers in 2024.

“When I look at those who are buying the cars and I look at handover days, I see the families and the young professionals. I also see the established professionals and businesses buying vehicles, I can only have a very positive outlook for the country,” he said. .