Hawaii consumers were loath to drive new vehicles off dealership lots during the first quarter of this year, and indications are that things won’t get any better the rest of 2019.
New-vehicle registrations tumbled 4.5% in the January-March period, and sales are forecast to soften even further this year, according to a quarterly report scheduled for release today by Hawaii Auto Outlook. The decrease follows a 4.4% drop in 2018 that marked the state’s first decline after seven consecutive years of gains.
“Right now, the majority of signs are pointing to a slowdown,” Jeff Foltz, editor of Hawaii Auto Outlook, wrote in the report. “As with just about any economic activity, vehicle sales intrinsically follow a cyclical pattern. … After such a strong run (from 2011-2017 when the market increased 81%), the market was due for a contraction. And there are definitely some signs that the market is running out of steam.”
That would put Hawaii in line with the U.S. market, which saw new registrations sink 5.1% last quarter.
Price-conscious consumers have been turning their attention to used vehicles in Hawaii amid slowing economic growth, according to Foltz.
“Used vehicle prices have softened as several years of strong new vehicle sales have led to increasing supplies of late model cars and trucks,” he said. “Lower prices for used models entices many consumers to shift their purchase intentions from new vehicles to used. Higher interest rates and increasing new vehicle prices have also hindered consumer affordability.”
Hawaii Auto Outlook is projecting new-vehicle registrations in the state to fall 4% this year to 54,250 to mark two straight years of declines. The forecast for new registrations was revised lower from the 54,750 that Hawaii Auto Outlook had projected in its last report in February.
“The headwinds simply seem too strong for the market to remain at near record high levels (for annual registrations), but neither do we expect the market to fall off a cliff,” Foltz said. “Unemployment rates are very low, incomes are moving higher, consumer sentiment is strong, and GDP growth is predicted to remain solidly positive. It would be unprecedented for new vehicle sales to collapse in an environment with such strong core economic fundamentals.”
Foltz added that technological advances in today’s new vehicles are a strong motivation for many consumers to upgrade.
“The state’s new-vehicle market is expected to soften over the next several years, but sales should remain above average, based on historical standards,” he said.
While new-vehicle registrations can be representative of auto sales, the two don’t always align because a buyer can purchase a vehicle one month and register it in another month. The data are based on county Department of Motor Vehicles registrations.
Light trucks, which include vans, SUVs and pickups, continued to widen their market share in Hawaii over cars with 68.7% of consumers opting for the larger vehicles. That is up from a 67.9% market share in 2018 and a market share of 48.7% in 2012.
There has been a strong preference for light trucks among consumers during recent years due to stable gas prices, which have spurred potential buyers to seek out vehicles with additional cabin room for passengers and storage, as well as a higher seat position that allows the driver to see the road better.
Cars, meanwhile, dropped to a market share of just 31.3% during the first quarter, down from 32.1% in 2018.
Toyota was the best-selling brand in Hawaii in the first quarter with a 27.1% market share, followed by Honda at 14.3% and Nissan at 8.1%. The largest percentage gains were registered by Tesla (298.5%), Volvo (95.2%), Mitsubishi (41.4%), Subaru (28.4%), Lexus (22.5%), Ram (19.8%), Acura (16.4%) and Hyundai (15.6%).
Among light trucks the highest market share belonged to the Toyota 4Runner at 43.5%, followed by the Honda Pilot at 10% and the Toyota Highlander at 6.4%.
Hawaii drivers are gradually sliding behind the wheel of hybrid and electric vehicles with the state’s market share in that category increasing to 9.1% in the first quarter from 7.7% in 2018. The Tesla Model 3, Toyota Prius and Nissan Leaf were the best-selling models during the first three months in that combined category.
- New-vehicle registrations fell in three of the four major islands with Maui incurring the biggest drop at 12% and Oahu, which has the most registered vehicles, falling 4.3%. Kauai registrations fell 1.8% while Hawaii island registrations inched up 1.1%.