Major changes are coming to the local car dealership market as authorities seek to put the brakes on “irregularities”, and create a “level playing field” for both new and used-car dealers.
Minister of Small Business, Entrepreneurship and Commerce Dwight Sutherland made the revelation on Friday, following a tour of the National Automotive Sales and Service Company Ltd (NASSCO).
Sutherland said in addition to legislation and a new vehicle policy to govern the importation and assembling of vehicles, issues relating to concessions and taxes on electric and hybrid vehicles would be examined, and a new registry of assemblers for vehicles in Barbados would be implemented.
This comes about a year-and-a-half after NASSCO officials claimed that some third-party vehicle importers were cheating the system.
Officials of the Toyota car dealership had raised concern with the Minister after it was found that vehicles were being imported and entered into a lower tax bracket than they should have been, and were therefore being sold “way cheaper” than what was considered the fair market price.
Officials argued that this was partly responsible for the fall-off in the sale of new vehicles since 2017, which had declined some 16 per cent, going from roughly 31,000 per year to 26,054 last year.
Sutherland stressed that he was not against used-car dealers, but said his ministry recognized the need to bring the used car market, the new car market and the crashed car market on “a level playing field”.
“We are in the process of implementing a vehicle policy or legislation which would address some of the irregularities and anomalies,” Sutherland told reporters at the River Road, St Michael company.
He pointed to the example of one dealer importing new Toyota Hilux vehicles and selling them at a much cheaper rate than NASSCO, which is the local certified Toyota dealer of new vehicles. Sutherland explained that the third-party dealer imported the new vehicles which are classified as trucks, and this took place despite no import licences being issued at the time.
He said in that case they were able to be sold up to $25,000 less than what they were being sold for at the NASSCO.
Sutherland explained that the Hilux vehicles were being imported with far more than the basic accessories and was only attracting an excise tax rate of 47.77 per cent even though they should have attracted 65.5 per cent.
NASSCO, on the other hand, despite being the official dealer of the brand, had to remove accessories and install them upon arrival in order to get the vehicles in the lower tax bracket.
“So those third-party dealers were able to import the vehicles and sell them at a much lower price, having attracted the same duties [as those with the basic accessories],” said Sutherland, who added that the planned changes would not affect the prices being offered by authorized dealers.
“The reality is that consumers want a fancy vehicle with the fog lights and crash bars and leather seats, but I believe we have to make the playing field level. And the vehicular policy will ensure that the importation of vehicles, whether used or new, fall under the vehicular policy,” he said.
Officials are hoping that this new regulation will be in place by yearend.
Managing Director of NASSCO Ltd Roger Hill welcomed the visit from the Minister and representatives from his ministry, saying he was glad that a call he made more than a year ago was finally being answered.
“I was very concerned about practices that I saw going on with the importation of vehicles in Barbados,” said the local Toyota distributor.
He said based on the practice it came across as though new car dealers were ripping off consumers but that was not the case.
“We brought this situation many years ago to different people within Customs but yet we have really gotten no action. I went to the Minister and he promised he would look into it and we will see what results we can derive from this situation,” said Hill.
“If we are to go forward with free, proper trading where everybody is operating on a level playing field that is what has to happen and that is what we need to happen. That is all we are asking for,” said Hill.
Barbados TODAY checked with another major car dealer, who verified that he has also been encountering similar problems where a third-party would import a same brand vehicle under a different tariff heading and are therefore able to sell the vehicle at a lower rate.
“There has been a manipulation of values with the importation of vehicles for quite some time. We ourselves have been directly affected by the importation of new vehicles from markets which are unauthorized to export vehicles and have them imported into places like Barbados. They are not covered by manufacturer’s guarantee and are being sold at prices which are impossible for them to be sold at if they were under the correct tariff heading,” he explained.
Sutherland gave the assurance that the ASYCUDA World System, which came into effect around the end of October last year after several teething challenges, was working and that it would result in increased levels of transparency and compliance, predictability and accountability.
Stating that the new policy would allow Government to not be cheated out on its “fair share” of revenues, Sutherland made it clear that he would not be seeking to bring anyone to accountability that were responsible for the anomalies experienced up to last year relating to the importation of vehicles.
“What has gone has gone. We are not being punitive. We have ASYCUDA World now, which is the system that can pick up all these irregularities and anomalies,” he said.
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