Hawaii auto sales had nowhere to go but down in the first quarter as the state’s stay-at-home order, business shutdowns and thousands of displaced workers left roadways nearly empty and dealerships virtually closed.
The COVID-19 pandemic sent new vehicle registrations plunging 6.6% with the tailspin expected to considerably worsen the rest of the year, according to a report scheduled for release today by Hawaii Auto Outlook.
New vehicle registrations are projected to decline 33% in 2020 to a nine-year low of just 38,250, according to the report produced for the Hawaii Automobile Dealers Association. It would be the lowest level since 2011 when 37,090 vehicles were sold and end a run of seven straight years of more than 50,000 vehicles sold. It also would mark the third straight year of declines in what has been a softening auto market in the state.
But the market should take a turn for the better next year, Jeffrey Foltz, editor of Hawaii Auto Outlook, wrote in the report.
“One thing … seems likely right now: The low point in sales should occur in 2020 after which, the market can start what is likely to be a slow upward climb,” he said. “The dramatic sales slump will result in the accumulation of pent-up demand, fueling an upswing in sales that will likely lead the market to higher levels over the next several years.”
Hawaii’s auto market has been gradually slowing with new vehicle registrations declining year over year for seven straight quarters. Foltz said Hawaii’s new vehicle market got off to a good start in the first two months of this year, but then the bottom fell out when COVID-19 hit in March and auto dealerships were allowed to remain open strictly for vehicle repairs.
Now, though, customers can visit auto dealerships by appointment only on Oahu and Maui with some additional restrictions. On Kauai and Hawaii island, there have been no specific orders regarding automobile sales, but auto sales under Gov. David Ige’s proclamation are considered essential.
The effect from the coronavirus-related shutdown wasn’t clearly reflected in the auto report because new vehicle sales declined significantly in March and April, said Foltz, adding that registrations typically lag actual vehicle sales at dealerships.
He said the three keys to monitor over the next few months to get a handle on how fast the recovery can progress is how quickly business restrictions will be lifted so economic activity can resume, how many businesses will manage to survive the shutdown and how long it will take for households to repair their balance sheets. Foltz also said the blow to the state’s tourism market also could extend the hit to the state’s economy since people likely will be reluctant to board a plane, get in somebody else’s car or stay in a hotel.
”Rising unemployment and lost wages will result in growing debt, and a depletion of savings,” he wrote. “Stimulus checks and 0% interest rates will help, and the balance sheet correction should be less severe than during the Great Recession. But many households will be dealing with the financial consequences of a significant interruption in income, which will crimp spending on big-ticket items, like new vehicles.”
Overall, new vehicle registrations in the state fell last quarter to 13,679 from 14,640 in the year-earlier period. All four island markets also declined. Kauai auto sales plunged 15%, Maui auto sales fell 10.2%, Hawaii island auto sales declined 8.6% and Oahu auto sales dropped 5.1%.
Toyota was the bestselling brand in Hawaii last quarter with a 26.8% market share, followed by Honda at 13.7%, Nissan at 8.6%, Ford at 7.1% and Subaru at 4.6%.
The Toyota RAV4 was the top-selling SUV in the first quarter with a market share of 9.9%. It was followed by the Toyota 4Runner at 9.2% and the Honda CR-V at 6.4%.