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The Honolulu Advertiser
Posted on: Friday, October 31, 2008

HAWAI'I AUTO DEALERSHIPS REELING FROM DISMAL SALES
Hawaii vehicle dealerships reeling as sales decline 20.3%

By Greg Wiles
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

In 2004, when these new automobiles were lined up on a Honolulu Pier after being unloaded, the industry was flush with sales. It's a different story this year, with new-vehicle sales in the tank and no significant improvement expected until 2010.

ADVERTISER LIBRARY PHOTO | 2004

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34,995

Number of new vehicles sold in Hawai'i during the first three quarters of 2008.

43,913

Number of new vehicles sold in Hawai'i during the first three quarters of 2007

-20.3%

Difference between 2008 and 2007

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Hawaii news photo - The Honolulu Advertiser
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Hawai'i car buyers took the slow lane during the first nine months of this year and aren't expected to step up buying anytime soon.

Data gathered for the Hawaii Automobile Dealers Association shows new vehicle sales as measured by new car and light-truck registrations tumbled to 34,955 through the end of September.

That was one-fifth lower than the same period a year earlier.

Hawai'i residents are braking when it comes to car sales because of a variety of factors, most prominent of which is the state's worsening economy, rising unemployment and lower credit availability. The state has been hit with a series of economic shocks, ranging from the abrupt shuttering of Aloha and ATA airlines, to thousands of people being laid off, to higher energy costs brought on by record crude oil prices. Tourism arrivals fell 19.5 percent in September.

Vehicle sales here have declined faster than those nationally; Hawai'i sales are down 20.3 percent compared to the national decline of 13.7 percent.

"Without question, these are highly uncertain times," the dealer group's quarterly newsletter said.

"The multitude of events unfolding in the economy in general, and the financial/banking sector in particular, is mind boggling and unprecedented.

The dealers group said household debt and the availability of credit are playing a role in car sales nationally, along with people holding back on major purchases given the economic uncertainty here and globally.

It forecast car sales will slow further in the last three months of the year and that sales for the year will end down by 21 percent. At the start of the year, the group had thought 2008 would be weak and had forecast just a 4.1 percent drop from the 57,5261 vehicles sold in 2007.

It now predicts this year's sales will total 45,526, or a drop of more than 12,000 units.

"Certainly, it's a tough time for business," said said David Rolf, executive director of the Hawaii Automobile Dealers Association.

"There are a lot of folks who've said they've never seen things quite like this."

But Rolf also said he believes things could loosen up after the general election next week, especially since manufacturers are offering rebates and some dealers have cut prices. He said anyone interested in buying a car will find a lot of choices because of the inventory that's available.

Next year will also see some deterioration, though at a slower pace. New car and light-truck sales are expected to drop 3.4 percent in 2009, the fifth consecutive annual drop in sales for the market.

"Postponed new vehicle purchases are starting to reach a significant level and should provide some support to the market by mid-2009," the dealer newsletter said.

The decline is pretty much affecting all makes of vehicles with only Subaru, Mini and Jaguar showing year-over-year gains. Sales for Toyota/Scion, the biggest in the state, were off almost 17 percent in the first nine months compared with the same 2007 period.

Honda's sales fell by 13.2 percent, while Nissan sales were down almost 21 percent.

Rounding out the top five sellers here, the number of units sold by Ford dealers slid almost 26 percent and Chevrolet sales were off a similar amount.

The dealer group said sales will start to recover in mid-2009 under a best-case scenario that includes a financial-system rescue by the federal government gaining traction with credit markets recovering and the economy rebounding. Car sales would increase slightly in 2009 and be sharply higher in 2010 and 2011.

The worst-case scenario is bleaker, with credit markets clogged and banks hesitant to write new loans.

New vehicle sales would be sharply lower next year as households hold the line on spending, with a slow recovery taking hold in 2010.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.