Ian Lyn, manager of New Line Motors and new president of the Jamaica Used Car Dealers' Association. - File

USED-CAR dealers say they have some 2,500 cars backed up in inventory, and that more than half have surpassed the regulatory three-year-old benchmark that financial houses look to in granting car loans.

Consequently, the dealers say they are unable to move the older models off their lots, and are lobbying Government to lift, by two years, the age limit on used-car imports, while at the same time advocating for the slashing of interest rates for consumer loans in a two-pronged attack on the system.

Government in 2008 endorsed a three-year age limit on cars, four years and under for vans and pick-ups, and 10 years for trucks, trailers and other heavy-duty equipment.

Readjustment request

Jamaica Used Car Dealer' Association (JUCDA) president Ian Lyn says his members are asking for its readjustment to five years to re-energise sales.

At last count, said Lyn, 55 per cent of the 2,500 motor cars sitting on the lots of the dealers nationwide were 2005 models and older, with barely any takers.

"The request to allow the importation of vehicles up to five years is to enable us to take our businesses off life support," he told Wednesday Business.

"Three-year-old cars cannot be sold for under a million dollars," he added, "but with a change of policy and allowing five-year-old cars on our shores, we would be able to sell for about $700,000."

Lyn, in pitching for new concessions from the banks at a press conference Wednesday, said JUCDA members would only do business with those who comply with the association's wishes to drop rates.

He claims that while Jamaica is by no means a rich country, its consumers are buying cars at four and five times the rate of other countries.

The World Bank ranks Jamaica as an upper middle-income country with per capita income of US$4,780.

Several institutions have already been pricing car loans at special rates, but apparently not deep enough to satisfy vehicle vendors.

FirstCaribbean Jamaica was among the first to cut rates in June - later announcing that it would also offer a special loan package to license and insure vehicles; followed by RBTT which began offering a new loan rate of 20 per cent for motor vehicles up to one-year-old and 21.75 per cent for vehicles older than a year.

Scotiabank Jamaica went further with a new-car rate as low as 19.25 per cent, under a special promotion with a limited lifespan.

Not for older vehicles

The bank noted, however, that it does not finance pre-2004 vehicles unless additional collateral is provided.

Such efforts at risk containment disfavours sales of older motor vehicles.

Lyn's push for a friendlier environment for car sellers is motivated in part by efforts to keep dealers afloat in a dwindling sector.

Of the 131 members that were in business at the start of 2009, only 114 are still operational, with some shutting down while others are selling out - a consequence of the estimated 60 per cent decline in the auto market this year.

The latest among them was Fortune Corporation Limited which, after more than two decades in business, has been acquired by the Aaron Smith-owned Millennium Auto.

Fortune, owned by Orrette Richards, has traded in Japanese-made used cars since November 1995.

The new owners were not willing to comment on the acquisition.

Fortune, in the meantime, has hired the services of an agency to collect outstanding loan payments from its clients.

Lyn says the exodus will continue and that another 30 dealers are expected to close their doors by January 2010.

Government can stem the haemorrhage, he said, by tweaking both the age policy, as well as revisiting car import taxes, recommending that they be lowered on vehicles of 1600cc and below to a compounded tax of 30 per cent - 10 per cent duty and 16.5 per cent GCT.

The aggregate duty on cars, as defined by the Customs Department, ranges from 63 per cent for the lowest rated cars of 1000cc up to 128 per cent for vehicles of 2001cc to 3000cc.

The current 82 per cent aggregate on a 1600cc car comprises 40 per cent import duty, 11.5 per cent special consumption tax, and 16.5 per cent GCT.

"The Government over the years has benefited greatly, sometimes 300 per cent, from taxation on imports," said Lyn at Wednesday's press conference.

"The Government must change their policy and reduce the taxes on motor vehicle imports to save this industry," he said, "You are looking at an industry that, up to two years ago, was selling 20,000 cars annually."

mark.titus@gleanerjm.com

Displays at the Jamaica Motor Show put on by the Jamaica Used Car Dealers Association on October 31 and November 1. Used car dealers say 2005 and older models are increasingly difficult to sell. - File