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Factory Closures Hit Local Dealerships

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by Duncan Hall

When auto parts factories in the Far East began to shut down last year in order to control the spread of the coronavirus, Bermuda – like everywhere else – felt the impact. 

Delays in the supplies of vehicles and parts have proved a major setback for local dealerships battling through the most difficult of periods. 

But while business plunged during shelter-in-place, an increase in sales after lockdown has at least helped the local industry weather the storm. 

Dealerships shared their experiences on the impact of the Covid-19 pandemic – and their hopes for stability in the months ahead. 

Glen Smith is the managing director of Auto Solutions in Pembroke, which sells Honda, Hyundai, Mazda, Mitsubishi, Nissan and Suzuki cars and the UD brand of trucks. 

He said: “We have had major disruptions in the supply chain over the course of the last year. One unforeseen issue that we have been facing is in sourcing vehicles and parts for vehicles. 

“We are having issues with some of our manufacturers not producing enough inventory to fulfil vehicle orders. Over the last year we have had numerous orders cancelled due to the manufacturer’s inability to catch up on the backlog stemming from the closures of factories in Asia during the Covid-19 lockdowns in 2020.” 

Mr Smith said those challenges continue today, adding: “One component in particular that is affecting the entire automotive world would be the shortage on semi-conductors, which invariably delays production lines and creates low inventory levels for all manufacturers.” 

Richard Davidge, the owner of Renault dealer EuroCar, said the Pembroke dealership experienced “some delays in getting cars due to factory shutdowns”. 

But Mr Davidge added: “However, we had a constant supply, except for cars built in Europe. 

“Parts supplies have been hampered due to lack of airlift. Ocean freight had to be used which has caused delays in parts arriving.” 

Mr Smith said challenges persisting in early 2021 include delays in transit time and increased shipping costs. 

He said: “There is a massive backlog in container availability globally which started to affect our bookings in Japan and India and is now spreading to Europe. 

“In some cases, the rates from Asia have jumped five-fold in the last year and more recently the trans-Atlantic rates for a container have tripled in the last month.” 

Mr Davidge said: “Pricing for parts has been affected due to lack of capacity of containers from the Far East.” 

Vehicle sales tumbled in 2020 as Covid-19 began to impact Bermuda. 

Just 69 vehicles were registered at the Transport Control Department in March, compared to 105 during March the previous year. 

As shelter-in-place regulations took hold in April, just eight vehicles were registered during the month. 

Seventy-six were registered in May and 83 in June before an upsurge in sales as figures jumped to 139, 156, 129, 151, 112 and 139 in the months of July through December. 

Overall, some 1,306 vehicles were registered by TCD in 2020, down from the 1,353 registered in 2019. 

Mr Smith said Auto Solutions’ May sales increase was in part due to pent-up demand. 

But he added that the majority of his dealership’s brands are shipped to the US for trans-shipment to Bermuda on the weekly Oleander container ship. The exceptions are Mazda and Nissan, which resulted in inventory issues for Auto Solutions with those two brands. 

He said: “Conversely, most of our competitors’ vehicles arrive on the monthly car ship, which was not able to come to Bermuda following the government shutdown of the docks to all but essential vessels carrying food and medical supplies from March until the beginning of August.” 

Mr Smith said sales increased “slightly” June through December compared to 2019, adding: “Our sales January to February 2021 continue to thankfully remain constant, as compared to the last two months of 2020.” 

Amy Greenslade is vice-president and sales manager of Pembroke dealership Rayclan Ltd, which sells the Chevy Spark and Proton vehicles. 

Ms Greenslade said: “Sales have not been as bad as we expected. There was a little bit of a boom after lockdown, but that may be because cars that were presold were stockpiled when the car ships were cancelled. 

“There were quite a number of people who had to wait for their new cars, and the industry sales numbers reflect that.” 

Mr Smith and Ms Greenslade said reduced travel by residents may be positively impacting vehicle sales. 

He said: “Customers, mainly those who have been able to work, are instead looking to spend their money on upgrading their vehicle or homes, as they have found a bit of disposable income becoming available.” 

Ms Greenslade said: “If buying a new car was going to be on the cards in the not too distant future, and they realise that travel may also not be on the cards, they may be choosing to spend that money in other ways. I have no way of confirming this, but it is just an idea of why the market did not have a serious decline.” 

Looking ahead, Mr Davidge said: “We hope for the best but see the loss of some vehicles from our product lines due to manufacturers changing their market strategy.” 

Mr Smith said: “First and foremost, we continue to keep in our thoughts those whom have lost loved ones and those that are ill resulting from this pandemic, and wish everyone well as we collectively navigate through these continued unchartered waters. 

“In the automotive world, we hope for continual stability as the manufacturers continue to perform to the best of their ability and capacity, and in turn we are able to meet market demand. 

“The best we can hope for is a stable market in which people are able to meet their financial commitments and if they find themselves in a favourable financial decision, perhaps purchasing or servicing their present vehicle will factor into their decision making. 

“We are very thankful for the public’s support during these difficult times, which certainly helps us to be able to plan for the near future and beyond with our Auto Solutions team.” 

Speaking after Covid cases began to spike again in March, Ms Greenslade said of 2021: “As we can see from this weekend’s announcements, things change so rapidly, that I think that it is difficult to predict. People are definitely still buying cars, and as long as we stay open and the flow of inventory continues, I see the numbers staying steady.” 

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