Tuesday, 16 November 2010 06:55
By Everton Barnes
Several proposals intended to spark vehicle sales in Antigua & Barbuda are before the government for its consideration after representatives from the four major dealerships met with Minister of Finance Harold Lovell last week.
An executive at one dealership told Caribarena.com, “With the level of losses that the industry is experiencing, you have to understand that all the dealerships are operating as charities, as they have decided that despite the losses, they are not going to lay off staff, at least not yet.”
An example of the situation facing the dealers becomes quite clear with even a cursory glance at the available statistics.
The ABST took effect in January 2007.
In 2006, total new car sales stood at 2,356. In 2007 that figure fell to 2,134. In 2008 there was a further decline to 1,941. In 2009, the decline was sharper, down to 1,129.
For the first 10 months of 2010, only 525 new cars have been sold.
According to Paul Ryan of Antigua Motors, the problems facing the dealers should concern the government and members of the society.
“We have been told by government officials that the revenues they collect from new car sales represent a sizeable portion of the overall revenues, and as sales have declined, so too have been the revenues that the government has collected,” he explained.
The dealers have submitted a set of proposals to help improve their situation.
The following are the subjects/talking points discussed between the government and the dealers:
• Bond Surety/Payment for Bonded Vehicles.
Dealers want the government to remove or lower Bond Surety, and replace it with Proof of Insurance for Bonded Vehicles, as surety ties up their cash flow. They also want an agreement that all sales from Bonds be paid monthly to Customs Department by the 5th of the following month, and that any vehicles in bond after 12 months must be paid for. Used Cars should not be Bonded. Also, they want to reintroduce direct delivery at the port when vehicles arrive, to avoid damage at the port when stored there for dealers.
• Environment Levy/Luxury Tax
Dealers want to increase the cc rating for the luxury tax of 7 percent from the current 2.5L to 3.5L . They noted that it was stated before that the luxury tax would be removed.
• Duty Free Waivers
It is generally accepted that consumers buy cars more readily when they have duty free concessions. In the past, it was considered a norm for many consumers. However, it is the dealers’ view that instead of discretionary waivers, the government should move to allow waivers across the board for duty free concession on new car sales. Alternatively, the government should consider making this available to lower income buyers for vehicles under 2000 cc. Used cars will not be allowed concessions.
The government’s revenue will increase by collecting the ABST, RRC, and levies.
• ABST on used Car Sales:
Dealers want no ABST on the sale of used vehicles.
• USED CAR IMPORTS
It is strongly believed that imports of used cars continue to degrade new car sales and also government’s revenue. Used car imports also slow the sales of dealers’ used trade ins, as well as bank repos, which in turn cause banks to reduce financing of new cars. Suggestion: A ban on used cars (Pickup trucks and heavy duty equipment will not be included in this ban.)
In addition, they want the government to allow returning residents to purchase new cars under similar concessions as if they imported their own cars, however with a waiver of the RRC and allow the ABST to be paid.
• GOVERNMENT SALES AND SERVICE
The dealers want a more equal distribution of future government purchases, if any. The government should also insist that vehicles are serviced where they are purchased to ensure longevity and to utilize warranties on vehicles under normal use to cut government’s costs on repairs for at least three years.
• DIESEL FUEL (LOW SULPHUR)
There are a few dealers who cannot import diesel vehicles due to the poor quality of the diesel fuel imported into Antigua. Many diesel vehicles today require a low sulfur diesel which WIOC will not import. This needs to be addressed soonest.
Ryan said the Ministry of Finance took all the suggestions on board and that a follow-up meeting is likely to take place soon.See related stories:
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