September 18, 2017
www.usedcarnews.com
Hurricanes Destroy Thousands of Vehicles
Photo by The Associated Press WASHED AWAY: Vehicles are seen submerged at a dealership off Interstate 45 in Dickinson, Texas. The hurricanes in Texas and Florida destroyed at least a half million units that need to be replaced. By Ted Craig
Rush - Dated Material
The toll of Hurricane Harvey is still being totaled, but while the impact on the lives of people is devastating, the impact on the auto industry looks positive. Hurricane Harvey severely damaged or destroyed between 300,000 and 500,000 vehicles, which translates to $2.7 billion – $4.9 billion in lost vehicle value, according to Cox Automotive estimates. This is likely the worst natural disaster in the nation’s history by measure of vehicle damage. Hurricane Irma was expected to take out another 130,000 to 200,000
in the Florida market. It was too early at press time to know for sure. Those vehicles will be replaced over the months to come. Harvey in essence provided relief to the building inventory pressure on both the new- and used-car sides of the business. In some cases, the process of replacing vehicles is already under way. Cox Automotive’s Dealer.com saw a 16-percent increase in overall dealership website traic and a 26-percent increase in vehicle description page views in the Houston area over Labor Day weekend. It will still take a long time for in-
surance companies to assess losses and then start issuing checks. Mike Smitka, an economist at Washington & Lee University, said many people with negative equity in their vehicles will have to turn to the used market. That should be good for the latemodel segment. It will be a bigger challenge for independent dealers and their customers to replace their vehicles, said Ken Shilson, founder of the National Alliance of Buy-Here, PayHere Dealers. “Many independent operators have sufered big inventory losses and those vehicles will take consid-
erable time and will be diicult to replace,” Shilson said. “Subprime customers who lost their vehicles in the raging water have limited inancial capacity to replace them.” Shilson also expects many consumers to stop paying on outstanding subprime inance contracts as looded vehicles stop running and they lack insurance coverage to repair or replace them. Still, Shilson said, “both Texas and the subprime auto industry will recover from this horriic tragedy.” Trucks will see the biggest segment impact of Hurricane Harvey. Continued on page 5
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