For­eign ex­change chal­lenges and shift­ing con­sumer de­mands have brought about sig­nif­i­cant changes in the for­eign used car deal­er mar­ket.

In the past few years, sev­er­al deal­ers have ad­mit­ted the Gov­ern­ment’s ad­just­ments of im­port rules, as well as the mar­ket and cost fac­tors, have seen them move away from the large im­port of for­eign used cars, and have found them­selves in what some in­dus­try play­ers have la­belled “for­eign new.”

“Be­cause the econ­o­my is very tough right now, but we have been di­ver­si­fy­ing,” said Mikhail Ho­sein, chief ex­ec­u­tive of­fi­cer of HSM Mo­tors, in a phone in­ter­view with the Busi­ness Guardian.

Last year, HSM an­nounced it had be­come the of­fi­cial deal­er for Rid­dara in Guyana, months af­ter se­cur­ing a part­ner­ship to be the au­tho­rised part­ner and ser­vice provider for the Chi­nese brand in T&T and the South Amer­i­can state.

Ho­sein stressed that this was an av­enue the com­pa­ny would con­tin­ue to ex­plore.

“Be­cause we are in Guyana. We have opened in Guyana, and we are kind of go­ing away from the roll on, roll off en­vi­ron­ment. And we are es­tab­lish­ing deal­er­ships,” he said, not­ing that the com­pa­ny had al­so ex­pand­ed in­to the sale of heavy equip­ment.

How­ev­er, the ex­pan­sion has been man­aged de­spite the on­go­ing forex chal­lenges in the coun­try.

“We have ac­counts at all the dif­fer­ent banks, so we get a lit­tle bit every­where, which we have been man­ag­ing over the past cou­ple of years, in terms of the mar­ket. The mar­ket is very, very dif­fi­cult right now,” said Ho­sein.

Pres­i­dent of the T&T Au­to­mo­tive Deal­ers As­so­ci­a­tion (TTA­DA) Visham Bab­wah has long stat­ed that the for­eign ex­change sit­u­a­tion has re­strict­ed the au­to­mo­tive in­dus­try. Bab­wah has ar­gued that car deal­ers have too of­ten been wrong­ly iden­ti­fied as a ma­jor drain of for­eign ex­change. He said re­cent news of re­duc­tions of for­eign ex­change lim­its on cred­it cards on banks has on­ly ex­ac­er­bat­ed the is­sue.

“You’ll find that for the last six months, get­ting forex through the bank­ing sys­tem has be­come a re­al, re­al big chal­lenge, so but we have to cope. We have cus­tomers who would come and ask if we would bring a ve­hi­cle for them, and they would use their card to pay for it,” Bab­wah ex­plained.

“But with the re­duc­tion in card lim­its (it’s a chal­lenge again). We have a big re­duc­tion that would have tak­en ef­fect be­gin­ning of March here, from US$6,500 to US$2000, some­thing peo­ple now have on the cards. So it’s all around a neg­a­tive ef­fect. And it is a big chal­lenge. I’m not sure how we get­ting out of this.But it is a big, big, big chal­lenge,” said Bab­wah, re­fer­ring to FCB’s an­nounce­ment of re­duc­tions last month.

An­oth­er deal­er, who pre­ferred not to be named, al­so con­firmed that the for­eign ex­change sit­u­a­tion had been a ma­jor chal­lenge to the point that sev­er­al es­tab­lished deal­ers have gone out of busi­ness as a re­sult.

Ad­di­tion­al­ly, the deal­ers had not­ed that sev­er­al small­er deal­ers had en­tered the mar­ket with a dif­fer­ent ap­proach, which al­so cre­at­ed com­pli­ca­tions for es­tab­lished names in the used-car deal­er land­scape.

“You have a lot of very, very small es­tab­lish­ments pop­ping up with very lit­tle over­head costs. So they have been able to make in­roads in­to the mar­ket by of­fer­ing sub­stan­tial­ly low­er prices be­cause they don’t have high over­head costs com­pared to the larg­er es­tab­lish­ments,” said Ho­sein, who said that this, along with the for­eign ex­change chal­lenges, had seen HSM lose a sig­nif­i­cant chunk of busi­ness com­pared to pre­vi­ous years.

“It has im­pact­ed us sig­nif­i­cant­ly, be­cause over the past cou­ple years, the same banks have re­duced their cred­it card lim­its by at least 50 per cent right, “ said Ho­sein, who ex­plained that sales of ve­hi­cles have dropped by about 20 per cent in that time.

HSM has al­so seen a shift in con­sumer de­mand dri­ven by cost and val­ue, with con­sumers favour­ing Hy­brid SU­Vs sim­i­lar to the new car mar­ket.

Ho­sein said while in the past cou­ple of years the Hon­da Vezel had been the in-de­mand ve­hi­cle, a new im­port from In­dia has caught on.

“Pre­vi­ous­ly, you had the Hon­da Vezels be­ing the hot sell­ers. Now you have a shift in the dy­nam­ic with the in­tro­duc­tion of ve­hi­cles that are com­ing from In­dia. That’s the Toy­ota Taisor. They are now dom­i­nat­ing the mar­ket be­cause of the price point. I mean, you’re get­ting a brand new car for $170,000, and it’s a sub­com­pact SUV. So that has seen the mar­ket has shift­ed to that di­rec­tion now,” said Ho­sein.

Bab­wah con­firmed the Taisor had in­deed be­come the in-de­mand ve­hi­cle as con­sumers were en­tranced by its price point, while he al­so ac­knowl­edged that fol­low­ing the gov­ern­ment’s de­ci­sion to ex­pand the age for for­eign used petrol ve­hi­cles to eight years, cus­tomers were still look­ing to Hy­brid SU­Vs.

“We have had some calls, but not to the ex­pec­ta­tion that I thought peo­ple would grav­i­tate to­wards it (the eight-year-old ve­hi­cles). We have some new ve­hi­cles that we im­port al­so like the Toy­ota Taisor, those are brand new ve­hi­cles, and we get them in for $160,000. That’s a brand new ve­hi­cle. It is EV, one of the small­er crossover and peo­ple have grav­i­tat­ed in mass to­wards that type of ve­hi­cle be­cause of the price point. And then, the fi­nanc­ing is a very im­por­tant as­pect,” said Bab­wah.

He added, “In the used car in­dus­try, we still have that de­mand for hy­brid more so than the elec­tric. Be­cause cost is al­ways a fac­tor. Hy­brids are much cheap­er than the full EVs.”

An­oth­er deal­er felt the eight-year ve­hi­cle was more tai­lored to cash buy­ers, who may have pre­vi­ous­ly strug­gled to get fi­nanc­ing from banks.

How­ev­er, the deal­er felt that, giv­en the price point of brand-new ve­hi­cles com­pared to used ve­hi­cles, many con­sumers were opt­ing to get the new­er ve­hi­cles as their loans would not be sig­nif­i­cant­ly dif­fer­ent in cost. He not­ed that the cost from these deal­ers com­pared to tra­di­tion­al new car deal­ers al­so brought them to the “for­eign new” mar­ket.

“What we no­tice is that a lot of peo­ple val­ue for mon­ey they’re look­ing at, yes, I am spend­ing a lit­tle bit less, and I’m get­ting a new car, and again, a lit­tle bit more (sup­port/war­ran­ty),” said the deal­er who has op­er­a­tions at three dif­fer­ent lo­ca­tions around the coun­try.

How­ev­er, he not­ed that the mar­ket shift to hy­brid and EVs was no­table, as well as the grow­ing de­mand for ve­hi­cles from Chi­na and In­dia, which would con­tin­ue to shift the mar­ket.