Car importers fear credit risks over government crackdown

Car importers could face credit risks over recent government measures to regulate the local taxi sector.

Deborah Schembri, the secretary-general of the Association of Car Importers Malta, told MaltaToday that recent regulatory measures could spell trouble for local importers who have sold significant quantities of cars to fleet operators through hire purchase agreements.

“The recent shocks to the Y Plate system, whether through change in operations by stopping/limiting Third Country Nationals from being employed or other actions like court actions or freezing of assets, does pose a potential credit risk to importers who extended credit and/or stock risk for committed units (still in stock or on order) which shall not be acquired by respective operator in view of the uncertainty/market conditions,” she said.

A hire purchase is a payment agreement that allows the buyer to pay off the goods in instalments over a period of time. If the buyer defaults in paying the instalments, the seller can take back ownership of the goods and try to recover the debts. However, if the buyer is served an asset freeze by a court, the seller will be unable to recover the debts so easily.

Data seen by MaltaToday indicates that hundreds of cars have been sold by local car importers to fleet operators in the ride-hailing industry.

Malta’s fourlargest fleet operators – WT Global, Agius Trading, eCabs and Knock Knock – have alone purchased 595 vehicles since 2019 from select importers.

The importers most exposed to these two operators are Michael Attard and Motors Inc.

Trouble has been brewing in the taxi sector amidst a government crackdown on drivers and fleets alike.

Last month, the employment ministry decided that it will no longer accept work permit applications from third country nationals applying to become cab drivers or food delivery couriers in Malta.

This was decided after Jobsplus determined that the labour market for cab drivers and food couriers has reached saturation. As a result, any third-country nationals who are still abroad and applying to work in these roles will now have their applications refused.

Workers in these sectors who want to change employer but remain in the sector will also have their applications refused.

This move effectively closed the tap on foreign labour flowing into the sector. Ride-hailing platform Bolt has claimed that this move resulted in a price surge on its app, owing to a lower supply of cabs.

Meanwhile, the government has also cracked down on recruitment agencies, which provide labour to ride-hailing apps like Bolt, eCabs and Uber. Jobsplus raided the offices of three recruitment agencies last month: WT Global, Ferrugia Fleet and Mela Cleaning.

MaltaToday is also informed that investigations are underway at Jobsplus and at the Malta Police Force.