Isle auto sales expected to bottom out this year
POSTED: Wednesday, January 28, 2009
Isle auto sales are expected to drop for the fourth consecutive year in 2009 as tightening credit markets and a slumping economy are keeping customers out of showrooms, a report released yesterday shows.
HAWAII NEW RETAIL VEHICLE REGISTRATIONS
Source: Hawaii Auto Outlook
New-vehicle registrations are projected to drop 15.89 percent this year to 36,000—a record low for the 20 years of data available from the Hawaii Automobile Dealers' Association and Hawaii Auto Outlook.
The slump is nearly 10 percentage points less than the drop of 25.59 percent in 2008, when 42,804 registrations were reported. Sales have been declining in the state since hitting a high of 70,268 in 2005.
"It is the best time to buy a car anytime that I've seen," said Dave Rolf, executive director of the association, which commissioned the report from Pennsylvania-based Auto Outlook. "It may take a little bit more to reach a bottom."
Slumping sales mean that dealers have large inventories, and manufacturer incentives are plentiful, he said.
Ron Hansen, a minority partner in three isle dealerships who has worked in the industry since 1967, said the sales decline could be steeper in the first quarter of the year, with his business off 22 percent in the last 60 days compared to the same period a year ago.
"This is the most challenging time that I have been through since I have been in the business," he said. "The credit lines haven't opened up, and people with good credit who can afford to get a loan approved are waiting on the sidelines."
Hansen said customers are looking for deals as well as more fuel efficiency, although truck sales have rebounded slightly with fuel prices declining by more than half from record highs last summer.
Hawaii's light-truck sales accounted for 53 percent of the market during 2008, higher than the 47 percent share nationally.
Toyota/Scion and Honda topped the strongest-selling isle brands in 2008, with increases in market share to 28.5 percent and 14.3 percent, respectively.
Japanese automakers are projected to see a 13.7 percent decline in sales this year to 23,937. It is the slimmest decline expected for 2009 when compared to Detroit's Big Three automakers—General Motors, Ford and Chrysler—projected to drop 23.6 percent to 7,120; European automakers, with an expected slump of 13.8 percent to 3,670; and Korean automakers, with an expected decline of 14.1 percent to 1,273.
"The current sales slump will pave the way for an eventual recovery that will almost certainly begin later this year," wrote Jeff Foltz, author of the report. "In addition, new vehicles are likely to remain highly affordable, as very low interest rates should keep monthly payments relatively low."
In what he calls the most likely scenario for the isle auto market, Foltz said buying will be in part fueled by pent-up demand, even though spending will continue to be restrained.