A sales forecast from a national market research firm predicts that new car sales in Hawaii will improve during the last three months of this year.

In its latest quarterly forecast, Auto Outlook Inc. said Hawaii car dealers should expect to see a return to sales growth in the fourth quarter, followed by a 12.9 percent increase in new car sales next year.

But local car dealers have their doubts.

The Hawaii Automobile Dealers Association said the consensus among local retailers is that a rebound won't begin until sometime next year and that sales growth in 2010 won't be as strong as Auto Outlook's forecast.

"The market is just really flummoxed," said Dave Rolf, executive director of the local trade association. "There are just so many things weighing business down here."

L-SHAPED GROWTH?

Rolf said he's confident a rebound will begin next year, but said the growth curve will probably have more of an L-shape than a U-shape, based on expectations for other aspects of the local economy such as tourism spending, construction employment and home values. Government employee furloughs are also expected to be a new drag on new car purchases.

"Things are looking brighter — just not quite as bright as everyone had hoped things would be," the trade association said in a news release.

Nationally, car sales are projected to grow 20 percent next year, according to the National Automobile Dealers Association.

New cars are big-ticket items that consumers are more inclined to buy in proserous times.

The vehicle sales contribute significant revenue to not only dealers but also to tax coffers, shipping companies and other service providers.

New car sales in Hawai'i are in their fourth year of decline since reaching a record 70,268 vehicles in 2005.

Malvern, Pa.-based Auto Outlook projects that Hawaii sales this year will total 34,093, which is less than half the 2005 peak and is the lowest annual sales total since at least 1989 when dealers changed the way they counted sales by eliminating fleet sales to car rental companies.

CAR REGISTRATIONS

This year's rate of decline, however, is projected to be less than the 25.6 percent drop experienced last year.

During the first nine months of this year, there were 25,743 new cars registered statewide, a 26.4 percent decline from 34,995 registrations in the same period last year, the Auto Outlook report said.

The decline was greatest on Maui, where new car registrations were down 41.6 percent to 2,312. Big Island registrations were down 35.5 percent to 2,799. Kauai registrations were down 30.3 percent to 1,120. Oahu registrations were down 22.2 percent to 19,512.

Rolf said part of the reason for relatively low expectations in the fourth quarter is a hangover effect from the Cash for Clunkers program, which ran through most of August.

The federal initiative that offered new car buyers up to $4,500 in credits for giving up gas-guzzlers spurred purchases by consumers, including some who may have been planning to buy a car later.

STIMULUS EFFECT

The program produced 1,850 sales that helped push new vehicle registrations up 9.2 percent in August from the same month last year.

"That's an exceptional amount of federal stimulus," Rolf said. "It gave the consumer extraordinary purchasing power."

A federal program providing a general excise tax deduction for new car purchases still exists, though the program has income and price qualifications and so isn't expected to drive sales like Cash for Clunkers.