By Michael Spence
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| Michael Spence |
Seventy-five vehicles auctioned by one lending institution in a single week. That should tell us something. Lending institutions in Jamaica are not investing in real productivity. They prefer what I call the unproductive Motorized Pyramid Scheme Economic Model (MPSEM): lend for a car, insure a car, repair a car, fuel a car, auction a car, repeat.
No exports. No productivity. Just debt on wheels. Look at the numbers:
In 2015 there were about 190,000 motor vehicles on our roads.
In 2026 there are about 800,000 registered vehicles.
You haven't seen anything yet. As the economy contracts, thousands more vehicles will be on the auction block. Families cannot afford the loan, the insurance, the gas, and the service — all at once. The traditional used-car market has already been decimated by the new car market and easy credit.
And now watch the next wave: Chinese cars are coming at less than half the price of your favourite Break-My-Wallet cars. How about the Bring-You-Discount (BYD) vehicles from China? MPSEM on the move.
Soon Jamaica will have to seek markets to export its excess vehicle inventory. But where? We have no market to export 800,000 cars to. You ain't see nothing yet.
When banks prefer to finance a depreciating motor car that loses 50% value in 4 years instead of financing a farm, a factory, a fishing boat, or a small manufacturer that can create real jobs and foreign exchange, we are financing our own economic traffic jam.
We need a policy shift: Incentivize productive lending. Tax unproductive consumption. Invest in public transport so a man does not need to buy a car to go to work.
Otherwise, the auctioneer's hammer will keep falling.
Michael Spence
Michael Spence is a graduate of Cornwall College and the University of the West Indies. He is a trained teacher, a sociologist, and a writer for Bark Di Trute.
Micspen2@hotmail.com
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