Ashford W. Meikle, Business Reporter

The open Lot at 114 Constant Spring Road, (next door to Oaklands Apartment complex) earmarked for New Line Motors' new auto dealership. - Photo by Susan Smith

New Line Motors is to construct a new auto dealership on Constant Spring Road, St Andrew, as part of plans to scale down its used-car business and concentrate more fully on marketing Chinese-made vehicles.

New Line, a 12-year-old company, has the exclusive franchise to sell cars, trucks, pick-ups, SUVs and buses from four Chinese manufacturers - Yutong, ZX Auto, Cherry and Futon - deals struck separately over the past two years.

The new dealership, to be known as New Line Prestige Motors, will be built on a 2.5 acre lot next door the Oaklands apartment complex - its location perhaps explaining the inclusion of beauty care and Internet service in the products on offer at the site.

Managing director Dr Harry Benjamin declined comment on the project cost, but sources say it's a $85 million investment.

Upfront payments

New Line's slimming strategy follows weeks of turbulence in a sector with a $2 billion tax debt that few dealers seem incapable of paying, and an unsuccessful lobby to reverse a finance ministry decision for full upfront payment of duties and consumption taxes on imported cars.

The upfront payments represent higher operational costs that Kenneth Shaw, chief spokesman for some 60 car traders under the umbrella of the Used Car Dealers Association (UCDA), said might force businesses to consolidate.

Benjamin said he was in business for the long haul.

"Used cars is still a pretty good business, and we are not removing ourselves form it," he said. "It is going to be something we develop as the market changes, because at the moment there are a lot of players, but that is going to change over time."

The Constant Spring Road property, which Benjamin bought last year, will house a 4,000 square foot showroom that can hold up to eight cars administrative offices, a spa and a beauty parlour, as well as Internet facilities for customers, to be developed on 15,000 sq. ft. of space.

The designs also include an in-bond warehouse capable of holding 80 cars, a display lot with space for 70 vehicles, and a full-service centre staffed by 'factory trained' technicians.

"Right now we have two technicians in China on their third visit," said Benjamin.

The business will employ 90 persons.

"We are preparing the site now as we speak and we are actually awaiting final approval from KSAC to put in the foundation, and we expect that in a few days," Benjamin said last Friday.

The dealer was cagey about money, but did indicate that some of the financing would be in the form of debt from a local commercial bank.

"We are getting financing to assist with the development of the site," he said.

Construction is expected to take six months.

Local demand good

"We will have an auto parts show room with a floor space of 7,500 square feet [but] the way it will be racked, we will be getting 28,000 square feet of storage space," said the car dealer.

Benjamin said Jamaicans are demanding Chinese vehicles because they are more affordable than comparable Japanese and Korean makes.

"The local demand is very good, primarily because ... the vehicles are not new technology - the suspension, the frame, the drive train and the power are already in the market," he said.

"So, there isn't anything new, only the body [and] the method in which the Chinese have gone about getting these vehicles made has resulted in the competitive pricing and as a result giving consumers a brand new option for less."

Some of the pickups, for example, have a Toyota chassis and suspensions, and the choice of three engines - the Toyota 4x4, Nissan diesel, or Mitsubishi engine in the SUV.

"Chinese vehicles are around 25 to 30 per cent cheaper than their Japanese counterparts, so if you look at our QQ (car), our start-up price is $695,000," said Benjamin.

"The next car from Korea, which is the Kia Picanto, is $1.09 million, and that is the closest competitor."

Give up lease

With New Line now focusing on Chinese vehicles, Benjamin plans to give up the leased one acre property on Hope Road in St Andrew, saying it was "too large" to operate as a stand alone facility for used cars.

"We don't need more than half acre to display our cars and we won't be doing any servicing and after-sales service there. That will be done at Constant Spring Road," Benjamin told Wednesday Business."