Smooth Ride For Auto Dealers

New Vehicle Purchases Are Up In Hawaii. Waht's Driving The Sales?

October, 2003

You know new car sales are strong when the Hawaii Department of Motor Vehicles rations its cardboard license plates – temporary plates that identify new vehicles and their owners, while paperwork and metal plates are pending. The DMV stopped handing out paper plates earlier this year, because dealers were delinquent in submitting plate information. A paper plate’s data must be registered with the DMV one day after a new car rolls off a dealer’s lot.

“We had an ample supply of paper plates,” confirms Dennis Kamimura, licensing administrator for the department, which issues the paper plates in bundles of 100. “But we were wondering where they were going.”

The plate debate was a testament to the industry’s pent-up demand for new cars. Following last year’s growth spurt of 11 percent, Hawaii’s auto dealers have been extremely busy this year, keeping up with sales.

“I can’t complain,” says Joe Nicolai, president of Wholesale Motors Inc., which represents Chevrolet, Mazda, Audi and the exotic brands Ferrari and Lamborghini. Wholesale Motors had gross annual sales of $152.3 million and ranks No. 152 in this year’s Hawaii Business Top 250 list. The company had a 23 percent sales boost in the first half of 2003, compared with last year. It predicts a more than 10 percent increase this year. The reason for successful sales: Lowered interest rates, combined with financial incentives by auto manufacturers. “Manufacturers also have zero-interest programs. They’ve made it easy for a consumer to buy a new car,” Nicolai says. “In some cases, the rebates are as much as $5,000. The money can be used by the client for a down payment.”

BMW of Honolulu expanded its facilities this year by purchasing a lot adjacent to its Kapiolani Boulevard showroom. “We’re also doing construction on the side of the existing building, and we’re putting in a dedicated, certified pre-owned department,” says Dennis Short, general manager and president of BMW. The luxury dealer had a 28 percent increase in car sales in the first six months of this year and is expecting to end the year with about 20 percent more sales than in 2002.


2001
2002
Forecast 2003
% change 2002 to 2003
Total
48,016
53,314
56,211
5.4%
Car
21,267
24,216
25,183
4.0%
Light Truck
26,749
29,098
31,028
6.6%
Big Three (U.S.)
17,025
16,976
16,868
-0.6%
Japanese
25,374
30,075
32,593
8.4%
European
4,648
4,953
5,319
7.4%
Korean
969
1,310
1,433
9.4%

The Hawaii Automobile Dealers Association predicts that 53,314 new vehicles will be sold in 2003, a 5.4 percent increase over 2002. That’s better than the national average. Combined sales across the country are expected to fall by 1.8 percent this year (from 16.8 million to 16.5 million), according to the National Automobile Dealers Association.

There are reasons Hawaii sales are better than the country’s average, says David Rolf, executive director of the Hawaii Automobile Dealers Association. Local consumers are making up for the stagnant 1990s. Car sales had stalled at an all-time low in 1998, with 40,673 registrations, a 30 percent drop in 10 years, according to the DMV. “There was no decline like that in the country,” Rolf recalls. He says that the Japanese bubble bursting in the late 1990s, combined with the Gulf War in 1991, created a double-whammy for Hawaii’s auto industry. “Our strong sales could be attributed to that pent-up demand,” he says.

Sales are having a ripple effect. Matson Navigation, one of two major transporters of automobiles from the U.S. mainland to Hawaii, is already on track to surpass its 2002 shipping volume of 120,500 vehicles. From January to June this year, Matson imported 79,100 vehicles, up 30 percent from 60,100 in the same period in 2002. Matson operates two RoRo (roll-on, roll-off) vessels that house multitiered garages.

Next year, Matson and its competitor, Horizon Lines (formerly CSX Lines), will be joined by a newcomer, Pasha Hawaii Transport Lines. Pasha has announced the 2004 delivery date of a RoRo vessel – a 579-foot ship that carries up to 4,300 vehicles. Pasha plans to deliver a second RoRo ship to Hawaii in 2005.

McKenna of Hawaii Inc. represents Volkswagen, Mazda and Ford vehicles. Says Mark Caliri, general manager and vice president, “2001 was our best year, then 2002 was even better. This year, we’re ahead of 2002 by 10 percent.” His company had 2002 gross annual sales of $58 million, a 7.4 percent increase over the previous year. The company placed No. 117 in this year’s Hawaii Business Top 250 list.

In the past, McKenna customers brought their Mazda and Volkswagen vehicles to the same service center. That changed on July 1, when the company constructed a new service department exclusively for Mazda owners. “Because of the growth, we were getting a little too tight. Now, both service departments are breathing a lot easier,” Caliri says.

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Author:

Cathy S. Cruz