Detroit: Fiat Chrysler Automobiles NV and Ford Motor Co. posted US sales declines after Hurricane Harvey slammed one of the country’s largest auto markets, putting a damper on what might have otherwise been the first month of growth for the industry this year.
Deliveries fell 11 per cent for Fiat Chrysler, trailing analysts’ average estimate. Ford’s sales fell 2.1 per cent and General Motors Co.’s climbed 7.5 per cent, beating projections.
The mixed performance for the three largest US automakers comes as Houston, a top-10 market for new-vehicle purchases, lost nearly a week of selling days due to heavy rain and flooding from Harvey. Kelley Blue Book and LMC Automotive trimmed sales projections they had released before the hurricane hit. Ahead of the storm, some analysts had been expecting US sales to record their first monthly gain this year.
“Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact the automakers,” Jessica Caldwell, an analyst at car-shopping website Edmunds, said in an email. “Texas is the second-largest auto market in the US so an event of this magnitude is going to make a dent in sales.”
Analysts surveyed by Bloomberg News on average predicted the industry’s annualised selling rate, adjusted for seasonal trends, may have dropped to 16.4 million vehicles in August, from 17.2 million a year earlier.
While the storm may have muted sales in August, car buying is expected to pick up as drivers buy replacement vehicles and reconstruction work spurs demand for full-size pickups. The Houston metro area ranks eighth nationwide in registered vehicles, with 5.6 million in operation, and accounts for about 2.3 per cent of US new-vehicle sales, according to Jonathan Smoke, chief economist at Kelley Blue Book’s parent company Cox Automotive.
Houston may have lost between 300,000 and 500,000 cars and trucks, potentially more than the 325,000 new vehicles sold in the region during the last 12 months, Smoke said. That compares with the 250,000 autos lost following New York’s Hurricane Sandy in 2012, he said.
Among the biggest automakers, only Toyota Motor Corp, Honda Motor Co. and GM were expected to report increases in August sales. Volkswagen AG, the world’s biggest automaker, may report a rise in combined sales for its VW and Audi brands following the recent addition of the Atlas SUV made in Chattanooga, Tennessee.
As many as 130,000 new vehicles that were on dealer lots in the Houston area may be scrapped as a result of flooding damage, Matthew Stover, an auto analyst for Susquehanna Financial Group, said in a report on Wednesday. The losses may actually turn out to be a silver lining, alleviating concerns about bloated car and truck supply that surged earlier this year to the highest level since 2004.
“Harvey may have solved the industry’s inventory problem,” Joe Spak, an auto analyst for RBC Capital Markets, wrote in note to clients Wednesday.