U.S. auto demand likely to see a post-Harvey pickup
The tallies for the damage inflicted by Hurricane Harvey are rolling in, and in the coming days, we expect to see those figures refined even further. Retail and restaurants will clearly feel the pain, but so too will automotive dealerships in and around Houston, the fourth largest city in the U.S. This is likely to have a negative impact on August auto & truck sales. However, with estimates calling for “several hundred thousand vehicles” ruined as a result of the hurricane, the industry could see a boost in the coming months as replacement demand picks up. This would be welcomed by an industry that is seeing declining sales, rising inventories and aggressive use of incentives. The problem is this would likely be a temporary surge, and it also assumes the potential buyers of those cars can afford them.
Hurricane Harvey and its catastrophic aftermath likely destroyed more vehicles than any other natural disaster in U.S. history, according to several early reports.
The calamity likely ruined several hundred thousand vehicles along the Texas Gulf Coast, including more than 1 in 7 cars in the Houston area alone, according to Evercore ISI analysts.U.S. auto sales suffered a temporary setback in late August as flood waters shut down hundreds of Texas dealerships. But sales are likely to get a boost in the fall as Texans scramble for transportation and spend insurance checks to replace their cars, sport-utility vehicles and pickup trucks.
Harvey destroyed about 300,000 to 500,000 vehicles owned by individuals, Cox Automotive chief economist Jonathan Smoke estimated. Insurance is expected to cover a large portion of those losses.
