Business

Auto retailers caught off guard by high demand for luxury vehicles and low inventory

The local automotive industry has been caught off guard by what has become a high demand for luxury vehicles and low inventory as a result of global supply chain shortages.

Bahamas Bus & Truck General Manager and Bahamas Motor Dealers Association (BMDA) Vice President Ben Albury said used car prices in this nation’s source market, the United States, have gone up more than 40 percent due to the lack of ability to secure new vehicles, creating a dynamic in the local market unlike anything he has seen before.

“At this point what I was expecting was too much inventory and too little demand. What I’m seeing now is an inability to secure inventory and an incredibly high demand, especially for high-end vehicles. There seems to be a lot of pent-up demand. It’s really hard to explain where we are at this point, I think it kind of caught everybody off guard,” he said while appearing as a guest on the Guardian Radio talk show Morning Blend Business.

“I’m seeing reports now that Ford, Chevy, Toyota, all of the major manufacturers are scaling back and cutting production and sending staff home because if they can’t get the components necessary in order to complete the build then there’s no need to hold onto those people or to keep them coming into work and punching a nine to five. So, I think from some of the reports we’re seeing this is not something that is going to be short-lived, it’s going to be something that is going to go on for quite some time and I think we’re going to feel the effects of this well into next year.”

While used car prices in the US are up about 40 percent, Albury said new car prices are also up, but only by about five percent.

He said even after things level out with the global supply chain, he doesn’t foresee a leveling out in costs for motor vehicles in the near future.

“The thing that scares me most is that in most cases we do not see a reduction that offsets the amount of inflation that’s experienced. So right now building supplies, cars, food, you name it, are continuing to escalate in price and I don’t think that we’re going to see a major reduction in that in some time,” Albury said.

A recent Oxford Economics report said disruptions in supply chains and global container shipping and road shipping “logjams” are likely to persist into mid-2022 as the world grapples with the prolonged COVID-19 pandemic and the ever-changing variants that continue to threaten global economic recovery.

It added that for many industries, production is likely being hampered by rolling shortages of inputs.

Albury said, “Some of this goes back as far as 2018 to 2019 with the trade war between the US and China. Also, this year in March, one of the largest semiconductor plants in China had a major fire. We’re seeing other impacts, raw materials which is also in high demand and low production, so the cost is sky rocketing.

“We’re seeing shipping logistic issues, we’re seeing shipping prices, where container prices have gone from some five to six thousand dollars a container, I’m hearing reports of some people paying as high as 17 to 18 thousand dollars per container.”

Data from the most recent retail price index for Q1 showed that the weighted price for transportation from 102.73 to 113.28 between January and April this year.

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Paige McCartney

Paige joined The Nassau Guardian in 2010 as a television news reporter and anchor. She has covered countless political and social events that have impacted the lives of Bahamians and changed the trajectory of The Bahamas. Paige started working as a business reporter in August 2016. Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News

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