Fleets, improved credit conditions drive 1.5% auto sales increase in ’11
Fueled by vehicle fleet sales, Puerto Rico’s auto industry reported a 1.5 percent growth in 2011 that is expected to continue this year, when an improvement of between 1 and 3 percent is expected, the United Automobile Importers Group said Thursday.
Last year, the island’s auto industry moved a total of 93,687 new cars, in comparison to the 92,308 units sold last year. Of the most recent total, 8.6 percent was attributed to the fleet category, which accounted for 11,814 units sold.
“Even though the industry has shown signs of improvement since 2010, we have gone through difficult economic times,” said José Ordeix, president of the trade group known as GUIA in Spanish and vice president of Motorambar Inc. “However, the fleet market remains the driver behind Puerto Rico’s new car sales. An improving economy and tourism are directly responsible for that.”
This year’s modest growth also responds to the ability the government gave auto dealers by law to sell cars beyond the lot, which Ordeix said allowed them to get closer to consumers, as well as better financing conditions through banks.
“Interest at historic lows, which will translate in benefits for consumers when purchasing their vehicle,” Ordeix said.
GUIA represents more than 96 percent of total vehicle sales in Puerto Rico sold by member companies Bella Group (Honda and Acura), Chrysler Group (Chrysler, Dodge, Jeep, RAM and Fiat), Ford, General Motors, Hyundai, Mazda, Mitsubishi, Motorambar (Nissan, Infiniti and Kia), Suzuki and Toyota (Toyota, Lexus and Scion).
“We have been consistent in championing not only our industry, but also the jobs that are created, and the general well-being of Puerto Rico’s economic development to which we contribute through excise taxes, income taxes and other employer contributions,” he said, adding that the auto sales industry generates some 12,000 direct jobs.
While the group did not break down vehicle sales by brand, Ordeix confirmed that the Toyota Yaris was the most popular small vehicle driven out of Puerto Rico new car lots. Generally speaking, sedans of all brands represented 47 percent of 2011 new vehicle sales, followed by SUVs (29 percent) and pick-up trucks (6 percent).
Auto execs press for vehicle tax review
This year’s projected growth could be potentially greater if the Treasury Department complied with its legal obligation of reviewing the current vehicle tax scale and adjusting it according to inflation. That revision — which by law must be done every three years — has been overlooked since 2005, industry executives said.
“If the Treasury Department worked on the tax scale review, the consumer could benefit from lower vehicle prices, which in turn could benefit the industry as well as the government, because it could potentially generate greater sales volumes,” said Irma Sotográs, vice president of finance and administration for Suzuki del Caribe Inc.
As of November, the island’s inflation rate stood at about 3.1 percent, down from about 6 percent in 2005. So theoretically, vehicle prices should be lower now. Auto executives said that for every $1 that vehicle taxes drop, consumers save $6,000.
The auto industry is one of the most taxed in Puerto Rico, as each imported vehicle pays between 13 percent and 40 percent in excise taxes, for an average of 20 percent over the sticker price. That said, the automobile industry generates more than $351 million in excise taxes that go into the government’s General Fund, representing 39 percent of 2010’s total.
During the news conference, auto executives urged Treasury Secretary Jesús Méndez to “open that additional benefit window” for consumers.