Sandy slams dealers but likely won’t sink sales
New York and New Jersey were hit hardest, but sales could rebound due to demand caused by the storm.
Before Superstorm Sandy struck the East Coast on Monday, public officials urged residents who were at risk from the storm to evacuate. But for thousands of new vehicles sitting on dealer’s lots or in other storage facilities, there was no shelter from the storm.
Many dealers in New Jersey and adjacent parts of New York hardest hit by the storm are still mopping up and assessing damage. Mark Schienberg, president of the Greater New York Automobile Dealers Association, told Automotive News that about 60 percent of its member dealers were still without power and were closed as of Wednesday.
Schienberg said that dealerships in Long Island, Brooklyn and Staten Island were hit particularly hard, and he hasn't yet heard from some dealers in those areas. He added that of the 435 new-car dealers who are association members, about 250 are on Long Island. A survey by the association of dealers who were able to respond reported that some suffered up to $50,000 in damage.
Many dealers in the New York City area don’t have the space to keep cars at their locations, said Schienberg, and instead store them on nearby piers, which could compound losses once a full assessment of the storm’s damage can be conducted. Schienberg said the latest information available shows that Manhattan Ford lost 200 vehicles stored on a pier, while Toyota estimates 4,000 to 4,500 of its vehicles were destroyed as they waited on a pier for delivery to dealerships.
The storm, of course, also dramatically cut into sales and showroom traffic before it hit, and could reduce it for some time to come, although one analyst we spoke to said he expects a year-end rebound.
Haig Stoddard, an automotive industry analyst with WardsAuto Information Products, said that while sales in October were down about 5 to 6 percent because of the storm, they likely will be made up from the end of November into January, partly because of demand for replacement vehicles totaled by the storm. Sandy's effect on the rest of the country in terms of car buying should be negligible, Stoddard said.
“Other than those affected by the hurricane, I don’t think the storm will have much impact on car buyers,” he said. “It is possible some popular vehicles that were already running lean on inventory could become temporarily harder to find, but not to any great extent.”
The storm’s timing at the end of the month also came during the critical end-of-the-month cycle, when many dealers offer incentives to boost sales.
“The last thing on peoples' minds right now … is getting their cars serviced or looking at buying another car," Schienberg told Automotive News. "The impact on the industry is going to be quite severe.”
Ford Chief Financial Officer Bob Shanks told Bloomberg that as many as 800 of the automaker’s dealerships have been affected by the storm.
The National Automobile Dealers Association reported that power outages are hindering communications between dealers and employees and that many dealerships are inaccessible because of debris and closed roads. In New Jersey, the state’s vehicle registry system is down, preventing dealerships that are open from selling cars.
At least one automaker, Nissan, is offering those in hard-hit areas a break if and when they decide to shop for a new car. On Wednesday, Nissan said it will offer employee pricing and discounted financing on Nissan and Infiniti vehicles to those who lost vehicles to flooding from Sandy. "Any additional incentives on vehicles are stackable on top of the Nissan employee discounts," the automaker said in a statement.
The offers are available to eligible individuals in federally designated disaster and emergency areas. Nissan said it will post more details on the offers via a "disaster relief" link at InsideNissan.com starting Friday. Nissan Motor Acceptance, the automaker’s finance arm, will allow eligible customers to defer payments for up to three months. It’s also offering payment extensions for up to three months for existing customers in the hardest hit areas. The offer is good through Jan. 2.
Stoddard said he doesn’t know of any other automakers offering similar deals to storm victims, but noted that several, including Toyota and General Motors, have donated money to relief funds or vehicles to rescue organizations.
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