Low inventories of new vehicles triggered a 10% decline in new vehicle registrations in Colorado in the first quarter and are expected to play an even bigger role in the second quarter, a dealer trade group said.

The 57,618 new vehicles registered in the first quarter were down more than 6,000 vehicles from the more than 64,000 registered in the first quarter of 2021, one of the best quarters for the state’s dealers, according to a Colorado Automobile Dealers Association report.

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“While I would love to say the worst (of the inventory shortages) is over, I would really be going out on a limb,” said Tim Jackson, the association’s president said Tuesday.

It seems supply chain issues are getting worse, Jackson said, especially for vehicle components or raw materials from Ukraine or Russia — fallout from Russia’s invasion of Ukraine and economic sanctions imposed against Russia.

The association’s quarterly Colorado Auto Outlook newsletter forecasts that registrations could fall by 15% or more during the second quarter as “tight inventories will continue to be a factor” in the vehicle market for at least another year.

Jackson said escalating vehicle prices, rising interest rates, surging fuel prices and the invasion of Ukraine also have put pressure on the new vehicle market.

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The decline hit every major market of the state, though registrations in southern and western Colorado were off by 11.2% and 12.3%, respectively, compared with single-digit percentage declines in the Denver area and northern Colorado. Among Colorado’s 25 largest counties, registrations in El Paso County fell 23.1%, the sixth most, just behind Douglas County.

Electric and hybrid vehicles were the only bright spot for the auto industry in the first quarter with registrations jumping 31.5% from the first quarter of last year to nearly 10,000, increasing their share of market to 17.4% from 11.8% a year ago. That helped electric-vehicle manufacturer Tesla boost registrations in Colorado during the first quarter by 37.7% from a year earlier.

Colorado new vehicle registrations surge in first half amid shortages

Jackson said higher prices for new and especially late-model used vehicles – those 3 years old or less – have prompted a growing number of buyers to purchase older used vehicles.

Registrations of vehicles 7-10 years old were up 15.6% in the first quarter from a year earlier, while those three years and newer were down 23%. Overall, used vehicle registrations in the first quarter were off 2.3% from a year earlier.