East Coast dealers shut stores, relocate cars as Hurricane Sandy hits
Photo credit: Reuters
As the Atlantic's largest-ever tropical storm hit the U.S. East Coast, auto dealers closed showrooms, moved cars to higher ground and calculated the effect on October sales.
Hurricane Sandy caused 65 deaths in the Caribbean and is expected to converge with two other systems to create a phenomenon the National Weather Service is calling Frankenstorm.
As of 8 p.m. EDT, the storm reached land near Atlantic City on the New Jersey coast. The storm's impact reached far inland as blizzard warnings went up in Maryland and West Virginia.
Holman Automotive Group closed all seven of its dealerships in southern New Jersey today in preparation for the storm, said Bill Cariss, vice president of dealership operations for the group in Maple Shade, N.J.
New Jersey has declared a state of emergency and so has Delaware, Cariss said.
"I'm hoping we can get open sometime tomorrow," he said. "We'll make that call later tonight or first thing in the morning."
Cariss estimates that Holman has about $60 million worth of new and used inventory at the seven locations that could be damaged by the anticipated 70 mph winds and severe flooding.
"You move them to as high of ground as you can, but New Jersey is a pretty flat state, and this storm is unprecedented. They are saying this is one for the decades," Cariss said. "So you're guessing what the impact will be."
"Our primary focus right now is the safety of our employees, saving our inventory, and if we can get back up running tomorrow, that'll be good. But the roads may not be passable."
He expects to have a lot of service and body shop work if the storm causes flooding and other damage to people's vehicles. If the damage is severe enough, car sales might jump, too, as people use insurance payments to replace cars.
In Pennsylvania, most dealerships had planned to close by noon today as the brunt of the storm was predicted to hit in the afternoon, said Kevin Mazzucolo, executive director of the Automotive Dealers Association of Greater Pennsylvania.
Dealers in the area were hit by Hurricane Irene in August 2011, which prepared them for Sandy, he said.
Mazzucolo said a lot of dealers are worried the storm will affect October sales.
"You never want to see this occur in a retail scenario toward the end of the month, but that's Mother Nature," he said. "You deal with it, and come back stronger."
He said many dealers have moved vehicles to storage on higher ground.
The Greater New York Automobile Dealers Association has advised Long Island dealers to move vehicles upland in storage.
"The water levels are now up to the levels at the height of Hurricane Irene, and we haven't even gotten to the bad part yet," said Nick Crispe, an association spokesman. He said he believes the storm will have a big impact on many dealers near the water.
In New York City, where public transportation is shut down, dealerships have closed their doors.
Deborah Dorman, president of the Eastern New York Coalition of Automotive Retailers in Albany, N.Y., said dealers there are concerned about wind damage, flooding in some areas and the effect on potential car buyers, who are hunkering down at home and dealing with school closings.
In addition, she said, she is worried that extended power outages may cause a problem for the auto show planned in the Empire State Plaza this weekend.
Dorman also mentioned the storm's timing with the presidential election on Nov. 6.
"This is a time of great uncertainty: What will the storm bring, and what will the election bring? Both are big issues for car dealers and for car consumers," she said. "Perhaps we'll have robust sales toward the end of the month or even sooner, if people are relieved about the storm and the election being over."
In Maryland, most dealers are inland, so their main concern is wind damage and loss of power, said Peter Kitzmiller, president of the Maryland Automobile Dealers Association.
Last year during Hurricane Irene, the biggest issue was loss of power for four to five days. A lot of dealers have generators to keep things going, at least in the service department, he said.
Bob Barton, vice president of Beach Ford of Virginia Beachin Suffolk, Va., said the dealerships are "open and ready to do business if anybody wants to get wet."
The dealership has moved vehicles around on the lot away from areas that collect the most water, he said.
Barton said that Virginia's biggest problem from past hurricanes has been power outages. But, he said, outages haven't been a big issue in his area so far.
Out of the 600,000 residents in Virginia Beach, only 900 or so have lost power, he said. The north side of the state is suffering more, he said.
Like other dealers, Barton is worried the hurricane might affect October sales.
"It couldn't have come at a worse time," he said. "The last three days of the month is when we have the biggest push. Everyone is going about their day and trying to build business for tomorrow and Wednesday."
TrueCar analyst Jesse Toprak said the hurricane has not changed sales predictions yet. He said he still predicts an annualized sales rate of 14.9 million vehicles for October -- which would tie September for the highest mark since early 2008.
There was some room in the forecast anyway, he said. And he pointed out that the storm is arriving during the week instead of on a weekend, so the loss won't be as large.
"When situations like this happen, it's a temporary halt in sales but it balances out," he said. "There's usually not a negative impact."
Jamie LaReau, Diana T. Kurylko, Brianna Valleskey, Reuters, and Bloomberg contributed to this report.