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Car makers, retailers rush to open, restock Houston after Harvey
August 31, 2017 / 5:30 PM / a month ago

Car makers, retailers rush to open, restock Houston after Harvey

A car dealership is covered by Hurricane Harvey floodwaters near Houston, Texas August 29, 2017. REUTERS/Rick Wilking

DETROIT (Reuters) - Houston area car retailers and automakers are rushing to reopen dealerships and beef up inventory to replace many thousands of vehicles damaged in flooding from Hurricane Harvey.

Pete DeLongchamps, vice president for manufacturer relations at Group 1 Automotive Inc, the third-largest U.S. auto dealer group, said the company prepared for the storm with a plan designed after Hurricane Katrina in 2005. This included moving moved inventory to higher ground and cleaning roof drains to avoid cave-ins.

Group 1 thus lost a “relatively small percentage” of inventory and reopened its roughly 25 dealerships in the Houston and Beaumont area by Thursday.

“Things have been moving fast and furious with a large number of tow-ins already,” DeLongchamps said. “Our customers have lost a lot of vehicles we need to help them replace.”

Harvey brought record flooding to Houston and killed at least 35 people. The storm is expected to briefly depress already slowing U.S. auto sales but could eventually help boost demand as damaged cars are replaced. Automakers report U.S. August sales on Friday.

Estimates for the number of Harvey-damaged vehicles needing replacement range up to 500,000.

By Thursday AutoNation Inc, the largest U.S. auto retail chain, had reopened its 17 Houston stores and is moving cars and trucks from other regions, company spokesman Marc Cannon said.

The company plans to move 500 to 1,000 used cars to an AutoNation USA used car store and stage a sale Sept 21-23, when many would-be buyers should have insurance checks to replace destroyed vehicles, Cannon said.

AutoNation is still assessing how many vehicles it lost, but it too moved vehicles to higher ground ahead of the storm.

General Motors Co spokesman Jim Cain said the number of damaged vehicles at dealerships “is relatively modest.”

“But there are still several dealerships that are inaccessible, so the number will increase,” he said. GM will move new and used vehicles to Houston, “but it won’t be done until the infrastructure and our dealers are ready.”

Ford Motor Co is still assessing damage and inventory needs, a spokeswoman said.

CarMax Inc, the biggest U.S. used car dealer, will reopen its six Houston area stores on Labor Day, spokeswoman Claire Hunter said. “We are mobilizing additional inventory to the region as we speak,” Hunter said.

Paul Lips, chief operating officer at ADESA, a unit of KAR Auction Services Inc which with Manheim dominates the U.S. car auction industry, said Houston inventory is “dry and ready for sale.”

“Once roads are clear and employees can return safely to work, we will reopen business as usual,” he said. 

Group 1’s DeLongchamps said the high inventory levels that have been a concern for the U.S. auto industry this year amid slackening sales are now a positive.

As vehicles sell, the retailer plans to replenish inventory by drawing from surpluses at other dealers.

“We have one guy in our office here whose sole job is to match inventory to sales,” in the Houston area, DeLongchamps said. “We call him the ‘inventory czar.'”

In afternoon trading, AutoNation shares were up 4.5 percent, Group 1 was up 3.4 percent, while CarMax had risen 2 percent and KAR was up nearly 1 percent. GM shares were up 2 percent and Ford was up 1.2 percent.

Additional reporting by Joseph White; Editing by Cynthia Osterman

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