The third quarter report sponsored by the Hawaii Automobile Dealers Association predicts that limited availability of new personal vehicles due to microchip shortages and other supply-chain issues related to the novel coronavirus pandemic likely will last ”well into 2022.”
“Demand is significantly higher than supply and sales levels will be determined based on how many vehicles can be produced,” states the Hawaii Auto Outlook, released earlier this month. “Pinpointing production volume is a complex puzzle impacted by several inter-related pieces: the chip shortage, COVID-induced labor cutbacks, tight supplies of other key components and transportation logistics.
“… Demand will not be a primary driver for (Hawaii’s) new vehicle market for perhaps the next 15 months.”
Toyota still claims more than a quarter of the new vehicle market share in Hawaii at 25.3%, more than 11% higher than the runner-up, Honda, which claimed 14% of the market.
The four-top selling vehicle models in the state are all Toyotas: the Tacoma pickup truck with 7.5%; 4Runner sport-utility vehicle with 4.4%; RAV4 compact SUV with 3.8%; and Toyota Corolla sedan at 3.2%.
In a virtual tie for fourth is the Honda CR-V SUV, also at 3.2%, while the Honda Civic sedan claims at 2.9% share of the statewide market.
Sales of new vehicles statewide are up almost 33% through September 2021 compared to the same period last year. That said, the industry association’s projection of 56,200 new vehicle registrations in Hawaii this year is more than 6,500 fewer units than the 62,716 new vehicles registered in Hawaii in 2016.
The relative unavailability of new vehicles has led to increased demand for used vehicles, especially late-model, lower-mileage used vehicles.
Don Perea, owner of Big Island Used Cars, said current availability of used vehicles in Hawaii is “very low.”
“Just to give you an idea, the Honolulu Auto Auction every Wednesday used to sell approximately 350 to 400 vehicles a week. They are now down to about 125,” Perea said Monday.
Despite that, Perea’s vehicle lot at the former Excelsior Dairy location on Kekuanaoa Street appears full to drivers on the east-west Hilo thoroughfare.
“We’ve had to actually start going out of our comfort zone and find cars all the way from the mainland and shipping them over,” he said.
When the pandemic began and some workers, especially in information technology and other high-tech careers began telecommuting, a fair amount decided they could do their job just as well from Hawaii and enjoy the amenities provided in a tropical setting.
“We’ve had a slew of people moving here, and they’re buying a lot of cars, too, and I think that was a part of the initial impact” on the market, Perea said.
Eric Troutman, owner of Pono’s Used Cars, described his business as “kind of steady.”
“We have had some slow months — like last month wasn’t the greatest,” Troutman said. “I guess the used car sales aren’t as bad as for the new car guys, because they don’t have any. But it’s not like I’m having record months. It’s pretty much the same, with some months not as good as normal.”
Troutman’s lot, on a grassy knoll on the airport side of Kanoelehua Avenue in Hilo, also looks full to passing drivers.
“I stay full. I’ve been here long enough. Everybody knows me. They bring their cars to me,” he said. “I help with consignments. I help customers sell their cars. I don’t say no to trade-ins. And I’m always actively looking on craigslist and Facebook Marketplace.
“Every day, I’m searching for cars, so that’s why I’m always full.”
Asked if the limited availability of new vehicles has driven the prices of used cars upward, Troutman replied, “Oh, yeah.”
“You know, Tacomas, 4Runners, diesel trucks — prices for those cars these days are just unheard of,” he said. “The money you have to spend to get a Tacoma, it’s almost 10 grand more a year or two later.
“It’s definitely affected the market, and I wouldn’t say in a good way.”
Perea said it’s “hard to put an actual number” on how much higher those in the market will have to pay for a used vehicle, “but my guess from all the things I’m reading (industry publications) is about 25%.” Despite that, he said, that doesn’t necessarily mean a bonanza for used car dealers.
“Dealers are actually making less money now than before, because we have to pay so much more to get a car,” he explained. “The banks are only going to finance X amount of dollars on a car. … And, of course, shipping went up and that whole bit, too.”
Those in the market for a used vehicle can expect to pay close to the price on the sticker, according to Perea.
He said registration and other document fees for cars that aren’t previously registered in Hawaii also have cut into profit margins, meaning consumers can expect less of a markdown from a vehicle’s sticker price than in the past.
“It’s gotten to a point where negotiating is almost out the window, you know,” he said. “I’ve got to price my cars at such a thin margin that I have almost no room, anymore. Shipping is about double.”
Email John Burnett at firstname.lastname@example.org.
Source: Hawaii Tribune Herald