Bermuda's auto dealers say the hike in car duties outlined in this year's Budget will impact most on lower-income customers and the change has left distributors to seriously consider the way they will operate in the future.

In a statement put out by the Bermuda Automobile Distributors Association (BADA) highlighting the increases in business costs and their effect on the automotive industry as a whole, chairman Jonathan Brewin voiced the Association's concerns that, while the existing tiered rate of duty on cars will stay at 75 percent and 150 percent, the threshold that separates the two rates will be cut from $12,000 to $10,000. BADA is made up of representatives from Bermuda Motors, Continental Motors, Eurocar, HWP and Rayclan.

"In particular, the reduction in the threshold level for car duties is forcing us as an industry to take a close look at the way we do business in Bermuda," Mr. Brewin said.

"Our primary concern is that families in the lower-income range will be most affected by the increase in duty and the lowering of the duty threshold.

"Members of the Bermuda Automobile Distributors Association remain committed to bringing quality vehicles and parts to Bermuda. We will continue to work with our industry partners to ensure that vehicle pricing remains as competitive as possible despite the increased cost of doing business in Bermuda."

Mr. Brewin, who is also president and CEO of HWP, also pointed to a number of global trends and local developments which were impacting on car dealerships, including the falling US dollar and the rising price of oil.

"For automotive dealers, the cost of doing business is increasing in Bermuda. Several global trends and local developments are precipitating factors," he said.

"First, our purchasing power is being impacted by the declining value of the US dollar against foreign currencies in the countries we do business. As such, some vehicles are currently selling for a slightly higher price when compared against automotive retail sales prices in the first three quarters of last year.

"The declining value of the US dollar has impacted many sectors of the retail sales industry around the world and is beyond our control. However, BADA members are working together to find ways to minimise as much as possible the effects of this trend on vehicles prices.

"Second, the increasing price of crude oil on the world market is also affecting business costs in Bermuda. Given Bermuda's geographical isolation, all vehicles and parts must be shipped to Bermuda via sea or air, and freight costs have increased due to world oil prices."