Auto sales hit by Harvey as storm wipes out inventory
Brian Brenberg, associate professor of economics at The King’s College, on the economic impact of Hurricane Harvey.
Hurricane Harvey damaged thousands of new vehicles waiting to be sold at Texas dealerships, according to a new analysis from Edmunds.
The storm has brought record rainfall and widespread flooding to Houston and neighboring areas. Automaker and dealers continue to assess the destruction, though early reports indicated that some stores in Harvey’s path were either destroyed or severely damaged. Vehicle inventory is also at risk, especially in the hardest-hit cities.
Automakers will likely sell 2% fewer vehicles in August due to Harvey, Edmunds said. Sales declines could extend 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,” said Jessica Caldwell, executive director of industry analysis for Edmunds.
The car-shopping website estimates that Harvey affected 366,000 new vehicles across Texas, including 150,000 to 200,000 cars, trucks and SUVs that were sitting on dealers’ lots in the Houston, Corpus Christi, Austin, San Antonio and Beaumont/Port Arthur areas.
Harvey could have a notable impact on the industry’s profits, since Texas dealers tend to stock more SUVs and trucks to satisfy demand.
“Many of these vehicles are high-profit trucks and SUVs, so the automakers will feel a slight pinch, at least in the immediate term,” Caldwell said.
Texas is the second-largest market for U.S. auto sales, accounting for 9% of all retail states. The state is also the top market for pickup trucks. Through the first seven months of 2017, one of every five vehicles sold in Texas was a full-size truck.
Texas is the top sales market for the Ford (NYSE:F), Ram, GMC, Cadillac and Mitsubishi brands. Fiat Chrysler (NYSE:FCAU) owns Ram, while GMC and Cadillac are part of General Motors (NYSE:GM).