Car sales in Bermuda have fallen in the wake of the credit and sub-prime crisis and recent financial turmoil to hit the markets.

The fall-out from the economic woes in the US has already started to have a big impact on Bermuda's vehicle sales sector and Jonathan Brewin, president of HWP and chairman of the Bermuda Automotive Distributors' Association (BADA), reckons companies will need to adjust their business plans to deal with the effects.

Total market unit sales in the first half of the year have been steadily declining since 2005 from about 1,500 to just over 1,200 this year

All automotive distributors, except Bermuda Motors, have recorded a fall during this period. The Bermuda Motors figure can be attributed to sales of its popular Kia Sportage model.

"We have found ourselves in decline since December and I think that the market is probably about 20 to 25 percent down in car sales," said Mr. Brewin.

"We buy our cars five or six months out, so inventory management and control is really key because you have got to make sure that you are using your working capital to good effect and that it is working for itself."

Mr. Brewin believes companies, his own included, will be cutting back and trying to contain their costs in light of today's bleak economic situation.

"I think it is a question that there are lots of thoughts about how one can consolidate one's business," he said.

"We are looking at ways we can do that - we are looking at those problems that are not core to the business and are no longer generating profitability.

"We have made some changes recently - we ceased our towing business and outsourced that and I think it is likely we will do other activities to reconcile that."

But he said that while new car sales were down, drivers were still looking to keep their current cars on the road and therefore willing to pay for their maintenance.

"People still need to get their cars invested in if they want to keep them running," he said. "So we have had more exports on the after-sales side."

HWP also owns a number of gas stations across the Island, including the Shell East Broadway Service Station, from which it has seen a drop off in the volume of fuel sales as customers become more conscious about their spending, with many converting to a smaller class vehicle to cut back on gas consumption, according to Mr. Brewin.

Equally, he said, HWP is experiencing a stable trend in bike sales as car users transfer over to more economical means of transportation.

But Mr. Brewin has been encouraged by Government's involvement with the automotive interest, with Labour Minister Senator David Burch taking the lead in discussions between BADA and the TCD over the past few months via a tour of the Island's car dealers to understand how they do operate and train up young Bermudians.

"I would like to see a greater participation from the Ministry of Finance, however, to get more actively involved with local business," he said.

They have not contacted us directly, through the Bermuda Employers Council or the Chamber of Commerce about any initiatives we could do and that is perhaps something that local employers would benefit from."

The fall-out from American International Group Inc.'s (AIG) $85 billion bailout by the US government has, meanwhile, had a significant effect on car sales, said Mr. Brewin.

"What we did find was that the AIG news here caused more of a ripple than anything else," he said. "It seemed to cause more anxiety than anything else."

Mr. Brewin said he has held regular meetings with his staff to keep them informed of the global economic outlook, including updates on pricing of the yen and the euro, the currencies in which the company trades when dealing with overseas suppliers, as well as the value of crude oil.

"People really do not take on board the impact of the oil moving around has on Bermuda," he said. "I think people are aware of what is going on in the US, but I am not sure they are fully aware of the implications for Bermuda."

As of January, the number of Bermudian staff in the automotive industry was 272, with 71 work permit holders and 18 apprentices. The total distributors' unit sales between January and October 2007 totalled 1,992 and duty paid between April and December 2007 was $20 million, according to BADA's statistics, something which Mr. Brewin is keen to build on in the future.

"We, here at HWP, are trying to be strategic and proactive because when the goal posts are being moved around things are very difficult," he said.

"I think for those companies that can be proactive and make the changes ahead of them, then there is the possibility they will come out of the situation in a stronger position, but I think consolidation is likely to be the name of the game and looking at the way you do business and the cost of doing business in Bermuda."