Hurricane Sandy Puts Big Dent in Auto Business - NYTimes.com

The storm that ravaged the East Coast has also forced thousands of automobile dealerships to close because of storm damage and power failures.

?From what we do know, the impact on the auto industry will be severe,? David Hyatt, vice president of public affairs for the National Automobile Dealers Association, said in a statement. ?Widespread power outages are hampering communications between dealers and their employees. Depending on locations along the East Coast, power is not expected to be restored for several days to a week or longer.?

Mark Schienberg, president of the Greater New York Automobile Dealers Association, said every one of the 425 new-car dealerships his organization represented had been affected in some way.

On Wednesday, his office tried to call about a quarter of the association?s franchises. Of those, 60 percent did not answer. ?It?s amazing how much devastation,? he said. ?Just extraordinary.? Mr. Schienberg represents dealers in nine New York counties, including the five boroughs of New York.

Analysts say it is too early to speculate how many vehicles have been damaged by Hurricane Sandy but the number could exceed the about 300,000 affected by Hurricane Katrina, given the vastness of the area hit by this week?s storm. The cars damaged by Hurricane Katrina included personal vehicles as well as those on dealership lots.

Jessica Caldwell, senior analyst at Edmunds.com, said the Eastern region accounted for about 20 percent of the midsize new-car sales in the United States. ?So it?s fairly significant for such a small geographic area,? she said.

The number of damaged vehicles could reach the tens of thousands, Mr. Schienberg said, adding that 4,500 Toyotas alone were destroyed. Toyota e-mailed a statement saying in part, ?We are assessing how Hurricane Sandy affected our dealers and know a small number of dealers have sustained damage to their vehicle inventory. Many other dealers are still without power, and some may have damage to their facilities. We are doing everything we can to help our dealers recover quickly.?

Mr. Schienberg said his members usually had about $25 billion in annual sales and generated $2 billion in sales tax revenue for the state of New York. The dealerships employ 30,000 people.

Neale Kuperman, president of Rockland Toyota in Rockland County, New York, said his dealership had no power and was closed.

Although he lost no cars, he could lose hundreds of thousands of dollars in business, he said, adding that his dealership probably won?t open for about 10 days. Mr. Kuperman has 94 employees and sells about 2,200 new cars annually.

Jim Appleton, president of the New Jersey Coalition of Automotive Retailers, guessed that his dealers lost at least 1,000 new cars. Many vehicles were spared, however, because some were stored at piers on higher ground.

?From a business point of view, it?s serious,? he said. ?The interruption for some dealers will last a significant period of time. But for some across the state, it?s business as usual. Depends on where you?re located.?

He said fewer than half of the 515 stores were doing business on Thursday. At one point, three-quarters were without power.

For the next couple of weeks, inventory will be a problem, he said, adding that manufacturers might have a difficult time delivering cars to dealers. Still, he tried to see a bright side. ?I suppose all those vehicles that we see damaged and destroyed are going to have to be replaced,? he said. ?Dealers will be looking to get their hands on inventory that will meet their immediate needs. We?re a state that relies on our cars.?

Still, he said tough times await. ?It will be frustrating for consumers and dealers,? Mr. Appleton said. ?My big concern will be trying to help dealers learn how to make sure sufficient inventory is directed to the region.?

Kevin Mazzucola, executive director of the Auto Dealers Association of Greater Philadelphia, said up to 30 percent?of his group?s 190 stores had no power. ?But this isn?t the first rodeo for some of these dealers,? he noted. ?They?ve been through Irene and others.?

Ms. Caldwell of Edmunds.com said it was too soon to know how many damaged cars would end up back in the new-car market but that sales of those cars would be split between new and used.

Import vehicles are especially strong in the area, she said, and because of that those companies could feel more of a squeeze than domestic brands. For October, Honda and Nissan missed sales expectations, partly attributable to the few sales days missed because of Hurricane Sandy.

Manufacturers are taking steps to get the industry back on its feet. Hyundai said 80 percent of its 173 dealers in the Eastern region would be operational by Friday. Nissan North America will offer employee pricing and discounted financing on Nissan and Infiniti vehicles to eligible individuals in designated disaster and emergency areas who need to replace vehicles.

General Motors announced an assistance program for owners of its vehicles in affected counties. Those who lost their vehicles because of the storm can get an additional $500 discount on cars bought or leased through the end of the year.

G.M. estimated that the sales rate for October probably dropped by 300,000 units for the whole industry. More than half of G.M.?s New Jersey dealers were without power, according to published reports. However, G.M. said its nationwide sales were still up 4.8 percent over last October.

Still, even with all the people needing to replace their damaged cars, New York?s Mr. Schienberg said dealers would still be hurt by the aftermath of the storm.

?Even of those that are open, how many people are thinking about servicing or purchasing cars?? he said. ?There will be a tremendous loss of business all around.?

Source: http://wheels.blogs.nytimes.com/2012/11/01/hurricane-sandy-puts-big-dent-in-auto-business/

cnn