2 months ago
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After adding new cars to its offerings to entice increasingly reluctant used car buyers, auto trader Jetcon Corporation Limited is mulling the possibility of pulling out of the used car market altogether.
Three decades after its founding, the company that sells mostly sedans and sub-compact cars has found itself under pressure from changing market dynamics and a tightening economy that have led to losses since the fourth quarter of 2022.
Recently, Jetcon began selling new cars sourced from a Chinese auto company, in addition to preowned vehicles, to counter the market forces and boost shrinking revenue. Now, founder and Managing Director Andrew Jackson says that by year-end Jetcon will be taking a decision as to whether to move out of the used car market altogether.
“For the next four months, we will see whether we will continue with used car sales or abandon it all together. We’re watching both markets; as of right now, the used car market is not doing so well,” Jackson said.
That’s partly because interest rates are elevated, which makes it more expensive for consumers to borrow. That’s having on impact on customer traffic, as consumers are unwilling to take out car loans right now for used-car purchases.
It’s something that the Jetcon founder says his company is watching, to see if rates will trend down, amid the assessment of the company’s future direction.
In a bid to tame inflation, the Bank of Jamaica’s policy rate was increased in increments between years 2021 and 2022, from 0.5 per cent to the prevailing 7.0 per cent. This has caused lenders to ratchet up interest rates with a knock-on effect on purchases in the construction and transportation sectors.
Jackson said Jetcon had to pivot to new cars as the credit arrangements on used cars had become prohibitive.
Meantime, in the June quarter of 2024, losses at Jetcon continued to mount.The company bled $6.12 million, which was 75 per cent worse than the $3.5 million loss for the similar period in 2023. Revenue amounted to $110 million.
Jetcon started importing BAIC vehicles in 2023 and has conducted several tests of these cars in the Jamaican environment, Jetcon first struck a distribution deal with auto company Beijing Automotive Industry Company in 2023, and was recently appointed sole distributor for BAIC passenger vehicles in Jamaica. The arrangement covers marketing, vehicle sales, servicing and parts supply, the company said.
Regulations covering new car dealers require that they stock spare parts equivalent to at least 10 per cent of the value of the cars they import, as a guarantee that auto parts will be available to service the sold vehicles.
Jackson says now that Jetcon has received and sold multiple shipments of the BAIC cars, the company is now focused on complying with after-sales requirements.
“We’re getting there,” he said.
“We have a whole shipment of parts on order just waiting to get them. They should be here in another month or two,” Jackson said.
Kingston-based Jetcon’s showroom can display about six to eight cars, presently, but will be further upgraded by the end of September. Jackson says his company will be adding another showroom of similar size over the next twelve months, at its complex located in the Molynes Road area.
In the meantime, the staff has has undergone training to service the new cars while another two to three vehicle lifts are to be added to the present stock of three lifts. In addition, the 5,000 square-foot service area, of which 3,000 square feet has roofing, will be fully covered.
So far, Jetcon has invested US$4 million to facilitate its new-car segment, with the bulk of the spend going towards inventory, Jackson said.
BAIC, through partnerships with Mercedes-Benz and Hyundai, manufactures cars for the Chinese market and exports to over 80 countries.
So far, Jetcon has brought in six shipments of the Chinese cars.
“They have been on the road for just over a year now and we have had no problems whatsoever,” Jackson said, adding that all six shipments are nearly sold out.
Jetcon was founded in 1991 and taken public via a stock market listing in 2016. It remains the first and only auto trader listed on the market.
English (US) ·