Dealers clean up, tally losses in Irene's wake
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EDITOR'S NOTE: This story has been changed to clarify that the National Automobile Dealers Association's tally on how many new-car dealerships were affected by Hurricane Irene. NADA estimated at the time that 10 percent of the dealerships in the affected states would be unable to operate due to storm-related damage.
Gushing water ripped the doors off the 24-bay service department at Maroon Kia in Wayne, N.J., and washed two front-end alignment machines, weighing an estimated 2,800 pounds each, into the nearby Pompton River. About 40 to 50 new and used vehicles were destroyed.
The building's new-car showroom and service department now have severe cracks in their walls and ceilings. The dealership's used-car lot is littered with holes -- one about 15 feet long, 10 feet wide and 6 feet deep.
Maroon Kia dealer principal Raymond Maroon Sr., 81, says he will rebuild or repair the dealership.
"I'm just hoping I have enough insurance. The adjusters are out looking as we speak," says Maroon, who has been a car dealer for 58 years. "It looks like it going to be a million dollars' worth of damage."
Hurricane Irene is long gone, but her presence -- severe flooding, washed-out roads and widespread power outages -- promises to linger for weeks or months at dealerships in the eastern United States. The economic impact will last for years.
The National Automobile Dealers Association says it estimates that 10 percent of the dealerships in the affected states would be unable to operate due to storm-related damage. The NADA won't attempt to put a dollar value on the damage. Some dealerships, such as Maroon Kia, sustained major damage and waterlogged vehicles. Other dealerships said the only impact came from distracted customers who prepared for the storm rather than buying vehicles.
Sales to dip, rebound
Urban Science, a Detroit retail automotive analytics firm, says 4,796 dealerships, or about 27 percent of the U.S. total, are in the states from North Carolina to Maine that suffered to varying degrees from the hurricane.
Based on calculations from previous disasters, Mitch Phillips, Urban Science's global practice director, predicts auto sales in impacted areas will dip for 30 days and then rise above historical sales levels in the next two to five months as consumers replace vehicles lost in the storm.
He says it will take 18 months to two years for the normal sales rhythm to return.
One of the hardest hit states was Vermont, which President Barack Obama declared a disaster area.
Dan Keene, owner of Lamoille Valley Ford in Hardwick, Vt., has two buildings on his 4.5-acre property: the dealership and an office building.
The dealership, on higher ground, was flooded with 2 inches of water, soaking the carpet and causing minor damage to doors and windows.
In the building housing his office, floodwaters were 3 feet high. Keene's controller, who lives near the dealership, and the controller's wife and two kids managed to lift the computer drives off the floor before the water crept in. Between the two buildings, the damage was about $200,000, Keene says.
Add to that about 50 new and 12 used flooded vehicles valued at $1.3 million to $1.4 million.
"We're hanging in there. It's a battle for sure," says Keene, who also owns Twin State Ford in Saint Johnsbury, Vt., 22 miles away. Each dealership sells about 85 new and used units a month.
"I was not required to have flood insurance," he says. "This isn't a 100-year flood plain."
5 feet under
Judy Schumacher-Tilton donned fly-fishing boots last Monday and waded through water that was more than 3 feet deep to survey the damage inside her dealership, Gearhart Chevrolet in Denville, N.J.
By that time the water had actually gone down about 2 feet, she says. Hours before the water was 5 feet deep, engulfing the dealership, used-car building, body shop and rental car office.
Computer systems, furnishings and inventory in the dealership's parts department were almost completely ruined. Schumacher-Tilton brought in a disaster recovery team to clean the buildings, and her employees worked through the night using bleach to clean tools, tile floors and whatever else was salvageable. "The used-car building will have to come down," she says.
The store's 350 new and used vehicles had been moved to safety, but about eight customers' vehicles in the body shop and on lifts in the service department were destroyed.
Schumacher-Tilton said she had no idea of the dollar value of the damage and declined to comment when asked whether she had flood insurance.
She said General Motors has been very supportive, sending representatives to visit her. She said employees and customers have been wonderful.
"We had 5 feet of water in the dealership, but through the grace of God we had 25 service customers" when the dealership reopened for business at midweek, Schumacher-Tilton said. "The dealership is up and running."
You can reach Arlena Sawyers at asawyers@crain.com.
