State auto sales seen rising 9.1% this year

Hawaii auto dealers encountered what could be one last hiccup in the first quarter before seeing an acceleration in sales that could produce a 9.1% increase for the entire year.

As the COVID-19 pandemic moves into the rearview mirror, new vehicle registrations are now forecast to top 50,000 this year after sinking below that threshold in 2020, according to a report due out today from Hawaii Auto Outlook.

New vehicle registrations declined 12.3% in the first quarter to 12,001 from 13,679 in the year-earlier period. But demand is expected to pick up the rest of the year and top out at 50,250 after falling 19.6% last year to 46,064 — the first sub-50,000 finish after six straight years above that mark. Hybrid and electric vehicle registrations were up 27% during the first three months of this year.

“First quarter results were undoubtedly impacted by the typical lag in measuring registrations,” Jeffrey Foltz, editor of Hawaii Auto Outlook, wrote in the quarterly report. “The recording of registrations can occur 15 days, or more, after the date of sale. So the March 2020 total likely reflects vehicles that were sold from around the middle of February to the middle of March, when COVID was barely a factor. The full impact of the pandemic will be evident in the second quarter, when the market could improve by more than 50%.”

Still, the rebound in auto sales for the year will be somewhat muted, Foltz indicated in the report.

Key factors driving the state’s new-vehicle market are low interest rates, pent- up demand, accelerated employment and the federal government’s economic stimulus, but they will be offset by tight inventories and rising gas prices, said Foltz, who produced the report for the Hawaii Automobile Dealers Association.

“If the outlook for 2021 was only a function of demand, vehicle sales would likely be off to the races in the second half of the year, but lean inventories will act as a speed bump that will slow the pace of the recovery,” he said.

Foltz said the ideal scenario for auto dealers this year would be that the vaccine rollout would expand as the year progressed, COVID would abate, full reopening would occur, travel and tourism would rebound, the state’s economic recovery would gain steam and new-car sales would head higher.

“But this scenario is far from guaranteed and the microchip shortage, and other supply-related bottlenecks, have added some uncertainty,” Foltz said.

It was a mixed quarter among the islands as registrations plunged 19.9% on Oahu and declined 3.3% on Kauai but jumped 10.5% on Hawaii island and rose 10% on Maui.

“While there is no clear reason for the variance between Oahu and the neighbor island counties, the difference may be attributed to the backlog in the processing of vehicle registrations on Oahu,” Hawaii Automobile Dealers Association Executive Director Dave Rolf said.

New vehicle registrations can be representative of auto sales, but the two don’t always align because a buyer can purchase a vehicle one month and register it in another month. The data is based on county Department of Motor Vehicles registrations.

Light trucks (which include vans, SUVs and pickups) maintained their large lead over cars with a 75.1% market share versus 24.9% for cars. More consumers are opting for the larger vehicles because of more visibility, additional room for storage and stable gas prices.

Toyota was the bestselling brand in Hawaii in 2020 with a 25.7% market share, followed by Honda at 15.5%, Nissan at 7.6%, Ford at 6.9% and Chevrolet at 4.8%.

The market share for the top-selling models in the state last year were Toyota Tacoma, 7.2%; Toyota 4Runner, 5.3%; Toyota RAV4, 4.3%; Honda CR-V, 3.6%; and Honda Civic, 2.9%.

As the state transitions away from fossil fuels, the market share of electric vehicles in Hawaii rose to 6.3% in the first quarter from 4.3% in the year-earlier period. Hybrid vehicles encompassed 4.3% of the market share versus 3% a year ago, and plug-in hybrids’ market share was 1.1%, compared with 0.8%.