DANIEL FARR/Tribune-Herald The Aloha Kia dealership is shown Monday in Hilo.
DANIEL FARR/Tribune-Herald Vehicles are shown at the Aloha Kia dealership Monday in Hilo.
Rising tariffs and trade policy uncertainty have shaken Hawaii’s auto market, contributing to a 4.1% drop in new car and light truck registrations on the Big Island in the first half of 2025 compared to a year earlier, according to a recent Hawaii Auto Outlook report from the Hawaii Automobile Dealers Association, which cites data from Experian Automotive.
Rising tariffs and trade policy uncertainty have shaken Hawaii’s auto market, contributing to a 4.1% drop in new car and light truck registrations on the Big Island in the first half of 2025 compared to a year earlier, according to a recent Hawaii Auto Outlook report from the Hawaii Automobile Dealers Association, which cites data from Experian Automotive.
New vehicle sales dropped in every county statewide during that period: the Big Island was down 4.1%, Oahu 3.9%, Maui 2.8%, and Kauai 1.4%, the report shows.
That decline on the Big Island is steeper than the statewide drop of 3.3%, according to HADA. In the second quarter alone, Big Island registrations fell 6.2%, again outpacing the statewide decline of 5.8%.
The report projects a further 5.6% drop in the second half of the year, totaling a 4.5% statewide decline for 2025.
Vehicle affordability was expected to improve early in the year, with lower interest rates and declining transaction prices, according to the report. Additionally, a strong economy marked by GDP growth, low unemployment, rising incomes, and easing inflation suggested a possible rebound. The report also cited pent-up demand from pandemic-era delays as a potential driver for a sales boost.
However, abrupt changes in U.S. trade policy, including higher tariffs, created new uncertainty for businesses and consumers. As the report states: “But that clear road quickly turned bumpy. U.S. trade policy was abruptly and dramatically altered, throwing a wrench into a relatively stable economic environment. The global economy is intricately interconnected, and the introduction of this level of policy uncertainty has left both businesses and consumers partially paralyzed. This level of disruption is substantial and without historical precedence, which makes isolating the impact on new vehicle sales very difficult.”
It continues, “Bottom line: Higher tariffs will likely lead to rising vehicle prices and in the short run, increasing inflation, lower economic growth, and stagnant household disposable income, all negatives for new vehicle sales.”
Phillip Z. Hodges, a sales manager at Aloha Kia in Hilo, told the Tribune-Herald on Monday that public perception plays a crucial role, referencing the media’s consistent message about rising prices and tariffs.
“The perception of the public matters more than anything, and the media has always been saying prices are going to go up, bad, bad, bad, tariffs bad, tariffs bad,” he said.
Hodges explained his dealership’s approach to the uncertainty: “So, we decided to get ahead of that and say, ‘Hey, you’re not going to have to take the cost of the tariffs. Actually, you know what? Tariffs are coming? We’re going to lower our prices … so that was really our strategy.”
He added that his dealership has not felt the dip in sales noted in the HADA report, because Aloha Kia prepared and strategized for this market volatility by removing all markups on two models, the Kia Sportage and the Kia K4, selling 100% at MSRP.
The report also mentions a “pull-forward” effect, where some buyers advanced their purchases earlier in the year anticipating higher costs, contributing to the drop in registrations in the second half, with further declines expected.
Hybrid vehicles, powered by both gasoline and electricity, experienced a 33% jump in registrations this year, accounting for 14.7% of all new vehicle sales statewide, the report shows. The Big Island showed similar growth in hybrid adoption. Fully electric vehicle sales dipped to 11.9% of the statewide market in the second quarter, according to the report. However, dealership sales of electric vehicles rose 10.9%, partially offsetting a 5% drop in direct sales from manufacturers like Tesla.
Tim Palms, vice president and general manager of BMW in Kailua-Kona, told the Tribune-Herald last week, “I know what we’re seeing between all of our dealerships in Kona, Oahu and Maui is some urgency on electric vehicles and battery electric vehicles before (federal tax credits for EVs expire). We’ve had a relatively good sales year. I don’t know that our new car volume was exactly where I’d like it to be, but I think we’re within, as a company, five units year over year.”
The federal tax credits for EVs are set to expire on Sept. 30, ending a key financial incentive that has helped drive EV sales nationwide.
A salesman from Pono’s Used Cars in Hilo told the Tribune-Herald last week that many recent arrivals are buying vehicles, while some local families are selling cars and moving out of state, adding a human perspective to the market shifts.
Light trucks and SUVs remain the most popular vehicle types across Hawaii, making up 86.2% of new vehicle sales statewide, up from 81.7% last year, the report says.
The Big Island reflects that trend. Among brands, Porsche and GMC saw the biggest gains statewide with sales up 69.7% and 46.7%, respectively, while Tesla registrations fell 11.1%, according to the report. Other strong brands include Volkswagen, Subaru, Toyota, Hyundai, and Ram, popular choices especially for SUVs and light trucks on the Big Island.
The Toyota Tacoma remained the top-selling vehicle statewide with a 7% market share, followed by the Toyota RAV4 at 5.2% and the Tesla Model Y at 4.7%, despite a 23.1% year-over-year drop in Model Y sales, the report notes. The Nissan Kicks and Toyota Land Cruiser also showed strong growth.
Email Daniel Farr at dfarr@hawaiitribune-herald.com
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