Wheels: Storm Has Car Dealers Doing Swift Business, if They Can Open

Wheels: Storm Has Car Dealers Doing Swift Business, if They Can Open

- in Automotive
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As Harvey moved on and patches of blue sky finally appeared over Houston on Thursday, hundreds of car dealerships began reopening across the rain-soaked region — and at least a few were doing a brisk business.

By noon on Thursday, AutoNation Ford in Katy, Tex., had sold 30 new vehicles, mostly pickup trucks to contractors and other tradesmen who were scrambling to get to work repairing the devastation caused by the torrential rains and flooding.

“We have stores where the phone is ringing off the hook,” said Michael J. Jackson, chief executive of AutoNation, the country’s largest auto retailer, which owns 17 showrooms in the Houston area.

South of Houston, in Alvin, the Ron Carter group of four dealerships had customers coming in shortly after the doors opened at 7 a.m. “There are some people looking to buy,” said Cary T. Wilson, the owner of the franchises. “But you’re also going to have a long list of service work for people whose cars have water damage and need to get back on the road.”

Harvey destroyed or damaging tens of thousands homes across hundreds of square miles in the Houston area and ruined a vast number of vehicles in a region that relies heavily on them.

As many as 500,000 vehicles — already on the road or still on dealer lots — will need to be replaced, according to an estimate by Cox Automotive, a research firm. That estimate, if confirmed, would be more than are typically sold in all of Texas in a year and exceed the combined losses from Hurricane Sandy (250,000) and Hurricane Katrina (200,000).

At McRee Ford in Dickinson, Tex., the entire stock of 500 new and used cars and trucks was damaged by water, according to a notice posted on the franchise’s website. “The inventory displayed here on our website and other sites on the web are no longer available for sale,” the notice said.

In a message on Facebook, the dealership’s owners said they were “beyond grateful” for the messages of concern they had received. “We have been in the facility today trying to get a grasp of the damage, and to be honest it’s a bit overwhelming,” the message said.

Vehicles submerged at a dealership off Interstate 45 in Dickinson, Tex., on Sunday. As many as a half-million vehicles may have been destroyed by Harvey, according to an estimate by Cox Automotive.

Credit
Kelsey Walling/The Galveston County Daily News, via Associated Press

The amount of water was also overwhelming: some parts of Texas received more than 47 inches of rain.

“I’ve never seen anything like this rain, holy cow,” said Pete DeLongchamps, vice president for manufacturer relations at Group 1 Automotive, which is based in Houston and owns 228 new car franchises across the country, including 28 that were hit by Harvey.

“Some hurricanes are mainly wind,” Mr. DeLongchamps said. “But this was a water event, and that means a lot of cars got totaled.”

Group 1 reopened a few franchises on Wednesday, and by Thursday it was delivering a stream of new cars to customers. “People need cars to get around, get to work, get paid,” he said.

On Friday, automakers will report their new-car sales for August, and analysts expect a decline, in part because Harvey wiped out sales in the final weekend of the month — typically a time when a rush of deals are closed — in Texas, the country’s second-largest auto market after California.

Eventually, Houston-area auto dealers will see a swell of sales as people look to replace vehicles that were damaged or destroyed by Harvey. “People first have to get back on their feet, and then it takes time to settle with their insurance company,” Mr. Jackson said. “It will probably be the fourth quarter before we begin to see replacement business in volume.”

Although Harvey’s effects on the auto industry are significant, they are expected to be relatively localized. The two auto plants in Texas — a General Motors truck plant in Arlington and a Toyota pickup plant in San Antonio — were largely unaffected. And while flooding of highways and rail lines is expected to slow the shipment of cars, engines and parts produced in Mexico, dealers around the country have enough inventory to allay any concerns about shortages, according to Black Book, a provider of auto industry data.

Many dealers count themselves among the victims of the storm. About 50 AutoNation employees have been left homeless. AutoNation has a crisis team of about 50 people on the ground in Houston to help them find housing, get new cellphones and provide meals for their families.

Group 1, which has some 3,000 employees in the area, organized email and text chains to stay in touch and provide assistance if any were flooded or in danger. It also set up a disaster recovery fund to help any displaced employees.

A dealership in Dickinson, Tex., left under water by Harvey’s vast rainfall.

Credit
Kelsey Walling/The Galveston County Daily News, via Associated Press

Mr. Wilson, the owner of the Ron Carter dealerships, was among those hit hard. His home ended up with about six feet of water in the garage and about three feet in the living room, kitchen and hallways.

“I’ve got contractors tearing out Sheetrock,” he said. “All the appliances have to be pulled out of the house. All my tools and the lawn mower are a total loss. It’s a pretty massive cleanup.”

His Ford, Toyota, Buick and GMC franchises — with a combined inventory of more than 2,200 new vehicles, worth about $60 million — fared better.

To protect them, Mr. Wilson had his staff park the vehicles on the highest ground of his 26-acre site — “door handle to door handle,” he said — to reduce damage from windblown debris.

He estimated that 400 to 500 of his vehicles had been in water less than a foot deep — shallow enough that they had most likely suffered no lasting damage. “Those can be cleaned and sold,” he said. Still, Mr. Wilson said he would provide customers with copies of any repair orders.

Perhaps 25 or 30 others that were in deeper water are too damaged to repair, Mr. Wilson said. “We are very fortunate there,” he said. “It could have been much worse.”

Both AutoNation and Group 1 own dealerships across the Gulf states, where hurricanes are common, and are experienced in battening down. Days before the storm hit, both companies began bracing themselves.

Like Mr. Wilson, the two companies moved cars to high ground, in some cases to storage lots away from their dealerships. At AutoNation’s two Mercedes franchises in Houston, the priciest models were stored on service lifts to preserve them even if the buildings were flooded.

“This is a historic, epic rainfall,” said Mr. Jackson of AutoNation. “It’s caused incomprehensible suffering for the people of Houston. We’ve dealt with hurricanes before, but this one’s unique.”

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