Bermuda's auto sales are expected to fall by between 20 and 30 percent over the next year, but there could be an upswing in 2011 as the economy starts its long road to recovery.

That is the view of Jonathan Brewin, chairman of the Bermuda Automotive Distributors' Association (BADA) and president of the HWP Group, who was speaking to The Royal Gazette yesterday in an interview about the state of the Island's auto industry.

But Mr. Brewin revealed that BADA had been in talks with Finance Minister Paula Cox about the challenges faced by the industry as a whole and possible changes to its business model to preserve capital.

He said sales had been steadily declining over the past five years, from 2,508 vehicles in 2005 to 1,816 in 2009 — representing a decrease of 30 percent — and anticipated another drop of 20 to 30 percent this year.

Mr. Brewin put the reduction in sales down to the impact of the economic downturn and a lack of confidence in the economy, pointing out that a number of motorists had made the conscious decision to hold onto their vehicles for longer rather than replacing them with new models, but not getting them serviced, ultimately costing them more in the long term. However he added that auto dealers such as HWP were doing their utmost to offer after sales service to help customers keep their cars running.

The Department of Statistics' Retail Sales Index for November 2009 showed that motor dealers experienced sales gains of two percent, due to a higher demand for models and the availability of more popular bike models, with the rebound in sales activity ending six consecutive months of declines since May 2009, including a dip of 24.2 percent in September of last year. Among the biggest challenges ahead for the auto industry over the next 12 months are the knock-on effect of the slowdown in the construction sector on local business across the board, the cost of employing overseas workers and training young Bermudians, according to Mr. Brewin.

"There are normally 200 staff working within the five main dealerships on the Island, of which 25 percent are work permit holders, primarily in the technical trades," he said.

"But we are working with the National Training Board to try and ensure that the training programmes they put together for the Bermudian youngsters matches the needs of the industry."

Mr. Brewin said Minister Cox had been keen to learn more about the industry and had given them hope of opening up a regular channel of communication in order to keep the Ministry abreast of the latest developments within the market.

He also called for a review of the import duty on new vehicles in order to ease the burden on dealers if less are sold, with in the region of $20 million being paid in total in duty over the past year, while being able to sell enough models to maintain a viable going concern.

"The industry has already been impacted across the board by sales reducing and a number of companies within BADA have had to take steps to reduce staff or reduce working hours," he said.

"I think that we are going to maintain those levels this year, but I hope that in 2011 we are going to see some upswing."

Mr. Brewin sees a number of trends emerging over the forthcoming year, with more dealerships focused on smaller cars and the potential to roll out of hybrids, electric vehicles or fuel efficient saloon cars as manufacturers produce more 'green' models and consumers become more aware of the alternative energy sources.

"The primary thing is to maintain viable businesses with a continued level of realistic competition between those businesses and at the same time a continued focus on recruitment and training of Bermudians and a continued level of focus on high customer care," he said.

Mr. Brewin said that the public was now much more informed about motoring issues, particularly following Toyota Motor Corp.'s recent safety recall of more than eight million vehicles due to problems with unintended acceleration, which has been estimated to cost the company $2 billion by the end of March in lost sales.

Companies to look out for in the future were the likes of Korean manufacturers such as Hyundai and Kia, who were producing extremely competitively priced models, he added.

Mr. Brewin said the Island's auto industry will launch four to five new products over the next year as dealers target the right vehicles and volumes for the market, while meeting costs of importing, bringing in new technology and training of employees, taking into account a lead time of four to six weeks to secure the products, when working capital is tied up.