3 weeks ago
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By year end, used car dealer Jetcon will be turning the page on the business that has been its mainstay for the past 35 years. The company will shift to selling new cars.
Speaking after the company’s annual general meeting on Wednesday, CEO Andrew Jackson said that faced with mounting losses from the sale of used cars and with a financing environment that favours new cars, the shift to selling only new cars was the best option.
“By the end of December, we’ll be out, fully out,” Jackson said.
The 350 to 500 used cars normally held as inventory by Jetcon is currently down to about 50, he told the Financial Gleaner.
Jetcon has been weighing whether to discontinue its core for some time, and was previously in two minds about whether to make a permanent break from that market after entering the new-car arena. A final call was made when the company found that in recent times, every used car that it sold was done at a loss, while every new car sold brought in a handy profit.
The company’s new challenge, Jackson said, is to drive up the number of new car units traded.
“Every time we sell a used car, there’s a lot of cost involved in getting the car prepared; and after we sell it, they come back with issues that cost us something. We sold a car recently; it came back three months later with transmission issues. That’s $200,000, $300,000,” said the auto trader.
Meanwhile: “We haven’t had a problem with any new cars as yet and we’re approaching two years,” he said, referencing the timeline since Jetcon diversified into the new car space.
The costs racked up on the used car sales led to losses of $4.5 million year 2023, and an even bigger bleed in the current fiscal period, $17.06 million in nine months.
To facilitate the new car operation, Jetcon has spent just over $30 million to repurpose its Sandringham Avenue location in Kingston to create 2,100 square feet of space to showcase up to eight cars.
The company has an exclusive Jamaican dealership for all passenger cars manufactured by Beijing Automotive Industry Corporation. Models on offer include the Beijing X55, which is a competitor to compact SUVs like the Honda CRV and Toyota Rav4; and the BJ40, a full-size SUV which competes with the likes of the Toyota Prado and Jeep Grand Cherokee.
In his address to shareholders at the annual meeting, Jackson noted that there has been a major shift in the world auto market and that Chinese cars, in particular, “have made quantum leaps in terms of styling and quality”. Consequently, the entire car market has been disrupted with the shift towards Chinese cars, he said.
“We believe the Jamaican market will be shifting to this as well,” said the auto trader, adding that Jetcon has positioned itself to take advantage of these changes.
As for the trajectory of the company’s used car business, he reported that sales dropped from their highpoint of 688 units in 2022 to 383 units in 2023.
“This is due mainly to our customers facing increasing problems accessing loans, used cars, banks are now favouring lending for new car purchases rather than used car purchases. There’s a significant increase in competition in the used car market, with over 500 registered used car dealers around Jamaica,” Jackson said.
Jetcon has also diversified into the wholesaling solar equipment. Jackson says there are no plans at this time to enter the retail market but rather to sell to installers.
“We have essentially started two new business units. Solar sales and new car sales. To this end, we have established partnerships with a number of equipment manufacturers in China for solar equipment, solar panels, solar inverters, batteries, and other equipment,” he said.
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