Slump drives car sales down by 50 per cent

Earlier this month Bermuda Motors was forced to cut staff numbers and make five employees redundant. While other big firms have more than halved their inventories as there simply is not the demand for new vehicles.

In July dealerships witnessed a staggering 44.7 per cent drop in sales receipts compared to the same month in 2010. That represents a drop of almost half of total sales.

The Retail Sales Index for that month indicated that the number of cars sold fell by 41 per cent while motorcycle sales declined by 17.6 per cent.

The August figures paint an equally bleak picture. Sales revenue for motor vehicle stores fell 3.4 per cent, despite a small increase in the number of vehicle sales.

August was the eighth consecutive month on month sales index drop of 2011.

Tony Martin, sales boss at HWP, said: “This is the worst I can remember it for more than 25 years.

“The industry still seems to be contracting. People are a lot more cautious about buying new cars in the current economic times. We have seen our inventories and sales half in the last year. It’s a tough time and no one can really say when it will end.”

Richard Davidge, who is president of Eurocar, Executive Autos and Prestige Motors, said the industry was in bad shape.

He said: “As the retail sales index figures suggest it is not good at the moment.

“People are obviously keeping their vehicles longer and people are also leaving the island which does not help us. The car sales have slowed down drastically this year.

“There are definitely less new cars coming onto the island at the moment.”

Mr Davidge told the Bermuda Sun that the car industry would be helped if government could inject some impetus and exemptions.

He added: “It would help if the vehicles could be made a little bit cheaper by reducing the duty that has to be paid on them. Likewise if there were exemptions for certain types of cars then that would also help us a great deal.

“I would say that by the end of this year we will be down by 55 per cent compared to where we were in 2008.”

Not essential

Craig Simmons, economics lecturer at Bermuda College, added: “This effect on the car industry is not really a surprise in a recession.

“People can do without a new car during a down-turn. It is a discretionary purchase and not an essential commodity so people will postpone purchasing one.

“I would imagine that entrepreneurs in this area anticipated the dip and made their inventories leaner.”

Mike Butler, general manager of Bermuda Motors, said his firm had been gradually reducing its inventory over the last six to seven months.

He told the Bermuda Sun car sales in Bermuda had gradually declined over the past few years from approximately 2,000 annually to 1,600 hundred, with some projections showing as little as 1,000 cars sold in 2011.

He added: “We all know that sales have halved since 2007. It has been a pretty gradual decline since then to where we find ourselves now.

“Most companies are still keeping the same number of employees and unless sales come back to where they were before then companies will have to shrink. We certainly have been bringing in fewer new cars because there simply is not the demand.

“Since the beginning of the year we have been slowly but surely reducing our inventory.”

It’s not just in the showrooms where the drop in trade has been obvious.

The number of vehicles being brought in on the car carriers that visit the island from Japan every month has drastically declined.

Joe Simas, general manager of Meyer Freight, which acts as agent for the car carriers, said: “Two or three years ago we would be getting in around 150 cars every month.

“Now we are getting figures like 60. The highest batch we have had this year is 80.

“This year especially we have brought in half of the cars that we were bringing in two or three years ago.”

Jeff Stirling from Continental Motors said that 2011 had been the worst year for the industry for more than a decade.

He said: “For us it is very, very slow.

“A lot of people have been leaving the island and selling their cars at half the price and you can not compete with that.

“We’ve definitely seen a down turn in the number of sales but there has been an increase in the service department as people try to keep their old cars going rather than buy new ones.