News Column

Auto Dealers Having 'Fabulous Year'

June 28, 2012

Erika Engle, The Honolulu Star-Advertiser

Auto Dealers

New car and light truck registrations in Hawaii soared 21.5 percent in the first quarter of the year and are up 17.8 percent for the first five months of 2012 compared with the same period last year, according to the just-released Hawaii Auto Outlook report. The national average increase was 5.8 percent for the first quarter and 8.4 percent through May.

Hawaii retail sales of new cars and light trucks, as represented by vehicle registrations, are projected to increase 10.7 percent in the second quarter, more in line with the projected 9.6 percent national increase, according to the report prepared for the Hawaii Automobile Dealers Association.

The report projects sales of 42,000 vehicles for 2012, a 13.3 percent increase over last year and a welcome number for dealers that hit an uber-low point of 33,639 vehicles sold in 2009 -- the lowest point since 1989. The previous low, in 1998, was 40,673 new vehicle registrations. Sales have been on the upswing since 2009.

The report cites five primary reasons for the 2012 increases:

--Pent-up demand after years of slumping auto sales resulting in the aging of consumer vehicles;

--Economic recovery since the 2008 financial crisis;

--High used-car values that translate to good trade-in values;

--Ninety-four percent of the workforce that has remained employed has made significant headway in reducing debt and have therefore been in good financial position to buy a new vehicle; and

--Automotive credit markets have eased, making arranging financing easier for most consumers.

Japanese brands collectively have a chokehold on market share in Hawaii at 61.1 percent year to date, which is down 2.5 percentage points from a year ago. Domestic brands' year-to-date market share is up 1.9 percent, to 20 percent of the market compared with 18.1 percent a year ago.

Among the top 25 brands, registrations of Acura, Chevrolet, Chrysler, Dodge, Jeep, Mitsubishi and Volkswagen models were up more than 33 percent each through the first five months of the year.

Sales of electric and hybrid vehicles also are on the rise, projected to exceed 8 percent of the market by the end of the second quarter.

Toyota and sibling Scion remain Hawaii's favorites, with nearly 27 percent of the statewide market, according to the report.

The brands were on top before the March 2011 Japanese earthquake and tsunami and have remained dominant despite resulting product shortages.

Toyota has introduced a number of new vehicles to which customers have responded very well, said Rick Ching, president of Servco Automotive, which not only has auto dealerships but also is the Toyota distributor for the state of Hawaii.

Despite the natural disaster's effects on the industry, Ching said, "we'd like to think that even though there were supply issues," customers "may have been waiting until they got the exact Toyota they wanted."

Toyota's hybrid vehicles, such as the Prius, "depending on which month, make up 15 to 20 percent of our sales," Ching said. "A significant portion." There are four Prius models.

The top domestic brand in Hawaii is Ford, which Nick Cutter, president of Cutter Management Co., attributes to strides made by the automaker under Alan Mulally, president and chief executive officer. The Fusion and Fiesta are enjoying increasing popularity "and their trucks have always been the best," Cutter said. He also cited "the technology they're putting into the product."

The company is "outselling their build, (due to) a lot of demand," he said. The company tightened production through the recession and is now making moves to correct that, said Cutter, whose company owns two Oahu dealerships.

"It's been a fabulous year for everybody," said John Uekawa, president of New City Nissan and a member of the Dealer Advisory Board.

While the auto industry in general has focused on quality and reliability, which has somewhat leveled the playing field, in the eye of the consumer "it comes down to style," he said. "Nissan has recognized that," and will roll out five new body style changes for its core models over the next 15 months.

The Altima, Pathfinder, Sentra, Versa and Rogue are all "class-leading" in terms of gas mileage and are "where the meat and bones of everything comes from, so that's where the advantage for Nissan is going to be this coming year," Uekawa said.

Source: (c)2012 The Honolulu Star-Advertiser

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