Vehicle sales plunge

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New car and truck sales are down sharply across the state, but they've fallen more on Maui than in any other county, according to figures for January-June registrations from the Hawaii Automobile Dealers Association.

There were 2,768 new light vehicles (cars, sport utility vehicles and pickups) registered as of the end of June in the county, down 26.2 percent from the 3,750 new vehicle registrations of the first half of 2007.

"Car sales mirror the economy as much as any single figure," says Dave Rolf, executive director of the association.

If Maui's tourism numbers are taking the biggest hit in the state - as they are - then vehicle sales should follow along.

The decline this year has been steeper than in past downturns, but auto sales are cyclical. Rolf describes the sales graph for the past several years as "looking like the Golden Gate Bridge."

Oahu showed the smallest registration decline, down 15.5 percent to 16,917 new vehicles. Kauai was down 22.5 percent to 1,111, and Hawaii County was down 24.7 percent to 4,039.

The Hawaii figures are tracked by Auto Outlook Inc. of Malvern, Pa., for HADA. Auto Outlook says that compared to last year, sales of subcompacts nationally are up 8.2 percent, while full-size pickups are down 3.5 percent.

However, Rolf says each market in Hawaii has its individual quirks. Maui is a truck county. Light truck sales here are down just 1.1 percentage points, the smallest drop in the state. Trucks account for about two of three registrations here.

Commentary by Jeff Foltz of Auto Outlook paints a somber picture for auto dealers in Hawaii, as well as those nationwide.

This year may see fewer than 15 million sales, which would be the first time under than level in 15 years.

A number of factors are putting a damper on sales of new cars, even though surveys find record levels of wishful thinking - pent-up demand. They include:

* Turmoil in credit markets.

* Gas prices above $4 a gallon (though they just moved below that level on the Mainland). Maui prices are about 15 percent higher than that.

* Excessive household debt, reflected in home foreclosures and rising credit card delinquency rates.

Foltz said manufacturers are having difficulty shifting their center of production toward smaller and more fuel-efficient vehicles.

There is a plentiful supply of new and used trucks and SUVs, and that creates another problem. Resale prices of these vehicles are falling so fast that some owners owe more than they can sell the trucks/SUVs for. Even if they'd be willing to buy a new gas miser, they are deterred by the loss from trading (or selling) the vehicle they are driving now.

Foltz expects the market to hit a low in the up-and-down cycle in 2009, though he expects a slowing rate of decline in sales.

Rolf, watching the deteriorating visitor industry from Oahu, is somewhat more pessimistic.

He says the new car sales market is a creature of the wider economy. Over the years, he has identified a balance point in the statewide statistics that correlates with overall economic performance.

When new vehicle registrations are more than 60,000 per year, state tax collections expand by around 3 percent. Last year, there were 57,526 new registrations, symptomatic of a softening economy.

Through June, there were 23,839 registrations statewide, about 5,500 fewer than the pace last year. HADA is predicting a total of 48,139 registrations by the end of this year.

This should predict a drop in state tax collections.

Rolf says sales of luxury cars are holding up better than sales overall. Sales of hybrids, which are relatively pricey, are up to 3.7 percent of the Hawaii market. They might go up even more but manufacturers are having trouble raising output. In 2005, hybrids made up 1.5 percent of island registrations.

* Harry Eagar can be reached at heagar@mauinews.com.