Autos Destroyed by Sandy Create Replacement Sales Bounce
(Corrects Jefferies analyst’s estimates in chart; average GM estimate in 16th paragraph and chart; average estimate for Ford in 18th paragraph and chart.)
Babylon Honda moved its entire new- and used-car inventory a five-minute drive farther inland as Hurricane Sandy approached last month. The regular lot was swamped in the storm, and in recent weeks it’s been swamped by customers replacing cars destroyed by Sandy.
“I’ve been in business since 1964, and I’ve never had a month like this before,” said Gary Schimmerling, president of the dealership in West Babylon, New York, about 45 minutes east of Manhattan on Long Island. He will probably sell more than 250 new vehicles this month, versus 100 in a typical November, Schimmerling said by phone.
Replacement demand from owners of damaged vehicles and purchases deferred by the superstorm that slammed the East Coast could boost U.S. car and light-truck sales in November to the best monthly pace in more than four years, according to a Bloomberg survey of analysts.
U.S. light-vehicle deliveries probably rose 12 percent in November to 1.11 million, the average of estimates by 10 analysts surveyed by Bloomberg. The annualized industry sales rate, adjusted for seasonal trends, may accelerate to 15 million, the average of 15 analysts’ estimates.
For October, all automakers reported deliveries that trailed average estimates from Bloomberg’s survey after Hurricane Sandy inflicted almost $70 billion in damage to New York and New Jersey alone.
“It’s been really a disaster for a lot of people here, where they lost everything,” Schimmerling said. “Some of these people that walk in are in tears.”
Honda Motor Co. (7267)’s sales increase in November may lead all automakers with a gain of 33 percent, the average of eight analysts’ estimates.
The maker of Accord sedans and Civic compacts began the month with almost double the inventory it had in November 2011, according to researcher WardsAuto. Dealers for the Tokyo-based company faced shortages a year ago after the tsunami in Japan and floods in Thailand disrupted production and parts supply.
This year, it was Sandy’s turn to affect the auto market. The storm damaged more than 230,000 vehicles, including 190,000 in New York and New Jersey, according to estimates from the National Insurance Crime Bureau.
Huntington Honda fielded a call from a man in Ohio whose 87-year-old mother lives in the New York City beach community of Far Rockaway, said Megan Allen, a manager at the dealership in Huntington, New York.
“Everything was a complete loss, including her car, and he was desperately looking to find a replacement,” Allen said by phone. A sales representative dropped an Accord off at the woman’s house a day after she visited the dealership.
The average estimate for November’s sales rate would be a rebound from 14.3 million in October, according to researcher Autodata Corp. The U.S. market has been in steady recovery this year, topping out at an annualized pace of 14.9 million vehicles in September, the best since March 2008, Autodata’s figures show.
The U.S. averaged 16.8 million light-vehicle deliveries annually from 2000 to 2007, then dropped to 10.4 million in 2009, a 27-year-low, according to Autodata. Sales for 2012 are headed toward a third consecutive annual increase of more than 10 percent.
Hurricane Sandy left Beck Chevrolet in Yonkers, New York, without full electricity for an eight-day stretch after Sandy slammed the dealership.
“We were virtually out of business,” Russell Geller, vice president of the dealership, said by phone. “Once the power was restored, we bounced back. We had customers outside the door asking ‘Are you guys open yet?’”
General Motors Co. (GM) the top-selling automaker in the U.S., probably boosted deliveries in November by 7.6 percent, the average of 11 estimates. The Detroit-based automaker joined Ford Motor Co. (F) in announcing $500 discounts to buyers affected by the storm, according to Edmunds.com.
For November, the New York area “is showing a lot of strength, both for us and for the industry,” said Mark Fields, Ford’s president of the Americas.
Ford, No. 2 in U.S. auto sales, likely will report a 2.4 percent increase in November deliveries, the average of 11 estimates. The automaker, based in Dearborn, Michigan, “wouldn’t be surprised” to see an industry sales rate of at least 15 million for the month, Fields told reporters Nov. 28 at the Los Angeles Auto Show. The 51-year-old executive will become Ford’s chief operating officer tomorrow.
Sales figures will likely get a further boost next month as new vehicles in inventory that were damaged are written off by automakers and recorded as sales, said Paul Ballew, chief economist at Dun & Bradstreet in Short Hills, New Jersey.
“Vehicle manufacturers may vary a little bit on their policies, but they will be writing those vehicles off,” said Ballew, formerly an economist for Nationwide Mutual Insurance Co. and sales analyst for GM. “My gut is they’ll show up in December.”
Toyota Motor Corp. (7203) says it had 4,000 vehicles at the company’s port facility in Newark when the storm hit. Almost 3,000 will likely be scrapped. Nissan Motor Co. estimates more than 6,000 of its cars and light trucks will be scrapped.
Analysts estimate that Toyota sales will climb 20 percent and Nissan’s will rise 4.8 percent, both the average of eight estimates.
Chrysler Group LLC estimated that its dealers lost about 750 vehicles from their stock due to hurricane damage. The company, based in Auburn Hills, Michigan, probably will boost deliveries in November by 16 percent, the average of 11 estimates.
“We’re definitely seeing pockets of the northeast coming back quite strong from people that deferred purchases in late October,” Reid Bigland, Chrysler’s U.S. sales chief, said in an interview at the Los Angeles Auto Show.
South Korea’s Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) may combine to sell 9.1 percent more vehicles in November compared with a year earlier, the average of six estimates. U.S. regulators said earlier this month that the affiliates overstated the fuel-economy ratings for most of their 2012 and 2013 models.
Volkswagen AG (VOW) has probably already exceeded its full-year target for U.S. sales of 500,000 vehicles. After entering the month with 469,803 deliveries for its Volkswagen and Audi brands, the automaker likely boosted sales in November by 25 percent, the average of three estimates.
The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from November 2011. Forecasts for the seasonally adjusted annualized rate, or SAAR, are in millions of light vehicles.
November had 25 selling days, the same as last year.
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