While demand is expected to increase, dealers worry they won't have supplies
POSTED: 1:30 a.m. HST, Apr 29, 2011
Sales of new cars and light trucks rose by 4.2 percent in Hawaii during the first three months of the year, but dealers are concerned that production issues in Japan could reduce the supply of vehicles later in the year when buyer demand is strengthening here.
Local auto dealers sold 8,573 vehicles during the January-to-March quarter compared with 8,229 in the same period a year earlier, the Hawaii Automobile Dealers Association said yesterday in its Hawaii Auto Outlook report.
The first-quarter sales increase was smaller than expected and compared unfavorably with a 27.6 jump nationally in auto sales during the same period, according to the report.
"We were thinking that the first quarter was going to be a lot higher than 4 percent," said Dave Rolf, executive director of HADA. "What caught my eye was the gap between Hawaii and the mainland. We had the ability to supply the cars; we just didn't have the demand yet," he said, noting that Hawaii auto sales usually lag behind the mainland by about six months.
An expected pickup in buyer demand, strengthening consumer confidence and a reduction in household debt should support sales later in the year, the report said.
However, dealers are concerned that disruption in the supply of some vehicles as the result of the March 11 earthquake and tsunami in Japan could mean they won't have sufficient inventory just as demand is peaking, Rolf said.
The REPORT, which uses forecasts produced by Pennsylvania-based Auto Outlook Inc., is projecting Hawaii auto sales will rise by 6 percent in 2011 to 36,073.
That's up from last year's 1.1 percent increase in sales but down from the previous 2011 forecast of a 9 percent jump published in the Hawaii Auto Outlook three months ago. Hawaii auto sales have averaged 50,000 per year over the past two decades.
"By the time we’re ready to benefit from the pent-up demand, we could be challenged with availability,” said Rolf, who brought together a group of 10 local dealers yesterday to brief U.S. Rep. Colleen Hanabusa on the state of auto sales."
In addition to a reduction in the number of vehicles being produced by Japanese automakers, the natural disasters in Japan have disrupted the supply of Japanese-made parts to automakers around the globe.
For example, one local dealer who sells European cars was told that his supply would be affected because of a shortage of Japanese-made automatic transmissions used in those vehicles, Rolf said.
A dealer who sells Fords was told that certain colors would not be available because the pigment used in the paint comes from Japan.
Uncertainty over how severe the supply disruption will be has caused some dealers to question whether they will be able to hit the target of a 6 percent increase in sales this year, Rolf said.
"The auto dealers felt it might be hard to achieve that in light of the supply problems," he said. "There are a lot of unknowns between where we're sitting right now at the end of April and late in the year when things will smooth out and get back to normal for some manufacturers."
Some mainland dealers have been stocking up on used cars in anticipation of a reduction in new car shipments, Rolf said.
"We don't have the ability to do that too much here because we can ‘t buy that readily from the next state over or some other market," he said.