Nobody can have escaped the news about Hurricane Sandy that swept the East Coast of the United States. The US automotive industry has been collecting itself in the wake of the storm, and there seem to be mixed opinions about the impact the natural disaster has had on this sector.
On one hand, some have argued that the hurricane has resulted in billions of dollars in lost revenues for the auto industry. On the other hand, some companies can see new opportunities for business.
Now the figures are in from the warehouse inventories and the damaged outlets, it’s clear that the impact has been significant and severe for some.
Ferocious Hurricane Sandy started on October 22nd 2012, and this culminated in three days of total mayhem between October 29th and October 31st. The storm ripped through the Caribbean and then on to the United States’ North Eastern provinces, with some South Eastern, Midwestern states and even parts of Canada being affected to a lesser extent. This led to Sandy being dubbed as the Atlantic’s largest recorded hurricane.
Vice President of Public Affairs for National Automotive Dealers, David Hyatt, issued a statement regarding the impact of Hurricane Sandy on America’s auto industry. He said that the impact had been “severe” and that communications between dealers and employees were being hindered by power outages. Some locations on the East Coast had sustained more damage than others, so it was difficult to predict when business as usual would be resumed.
President of the Greater New York Automobile Dealers Association, Mark Schienberg, advised that every single one of the organisations outlets had been affected by Hurricane Sandy. To get that into perspective, that’s 425 outlets throughout nine counties in New York and this also includes the five precincts of New York. Schienberg was amazed at the devastation that the natural disaster had caused, describing it as “just extraordinary”.
General Motors, the American automotive giant, has now declared that it will be assisting its clients and those affected by the hurricane. In addition to refurbishments, the company is also offering to help its customers. This help comes in the form of an additional $500 discount on new cars that are leased or purchased by the end of the year, but only for those who lost their vehicles in the storm. The auto manufacturer Nissan has also unveiled incentive programs for the victims of Hurricane Sandy.
If turning a natural disaster into a marketing opportunity seems shocking, it’s worth remembering that the US automotive industry has already received a bailout. In fact, the industry could actually receive a boost from consumers in the wake of the storm.
Edmunds.com, the US car shopping website, is predicting a jump in demand and increased sales volume in the North East and Mid-Atlantic regions. The company is expecting sales in these regions to account for a total of 20% of all new car sales. Lacey Plache, Chief Economist of Edmunds, said that Hurricane Katrina had damaged around half-million vehicles back in 2005. It’s worth noting that the area affected by Katrina was nowhere near as densely populated as New York and New Jersey. It stands to reason that Sandy’s impact has been much larger. However, auto sales could be boosted by 3% to 4% for this quarter, even if 100,000 damaged vehicles were only replaced by the end of this year. This alone could have a very positive effect on the economy.
It’s good news for customers too, because the conditions for buying a new car will be very favourable with good interest rates on new-car purchases. The last time we saw annual percentages like these was back in 2002.
There are other factors that will be influencing auto sales. The company Edmunds believes that a more favourable economic climate in general will have a positive impact. Recovering housing markets, growing consumer confidence and increased lease terminations were among the reasons cited. All of these are driving the sunnier outlook for auto sales during the fourth-quarter. It’s also interesting to note that despite the chaos caused by the Atlantic’s largest recorded hurricane, American car sales actually increased over the month of October. This is why some are optimistic about the United Sates’ auto industry in the aftermath of the hurricane. It looks as if the industry is on track to sell as many as two million more new trucks and cars this year than were sold in 2011.