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Auto Sales Falter in Aftermath of Hurricane Harvey

By: Ryan Gallagher September 20, 2017
Hurricane Harvey swamped Texas in August, crushing auto sales late in the month and into the normally lucrative Labor Day weekend deals.

Hurricane Harvey’s wrath may have impacted Southern Texas like no other storm, with a potential price tag reaching a whopping $190 billion—one of the most destructive and costly that the U.S. has ever seen.

The Houston area usually accounts for 40% of Texas’ total car sales and up to 9% of total U.S. sales. However, the hurricane has swept away any interest in buying a vehicle—during a period that usually sees an increased rate of car sales

“Harvey will also depress one of the most critical selling periods of the year, spanning the August sales month close and Labor Day weekend,” according to a LMC Automotive report issued prior to the storm. “In 2016, these 11 days alone accounted for 4.1% of retail sales, or 580,000 units, nationally.

Of the many pictures and videos coming out of the Lone Star State, common images seem to be flooding, rain, and vehicles stranded in the deep water. Harvey managed to destroy an estimated 300,000 to 500,000 vehicles, including many still sitting in dealership lots.

“Any time you get a flood level in a vehicle above a foot or two, you really should scrap the vehicle,” said Mike Jackson, CEO of AutoNation. “The damage that’s done to the electrical systems in these high-tech cars—just forget about it. They’re all going to have to be replaced.”

When Hurricane Katrina hit in 2005, vehicle sales took a two-month plunge before returning to normal. Texas has a ways to go before the people, infrastructure, and car market are burden-free.

More than 500 dealerships in Texas closed due to the torrential rainfall and mass flooding, and still remain shuttered due to widespread vehicle water damage and impassable roads. Photos of dealerships have shown cars completely underwater; however, some dealerships were able to drive vehicles out of the flood zone to safer areas. 

Customers will soon need those cars, too. As many people get their lives back together, insurance companies are due to issue compensation in a few months, and affected drivers will be looking to buy again.

“We expect the recovery in vehicle sales to be quick,” said Jonathan Smoke, chief economist for Cox Automotive. “People need transportation to get their lives back in order, and in Houston, that transportation is the automobile.”

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