Reports in the US suggest that the US light vehicle market will be adversely impacted in the short-term by the impact of Hurricane Harvey in the south (especially Texas) of the country.
An estimated 500,000 vehicles are estimated to have been destroyed and many dealers have remained shut down by unprecedented flooding.
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The Detroit News notes that the state of Texas is the auto industry’s second largest market in the US after California, with large swathes impacted by flooding.
However, the newspaper also noted that car production in the state (GM and Toyota have plants) appears to have avoided major interruptions. It said the biggest impact is on dealers who may have to wait weeks to calculate the full impact of damage to property and inventory.
Some estimates say that as many as 40,000 vehicle sales may have been taken out of the market by the storm, although a rebound is in prospect later in the year as damaged vehicles are replaced.
Flooding in the final week of August could cause a significant overall US sales drop for the month, possibly a drop of 2%, according to Edmunds.
The Detroit News reported that Toyota Motor Manufacturing Texas in San Antonio is 200 miles west of Houston and produces Tacoma and Tundra pickups, but manufacturing was only briefly interrupted by the storm. A bigger potential issue will be ascertaining the impact on stock at major distributors.
GM’s Arlington Assembly Plant is 250 miles north of Houston and makes trucks including the Chevrolet Tahoe and Suburban and Cadillac Escalade. It’s operations are also said to have been unaffected.
Forecasters and analysts say that an event such as a natural disaster can take planned big ticket items out of household purchasing plans for a time, but there can be a spike to the market later when planned purchases come back on stream and/or insurance replacements take effect.
Hurricane Harvey was downgraded to a Tropical Storm when it made land in the Gulf of Mexico, but it has dumped unprecedented rainfall over a large part of Texas, including Houston – America’s fourth largest city.
just-auto’s US correspondent, Bill Cawthon, is based in Houston. He notes that Texas accounts for 8.9% of total US new light vehicle registrations. “The area affected by Hurricane Harvey has set a new record for the most rainfall from a single weather event in the history of the US,” he says. “Houston received more rain in four days than it normally gets in a year.”
Cawthon says that some dealers were able to get their new vehicle inventories to higher ground but many were not, especially in outlying areas and that some dealers have lost their entire inventories.
Cawthon also warns that the negative impact on vehicle demand in the region will continue beyond August. “The effects will continue well into September and perhaps even beyond as the extent of the damage becomes evident,” he says. “Since an estimated 80% of homes in the flood area did not have flood insurance (it’s only mandatory in some areas) the financial losses will be catastrophic.”
