Dealers face shortage of cars

By Dan Nakaso
Advertiser Staff Writer

A backlog of new cars awaiting shipment to Hawai'i has shrunk inventories and slowed sales for some dealers. Bloomberg News Service

The sudden shortage of inventory, which has slowed some dealers' sales, comes after zero-percent financing deals have spurred high consumer demand and made the new car industry one of the highlights of an otherwise sluggish Island economy.

But sales at dealers around the country were off about 25 percent in September, which was followed by a slow October that included the threat of war with Iraq, a tumultuous stock market, and other issues that have shaken consumer confidence.

"Then you put this fiasco on top of everything else and it's going to be a bad November," said Jim Ryan, area manager for Volkswagen of Hawai'i. "We have hundreds of cars backed up on the docks at Long Beach. We're just not getting the inventory we need. It's left our inventory very, very sparse."

Before the recent months' slowdown, the Hawaii Automobile Dealers Association had predicted that the Islands would have more than 50,000 new car registrations this year, a 4.9 percent increase over 2001. For the January through May period, dealers saw retail registrations rise 9.7 percent over the same period last year.

West Coast dockworkers have been clearing the backlog of cargo from last month's port shutdown, but cars and trucks bound for Hawai'i take a low priority, leaving dealers with fewer cars to sell. Normally, only about 1,000 new vehicles wait on West Coast docks for shipment to Hawai'i.

Some dealers said yesterday that the only good news is that the backlog is happening during one of the slow times of the year for sales.

"If there has to be a time for this to happen, this is the time," said Mark Caliri, general manager and vice president for Mike McKenna's Windward Ford and Windward Volkswagen/Mazda. "I'd just as soon this not happen going into Christmas and through the New Year."

Windward had stocked up on Fords but didn't have as big an inventory of Volkswagens before the dockworker problems began. The result is that Ford sales are off about 10 percent to 15 percent, Caliri said, while Volkswagen's are down about 20 percent.

"The Jettas that we want, or some of the Beetles we want, are hung up in California," he said. "Some people will wait or they'll go to another dealer. Generally when they want a car, they want it. And if we don't have it, it hurts us."

Some customers are making down payments on particular models and colors but the orders don't translate into sales for November, said Wes Kimura, vice president for Servco Automotive's strategic planning divisions for Toyota, Lexus and Suzuki.

"They're not sales because we don't have the cars," Kimura said. "We were short before this. Now it's a critical factor. People still want to buy our products. It's just that we can't get them to them."

About half of Servco's inventory comes directly from Japan but many of the most popular models are hung up in West Coast ports. Even when shipments come through, Kimura said, Servco has been ending up with 25 percent of what it expected.

"In the first two shipments (after the docks reopened), we were supposed to have maybe a couple hundred cars," Kimura said. "We got maybe 50."

Matson Navigation Co., which ships the majority of cars and trucks into Hawai'i from the West Coast, has been keeping dealers updated with daily faxes on the status of their shipments.

But much of the problem is beyond Matson's control, said Jim Andrasick, Matson's president and chief executive.

"We're dealing with equipment shortages because many of these cars are put into special auto carriers, and once those get out of sequence they're all lined up where they're not supposed to be and have to be repositioned," Andrasick said.

Matson officials recently added an eighth ship to their Hawai'i fleet to help move backlogged cargo more quickly.

Andrasick said yesterday the company is making plans to dedicate one, and possibly more, ships capable of carrying 1,000 vehicles to help break the backlog.

It's all hopeful news but doesn't give immediate relief for people such as Michael Johnson, general manager of Saturn of Honolulu.

Johnson said he has 126 cars stuck in Oakland and at a railhead in Milpitas, just north of San Jose. One hundred of the cars were supposed to have been delivered to Hawai'i as long as 45 days ago.

Saturn's normal inventory of 150 cars has now dwindled to 65.

"So we're in trouble," Johnson said. "It's starting to hurt us."

Saturn unveiled its new Vue SUV earlier this year and sold out of its Hawai'i supply almost immediately, Johnson said. "Now we don't have any new ones to sell."

The company also just introduced its new "S" series nationally and sales are off to a good start on the Mainland. But for Hawai'i's Saturn dealers, Johnson said, "Our first shipment's still sitting on the dock."