As auctions in the region continue to modify their businesses in the wake of Hurricane Harvey, Black Book shared an estimation on Thursday morning that 500,000 to 1 million damaged vehicles will have to be replaced in the city of Houston and surrounding regions.
The National Weather Service said on Wednesday that the storm dumped 51.88 inches of rain in Cedar Bayou, Texas, establishing a new record within the continental U.S.
“Black Book expects the impact of the hurricane to have far-reaching effects, not only on Houston-area automotive businesses such as dealerships and wholesale auctions, but also throughout the South and Midwest,” the company said in a message to Auto Remarketing.
“In fact, the storm continues to actively affect parts of Louisiana, moving northeast toward Tennessee,” Black Book continued.
According to an announcement posted on LinkedIn by Casey Allison, who is operations manager at America’s Auto Auction Houston, both of the company’s facilities in the Bayou City cancelled their weekly sales.
“Taking into consideration the safety of our America’s Auto Auction employees and dealers, we have decided to cancel this week’s sales,” the announcement said. “Both North Houston and South Houston America’s Auto Auction locations will resume next week.
“Our main priority is to focus on the well-being of those effected by the hurricane,” the announcement added.
Earlier this week, Cox Automotive officials explained how its Manheim facilities in the region initially would be handling challenges presented by Harvey.
According to an updated message sent to Auto Remarketing late on Thursday afternoon, the company said no sales will be held at Manheim Houston, Manheim Texas Hobby and Manheim South Houston during the week of Sept. 4.
In Louisiana, the team at Lake Charles Auto Auction sustained the impact when Harvey circled back into the Gulf of Mexico and struck near the three-lane facility this week.
“We have experienced tremendous volumes of rain and experienced some flooding,” Lake Charles Auto Auction owner Matt Pedersen said in a release sent to Auto Remarketing, “but nothing like our neighbors in Texas.”
Lake Charles AA delayed its usual Wednesday sale with plans to host it on Friday. The auction serves dealers from Lake Charles, Baton Rouge, Lafayette and New Orleans and throughout Louisiana, and because of its proximity to southeast Texas, regularly welcomes dealers from Port Arthur, Beaumont and Houston, as well.
“This delay has given us time to begin the logistic preparations that will occur in coming weeks,” Pedersen said. “Vehicles will be moved across the country to begin replacing the thousands of vehicles flooded and destroyed throughout southeastern Texas and in pockets of Louisiana.”
As auctions and dealers look to reorganize, Black Book projected that the rental industry will be impacted first with the supply challenge as thousands of residents will need to find immediate replacement of personal transportation.
“This entails not only a large quantity, but also the right mix of vehicles. Work trucks and service vehicles will be in extremely high demand immediately,” Black Book said.
Black Book recapped that early estimates say more than 500 dealerships have been impacted in the greater Houston area alone.
“We believe there is enough new inventory in the U.S. to supply the consumers’ needs, and the timing may actually be good with new-car stores looking to deplete the 2017 models at model-year changeover,” Black Book said.
“New-vehicle SAAR that has been on a decline this year will see a lift in the coming months as residents start replacing their damaged vehicles,” editors continued.
Pedersen noted how commercial consignors likely will be steering volume toward the region to meet upcoming demand. He added that his operation in Lake Charles could be a prime place for dealers to find the inventory they need. The auction recently broke ground on a new 6,500 square-foot office facility, which will open in next fall.
“We have heard from consignors around the tri-state area who want to be able to market their vehicles to dealers who must fill this important need quickly and efficiently,” Pedersen said. “The transportation companies like the logistics of our location to facilitate the movement of vehicles from around the state.
“Given the extent of this disaster,” Pedersen said, “we expect the need for slightly older and late-model used cars, trucks and SUVs to last for months. We will be doing all we can to help facilitate this recovery. The first thing people will need to begin the process of their homes and businesses back in order is a vehicle.”