The devastating impact of Hurricane Harvey will have far-reaching effects on the auto industry, from scrapping flood-damaged vehicles to replenishing dealership inventory.
And after the immediate impact of the storm is over, dealers can expect something of a sales boon. That’s because of a typical pattern of auto sales when natural disasters hit an area.
During a damaging storm and its immediate afterwards, car buying is not top of mind for most residents. Nor are many dealerships in shape to sell vehicles. An estimated 500 dealerships were affected by the storm and flooding in metro Houston alone.
But during the recovery period of a natural disaster, car sales typically spike. That’s because people who lose their vehicles in storm-related circumstances need to replace them. When they get their insurance-claims checks, they especially are ready to buy.
“There likely will be a rush” by dealers to get inventory and then by consumers to acquire it, Vince Phelan, vice president-marketing for dealer information services provider CDK, says of that post-storm period.
CDK is preparing to send field engineers to the area to help affected dealer clients. It serves about 120 dealer groups and 350 individual stores in the Houston area.
The storm hit some dealers harder than others, says Dean Crutchfield, CDK’s executive vice president and chief information officer. “We’ve confirmed some people are fine and able to conduct business.” Others aren't.
Between 500,000 and 1 million vehicles will need to be replaced in Houston alone, Black Book estimates.
The rental industry will be affected first with the supply challenges, with people scrambling to get transportation to temporarily replace personal vehicles, says Black Book. It predicts a particular high demand for work trucks and service vehicles.
The company says online buying will play a big role in a dealer’s ability to source vehicles, with purchased wholesale inventory coming from other parts of the U.S. and transported in.
CDK reports dealer computer and data-storage systems remain intact although in some cases are not able to function because of power outages.
“The good news is these systems are cloud-base so our data centers have protected the fundamentals of the system,” Crutchfield says. “Our effort now is focused at the dealer locations to assess their circumstances and to get them back to business as normal as possible.”
The most typical computer concern of affected dealers is to get their dealership management systems up and running, he says. “Our DMS runs their payroll. They want to make sure their people are taken care of during this time. That’s a common theme.”
The National Automobile Dealers Assn. is appealing to dealers across the country to contribute to the NADA Foundation’s Emergency Relief Fund to support dealership families affected by the destructive hurricane and flooding in southeastern Texas.
“Local dealerships nationwide are like a big extended family,” says foundation chairman Annette Sykora. “When one of us hurts, we always come together to help.”
Texas is the nation’s second-largest state in vehicle sales. California is the first.