Chip shortage could slow new vehicle sales

  • Due to a vehicle shortage, the Big Island Toyota car lot has fewer cars than usual on Wednesday. (Kelsey Walling/Hawaii Tribune-Herald)

  • Due to a vehicle shortage, the Big Island Toyota car lot has fewer cars than usual on Wednesday. (Kelsey Walling/Hawaii Tribune-Herald)

The Hawaii Auto Outlook for the first quarter of 2021 predicts a market recovery for new vehicle sales this year, with a projected 9% increase statewide.

There is one large caveat to that rosy outlook, however: You can’t sell what you don’t have.

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Big Island car dealers in mid-March said they were lacking inventory due to a hole in the supply chain of automotive semiconductor chips caused by pandemic-related issues on the production lines of computer chip manufacturers.

The chip supply deficiency was exacerbated about a week later on March 22, when an electrical fault caused machinery to catch fire at a Renasas Electronics microchip factory in Naka, Japan. The fire caused smoke to billow into the sensitive clean room of the plant.

According to an April 19 story in the Japan Times, Renasas — which controls about a 30% share of the global market for the microcontroller unit chip used in automobiles — is expected to be back to full production capacity by early July.

Some of the world’s most popular vehicles are affected by the chip shortage.

Ford said earlier this month it would halt or reduce production at eight North American factories for various periods of time in June. The shutdowns will affect the supply of Ford Mustang and Escape, the popular F-150 pickup truck, and the Bronco Sport sport-utility vehicle. Also affected by the announcement are the Lincoln Aviator and Nautilus.

Other manufacturers are affected as well. General Motors announced extended breaks at plants building Chevrolet Camaro, Equinox, Malibu and Traverse; Cadillac XT4, XT5 and XT6; and GMC Acadia. Affected Chrysler models include the Jeep Grand Cherokee and Dodge Durango.

Affected non-American makes and models include: Nissan Altima, Leaf, Maxima, Murano and Rogue; Subaru Ascent, Impreza, Legacy and Outlook; unspecified Hyundai models; Mercedes-Benz C-Class, GLQ and EQC; Jaguar XE, XF and F-Type; Land Rover Discovery and Range Rover Evoque; Mini Cooper; and BMW X1 and X2. Although those makes are considered imports, some manufacture vehicles in the U.S.

“I think it’s going to be a tough June because of inventory,” Dave Rolf, Hawaii Automobile Dealers Association executive director, said earlier this month. “A lot of the plants had to close because of the inability to have the chip. … The car is really a computer on wheels. It has more computing power than was used to send man to the moon, you know, years ago. There’s just a massive amount of computing power in cars … and all of that runs through a chip. There’s a lot of them in cars and trucks. And the truck situation was particularly tough.”

Hawaii’s new light vehicle registrations declined 12.3% in the first quarter of the year, according to the report, which chalked up the decline to a lag in vehicle registrations, not actual sales.

“Everybody talks about car sales, but this doesn’t represent car sales. It represents what got through the registration process,” Rolf said. “It’s been tied up in Honolulu with a huge backlog — and that’s probably made the statewide numbers somewhat skewed. … I don’t know that we’re a full 20% off. A lot of it is the backlog that couldn’t get through the Oahu (department of motor vehicles). But the neighbor islands have made it through more smooth sailing.”

The numbers appear to bear Rolf out. New vehicle registrations for the first quarter of this year on Hawaii Island and Maui improved 10.5% and 10%, respectively, over the same period in 2020, while Kauai had a 3.3% decline and Oahu experienced a precipitous drop of 19.9%.

Again, Toyota was the top brand statewide for the first quarter, with 25.7% of Hawaii’s market share, more than 10% ahead of the runner-up, Honda, with 15.5%. The three top-selling models are all Toyotas, as well — the Tacoma pickup with 7.2%, the 4Runner full-size SUV with 4.3% and the RAV4 compact SUV with 4.3%.

Light trucks, which include pickups and SUVs, carried more than 75% of market share statewide.

According to Rolf, the chip shortage stunts what otherwise is a market positioned for strong sales: low interest rates, pent-up demand, plus federal economic stimulus and unemployment rates that, while high, are much lower than earlier in the pandemic.

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“It is what it is,” he is. “For whatever reason, that some are doing better than others might have to do with how much inventory they had to sell. If you had a lot of inventory on the lot to sell, that would’ve made this quarter stronger. But then again, the registration delay and backlog has so clouded the picture.”

The Tribune-Herald placed multiple calls to Big Island new car dealers, but none were returned in time for this story.

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