The Independent September 30 2017 The Independent September 30 2017 | Page 13

Hurricanes could produce first
sales gain of 2017
DETROIT -- The two storms that battered parts of
Texas and Florida in the past month have given U.S.
seven consecutive annual gains.
According to data compiled for Reuters by car-
automakers a reprieve from two problems that have shopping website CarGurus, during the height of the
bulging new-vehicle inventories and an oversupply of percent -- from an Aug. 4 baseline -- but as of Sept. 17
cast a shadow over the price of their shares all year:
off-lease vehicles.
Automakers are scheduled to report U.S. sales on
storm, online car searches in Houston were down 25
were up 18 percent.
"Business has been very brisk at our 26 dealerships
Tuesday, Oct. 3, offering the first indications of the de- [in southeast Texas] this month," said Pete De-
stroyed in Houston's record floods and the pummeling at Group 1 Automotive Inc., the third-largest U.S. auto
mand for vehicles to replace those damaged or de-
much of Florida got from Hurricane Irma.
Some analysts expect September to show the first
monthly increase in vehicle sales this year -- though
their previous forecasts of sales gains for the industry
Longchamps, vice president for manufacturer relations
dealer group. "That's true for both new and used vehi-
cles."
Cox Automotive Chief Economist Jonathan Smoke
says the "immediate replacement demand" following
in March, May and August proved inaccurate. the storms is around 600,000, including 400,000 in
projects a 0.4 percent rise, and Kelley Blue Book ex- vehicles will likely be new and the rest used.
Any increase likely would be minimal; Edmunds
pects a 0.7 percent gain. However, either amount
southeast Texas. Around 200,000 of the replacement
Most of the vehicles will be used either because
would be enough to push the industry's annualized many people lack flood insurance, their insurers only
year. more than their vehicle is worth so they will not be
selling rate to 17.5 million units -- the highest of the
LMC estimates September sales will drop 0.1 per-
cent to 1,433,268 cars and light trucks and that the
SAAR will come in at 17.5 million.
“Hurricanes Harvey and Irma have disrupted -- and
will continue to disrupt -- new-vehicle retail sales in
September and beyond,” said Thomas King, head of
data and analytics at J.D. Power and Associates.
King said retail sales in the south central region,
which includes Houston, were up 14% in early Sep-
tember as shoppers replaced storm-damaged vehicles
and completed purchases that were postponed during
the storm. But retail sales in the Southeast, which in-
cludes Florida, were down 16 percent as the region
and dealers returned to normal operation.
"The effect of hurricanes Harvey and Irma is ex-
pay them the current replacement value, or they owe
able to afford a new car.
"This is a great opportunity for the automakers ...
as this will lead to a reduction in the excess supply
that's been on the market," he said.
High demand around Houston has already
prompted dealers in other states, automakers and their
captive finance companies to shift nearly new vehicles
into that market for auction.
Forecasts that hundreds of thousands of vehicles
would need to be replaced boosted shares of General
Motors and Ford Motor Co., despite disappointing
sales figures for August. GM shares are currently trad-
ing near a three-year high; they closed Thursday at
$40.50.
The Edmunds and KBB forecasts for September
The fact that thousands of vehicles were destroyed by the floods boosted sales
more vehicles in stock than they need. GM accounted 297,000 auto insurance claims had been filed related to
cut production and said earlier in September that it is Executives at Copart Inc., which dominates the
for about half that oversupply, Langley said. GM has
on track to reduce inventories to about 850,000 vehi-
cles at the end of the year from 938,000 as of Aug. 1.
There are concerns that competition for market
share amid declining sales mean automakers will not
Harvey and 128,000 had been filed because of Irma.
auto salvage auction business alongside KAR Auction
Services Inc., said last week during an earnings confer-
ence call that the company could salvage more than
85,000 vehicles damaged by Harvey. KAR did not
pected to boost retail light vehicle demand through the show GM and Toyota Motor Sales U.S.A. each gain- ues," said Jeff Schuster, senior vice president of fore- followed by smaller increases for Ford, Volkswagen cause everyone wants to fight for share," said Jessica Automobiles, Nissan North America and Hyundai-Kia Edmunds. aging for auto sales.
Harvey brought to the Houston area, an army of tow gional vice president at KAR's ADESA used-car auc-
aged vehicles. volumes have been up around 10 to 20 percent follow-
remainder of 2017 and into 2018, as recovery contin-
casting at LMC Automotive.
New-vehicle incentives were tracking at a record
ing more than 1 point of market share from a year ago,
Group of America and American Honda. Fiat Chrysler
high of $4,050 early in the month, J.D. Power said, as are seen losing share.
counting to clear out record inventories of prior model the large st levels of unsold inventory in 13 years, said
automakers and dealers "continue with aggressive dis-
year vehicles."
U.S. sales have dropped 2.7 percent this year
through August, threatening the industry's streak of
Before the storms hit, U.S. automakers were facing
Joe Langley, a senior analyst at economic forecasting
and data company IHS Markit.
IHS estimates automakers have 500,000 to 600,000
cut production enough.
"Inventory will likely be a lingering problem be-
Caldwell, executive director of industry analysis for
Within days of the catastrophic flooding Hurricane
trucks began descending on the city to haul away dam-
A spokesman for the nonprofit National Insurance
Crime Bureau said that as of Wednesday around
provide an estimate, but the website for its Insurance
Auto Auctions Inc. unit lists around 54,000 flood-dam-
aged vehicles that have been processed so far.
Recent data points from Houston have been encour-
Used vehicle prices are rising. Geoff Parker, a re-
tion unit, whose territory includes Texas, said auction
ing Harvey and 25 to 35 percent more dealers have
been attending auctions.