Why Hurricane Harvey Was Good News For Car Companies

Image courtesy of Kino Praxis

Hurricane Harvey wreaked havoc across swaths of Texas and Louisiana, damaging billions of dollars’ worth of property in its path. That includes cars, many of which needed to be replaced, resulting in a bittersweet sales boost for a number of automakers.

Major automakers are reporting record sales figures for September pretty much across the board: General Motors reported a 12% increase in year-over-year sales to 279,397 units; Toyota’s North American business was also bustling, with a 14.9% increase — compared to Sept. 2016 — to 226,632 cars last month; and Ford’s [PDF] sales were up by 8.7% over last year, with a total of 169,544 vehicles sold at retail.

Fiat Chrysler, however, had a 10% decrease in sales, even though its retail sales were up 0.3%. That’s because of a planned reduction in how many cars it sells to rental companies.

A lot of these increases can be attributed to post-storm purchases: Ford says it sold about 500,000 additional vehicles last month because of Harvey, Mark LaNeve, the company’s U.S. sales chief told reporters on a conference call today reported by Bloomberg.

“We expect to see some continued tailwind to our business and the industry over the next few months” from the hurricanes, LaNeve said. “But outside of the Harvey effect, business was strong for us and for the industry.”

Because people will still be looking to replace cars destroyed by the storm, analysts predict that the boom will continue: About 600,000 vehicles will need to be replaced in Texas and Florida, one economist tells The Wall Street Journal, with most of the post-storm sales spike happening in the first two months of recovery. There should be more sales boosts coming later this fall as car owners start to replace vehicles destroyed by Hurricanes Irma and Maria.

“When you have hundreds of thousands of people affected by an event of this magnitude, not everyone will hit the market at once,” an analyst tells Bloomberg.

It’s not just the storm that’s pushing higher sales: Many car companies have been offering discounts to encourage buyers and move inventory that’s been sitting on dealer lots since the spring.

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