With now Tropical Storm Harvey taking at aim at Louisiana and other locations inland after dumping 49 inches of rain near Houston, experts from Cox Automotive and Edmunds are looking to project how much this natural disaster is going to impact vehicle sales.
Meanwhile, the National Independent Automobile Dealers Association is organizing a fundraising effort to help people impacted.
Perhaps Edmunds executive director of industry analysis Jessica Caldwell summed up the entire situation when she stated, “Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact the automakers.
“Texas is the second largest auto market in the U.S. so an event of this magnitude is going to make a dent in sales,” Caldwell continued. “Edmunds estimates 2 percent fewer vehicles will be sold in August due to Harvey, with declines likely continuing into early September.
“In subsequent months we’ll likely see a slight localized bump in sales as the recovery takes hold and people are able to buy replacement vehicles,” she added.
Edmunds estimated there are approximately 366,000 new vehicles on dealer lots in Texas that could be affected by Harvey. Caldwell pointed out many of these vehicles are high-profit trucks and SUVs, “so the automakers will feel a slight pinch, at least in the immediate term.”
Edmunds projected there are between 150,000 and 200,000 units of new inventory that could be affected in the areas hardest hit by Harvey in the Texas cities of Austin, Beaumont, Port Arthur, Corpus Christi, Houston and San Antonio.
Edmunds added that Texas makes up 9 percent of U.S. retail sales and is the No. 1 truck market, accounting for 14 percent of all full-size truck sales so far this year.
To put that metric into perspective, analysts tabulated one out of every five vehicles sold in Texas so far in 2017 was a full-size truck.
Texas is the top sales market for Ford, RAM, GMC, Cadillac and Mitsubishi, according to Edmunds’ data.
Over at Cox Automotive, chief economist Jonathan Smoke uncovered information throughout the company’s portfolio of service providers, including Autotrader, Dealer.com, Dealertrack, Kelley Blue Book, Manheim, NextGear Capital, vAuto and Xtime. As a result, Smoke indicated Cox Automotive revised its August new-model forecast of 16.6 SAAR to 16.3, based on the hurricane and its aftermath delaying the turns of 20,000 to 40,000 new vehicles.
“However, September will likely get a mild boost from delayed purchases and the beginning of the market’s recovery, driven by the need to replace damaged vehicles,” Smoke said. “That process will likely last months, pushing higher sales in the region in 4Q. We are looking at impact to full-year SAAR. Initial estimates indicate a potential net improvement on full-year sales once replacement sales pick up in earnest.”
Federal officials said on Tuesday that they obtained a reading of 49.32 inches of rain being recorded at a location southeast of Houston. Officials said Harvey is expected to produce additional rainfall accumulations of 6 to 12 inches through Friday over parts of the upper Texas coast into southwestern Louisiana as the storm is projected to move further inland into Tennessee, Kentucky and West Virginia this weekend.
“A Texas-sized storm requires a Texas-sized response, and that is exactly what the state will provide,” Texas Gov. Greg Abbott said. “While we have suffered a great deal, the resiliency and bravery of Texan’s spirits is something that can never be broken. As communities are coming together in the aftermath of this storm, I will do everything in my power to make sure they have what they need to rebuild.”
And NIADA is looking to help with the rebuilding effort.
The NIADA Foundation has established an emergency relief fund to provide a venue for members of the National Independent Automobile Dealers Association to assist fellow dealers and others in the automotive community devastated by the effects of Hurricane Harvey.
Steve Jordan, CEO of NIADA and president of the NIADA Foundation Board of Trustees, said 100 percent of all contributions received will be donated to provide relief from the effects of flooding, help repair property damage and assist with other disaster-related needs attributable to the catastrophic weather event that struck Houston and other areas along the Texas coast.
Jordan said the foundation's goal is to raise $100,000 for the fund.
Donations will be made in collaboration with the Texas IADA – NIADA’s state affiliate – and will be considered on a case-by-case basis as identified through the collaborative disbursement relationship.
“We are committed to helping our friends and colleagues in the automotive industry get through this trying time,” Jordan said. “Our thoughts and prayers go out to all those affected or displaced by this massive storm.”
The NIADA Foundation is a non-profit 501(c)(3) charitable organization that serves as the focal point of NIADA’s charitable efforts and coordinates the association’s charitable giving. Individuals can contribute by going to this page.
While region residents still are dealing with the storm, Smoke uncovered that they aren’t necessarily shopping for or taking delivery of vehicles.
Since the storm came ashore this past weekend, Smoke noticed Dealer.com websites in the market have seen an almost 40-percent drop in vehicle shopping research compared to the previous weekends in August.
“This is a significant number as Dealer.com powers over 60 percent of dealer websites,” Smoke said.
Smoke noticed an even steeper drop in Dealertrack business within where Harvey dumped rain.
“Our Dealertrack credit application system has experienced a roughly 80-percent drop in activity in the affected area. Since most cars are financed, that’s an 80-percent drop in business since the storm came ashore Friday,” said Smoke, who also pointed out that 80 percent of U.S. franchised dealers use Dealertrack to submit credit applications electronically to finance companies.