Nov. 4 – The road to higher Hawaii auto sales in the near future looks rocky, but a new local industry report says there are two key positives that could stem a decline.
The road to increased auto sales in Hawaii in the near future looks rocky, but a new local industry report indicates there are two key positives that could stem a decline.
Hawaii Auto Outlook says in a report due out today that pent-up demand continues to grow and vehicle prices are poised to come down as supply chain issues improve.
That would be good news for state auto dealerships, which saw new vehicle registrations drop 14% to 46,529 in the first three quarters of this year, including a 21.7% decline in during the July-September period.
For the year, registrations are now expected to be just 53,000, down 8.4% from 57,851 in 2021, as the loss of production due to the shortage of microchips during the year was markedly higher than expected in early 2022, said Hawaii Auto Outlook Editor Jeff Rey Foltz, who produces the report for the Hawaii Automobile Dealers Association. The year-end forecast is also down from the 55,500 registrations projected just three months ago in Hawaii Auto Outlook’s second-quarter report.
“There is cause for concern about the outlook for the new vehicle market in Hawaii,” Foltz wrote. “Supply chain issues continue to limit inventory, inflation is rising, interest rates are rising, economic growth has turned negative and consumer sentiment is weak. It’s a terrific list.”
Foltz, however, says increased pent-up demand and an improvement in supply chain issues will likely prevent deterioration in current sales rates and should provide a boost when supply issues ease and the economic situation will improve. The report estimates that 24,785 vehicle purchases in the state will have been postponed between 2020 and 2023, representing about 43% of average year sales.
He added that vehicle prices, which have risen sharply due to supply constraints, may fall.
“If demand weakens enough, dealers may limit the practice of selling vehicles at or above list price,” Foltz said. “Furthermore, automakers could easily increase incentives, which have all but disappeared over the past year. .”
Foltz said the bottom line is that “those vehicle purchases haven’t gone away, they’re ‘stockpiled’. It’s the proverbial gas in the tank when fundamentals improve.”
He said the market is almost certain to improve in the fourth quarter of this year mainly due to poor results in the year-ago period when inventory shortages were acute. Foltz predicts new vehicle registrations will increase 5.3% to 55,800 in 2023.
In the first nine months of this year, registrations fell 16.3% on Oahu, 12.4% on Maui, 8.7% on Kauai and 5.8% on the island of Hawaii.
Light trucks, which include vans, SUVs and pickups, remained the vehicle of choice with a 78.1% market share year-to-date, compared to 21.9% for cars.
New vehicle registrations may be representative of auto sales, but the two do not always match, as a buyer may buy a vehicle one month and register it another. Data is based on county DMV records.
Toyota was the top-selling brand in Hawaii for the first three quarters of the year with a market share of 29.3%, followed by Honda at 8.9%, Ford at 7.5%, Nissan at 8 .3% and Subaru at 5.9%.
The market share of top-selling models through September was To yota Tacoma, 8.2%; Toyota 4Runner, 6.3%; Toyota RAV4, 4.0%; Toyota Corolla, 3.2%; and Nissan Frontier and Tesla Model Y, both at 2.3%.
The state continued to make progress in sales of electric and hybrid vehicles. Sales of hybrids rose 8.1% in the first nine months of the year. Electric vehicles increased by 7.4% and plug-in hybrids by 1.9%. Nationally, Hawaii ranks sixth in combined electric and plug-in hybrid vehicle market share at 9.3% behind California (19.1%), Washington (11.6%), Oregon (11 .3%), Nevada (10%) and Colorado (9.6%).