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Auto Industry Hit Hard by Harvey

August 29, 2017 0 Comments

As Hurricane Harvey made landfall in Texas, hundreds of auto dealerships in the area closed and vehicle imports slowed or stopped entirely. The Category 4 hurricane has more than put the brakes on the auto industry in southeastern Texas.

“This is bad; real bad,” said AutoNation executive vice president Marc Cannon. “Right now, we are focused on making sure all of our employees are safe and taken care of. At the same time, we’re focusing on getting all of our stores up and running.”

AutoNation owns 18 dealerships in the Houston area, all of which have been shut down in the wake of the storm. Additionally, the widespread flooding has swamped thousands of buildings and has likely damaged hundreds, maybe thousands, of new cars and trucks parked on dealership lots.

“We’re holding calls with our staff every three hours. We have reopened our stores in Corpus Christi and Austin, but some of the Houston stores may take some time,” Cannon said.

The Houston metropolitan area is home to over 500 dealerships and is a major driver of auto sales both in Texas and across the entire Gulf Coast.

With the massive flooding and widespread destruction, analysts are lowering their U.S. new vehicle sales estimates for August.

Italy Michaeli, a Citi analyst, cut his estimate for the rate of monthly auto sales in August, to be reported on Friday. Before Hurricane Harvey, Michaeli had predicted the U.S. August sales pace somewhere in the mid-$16 million range. Since then, his estimate has dropped. “Our analysis suggests that Hurricane Harvey could push this down to the low-$16 million unit range,” Michaeli wrote in a note to clients.

Michaeli further estimates that the storm will affect 125 Texan counties and 60 percent of Texas auto sales.




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