East Coast dealerships assess damages after hurricane strikes
Photo credit: Bloomberg
Hurricane Sandy, the largest tropical storm the Atlantic has ever seen, hit southern New Jersey Monday evening, affecting sales and damaging inventory at dealerships there, as well as other East Coast states.
Nearly 8 million electric customers in 15 states and Washington, D.C., were without power today and the storm's death toll reached 29, CNN reported.
Up to 800 Ford Motor Co. dealerships are affected by the storm, Ford CFO Bob Shanks told Bloomberg today.
Those dealerships are closed for today and tomorrow, and Ford is not sure when they will all be up and running, he said.
"Clearly this is going to have an impact on industry sales towards the end of the month and maybe early November" Shanks said. "But all of our plants and our suppliers fortunately are continuing to operate as normal."
In central New Jersey, the DCH Auto Group was dealing with the mess today.
The dealership group has nine stores that remain closed and could be severely damaged because they were located in the counties declared disaster areas, said Roy Bavaro, director of corporate marketing at DCH Auto Group in South Amboy, N.J.
DCH Auto Group owns 29 dealerships in the United States, 14 on the West Coast and 15 on the East Coast, Bavaro said. The group's headquarters is without power after a backup generator went down.
"Once it's safe to travel, we'll have managers travel to our dealerships to assess our damage," Bavaro said. "It's still a state of emergency, and officials are asking that all nonessential vehicles remain off the roads."
The DCH dealerships affected sell Toyota, Honda, Nissan, BMW, Audi and Acura brands with inventory worth "several millions" of dollars on the ground, Bavaro said.
"Most of the inventory is kept outside," Barvaro said. "There are some that stayed inside showrooms and some inside garages. When we expect bad storms, we move as much of the inventory indoors as we can, but I'm not sure how much was able to be moved this time. There is very limited space."
Better luck inland
In areas more sheltered from the storm, some dealers are feeling fortunate today.
In Falls Church, Va., International Motors is closed for the day, but the store and inventory are undamaged, said owner Kurt Schirm. The store was a Saab dealership, but is now a parts and service shop for the defunct brand. Schirm said he plans to sell the property and relocate to an area where he can get a new franchise.
"Our store is fine. We have power, and there's no physical damage,"
Schirm said. "But there is a lot of flooding in the area and a lot of trees down. The area is disrupted. Government's closed, school is closed and almost all the businesses are closed because there is a scattered level of damage."
In southern New Jersey, Holman Automotive Group opened its seven stores at noon today, said Bill Cariss, vice president of dealership operations for the group in Maple Shade, N.J.
None of Holman's dealerships lost power and while some roads are impassible, the main roads are open, Cariss said. His managers are assessing store and inventory damage, but the preliminary indications show, "we got really lucky," Cariss said. The dealerships had about $60 million worth of vehicle inventory on their lots when Sandy struck.
"Right now it looks pretty good," Cariss said. "We feel we really dodged a bullet and we're ready to close out the month. There'll be a ton of insurance work and flood damaged reports and so on. But we were very, very lucky."
Brad Benson Hyundai in South Brunswick, N.J., made it through the storm almost unscathed, said Dave Cantin, the dealership's vice president. The dealership's inventory, buildings and infrastructure were undamaged, but the store's landmark feature was not so lucky.
An original, 40-foot goalpost from the Meadowlands, the former stadium of the National Football League's New York Giants and New York Jets, installed at the dealership in 2011 was torn down by high winds. Brad Benson, the dealership's owner, was the starting left offensive tackle for the Giants team that won the 1987 Super Bowl.
Though disappointed, Cantin said he hopes to rebuild the goalposts to stand in front of a new facility set for construction at the dealership next week. Cantin said he expects to go ahead with the new store's groundbreaking as scheduled.
"All things considered it could have been a lot worse," he said.
Assessing the damage
Pete DeLongchamps, a vice president at Group 1 Automotive in Houston, said the group was still assessing the situation and making sure employees are safe.
Group 1, No. 4 on the Automotive News' list of the top 125 U.S. dealership groups for in 2011, has several "nice-sized" stores on the East Coast, including BMW, Honda and Mercedes outlets in New Jersey and BMW/Mini, Volvo and Mercedes stores in Long Island, N.Y.
"We've got general managers on the ground that will be working to get the dealerships open as soon as possible to serve our clients because there will clearly be consumer demand for parts and service, I would imagine," DeLongchamps said.
When Hurricane Katrina struck the Gulf Coast in August 2005, he said there was "a significant spike (in sales) once insurance companies came in and people started getting their lives back together."
But no two storms are alike, DeLongchamps said, so it's hard to predict sales.
Vince Sheehy of Sheehy Auto Stores in Fairfax, Va., has several stores in the path of the storm in Maryland, Virginia and Washington, D.C.
"We were very concerned, but pleased to report that 16 of our 18 locations maintained power the whole time," he said. "Only two stores lost power. We closed all the stores yesterday at 3 p.m. and reopened them today at 10 a.m. as a company. And we had very little damage from the storm, unlike what it sounds further north to New York."
The damage that did occur was just "excess leaking and a couple of carpets that got real damp just nuisance stuff," he said. The two stores without power are open for business and being powered with a generator.
"We dodged a big one," he said. "None of the inventory was impacted."
Can't ask for more
Darcars Automotive Group, ranked No. 25 on the Automotive News list, has about 30 dealerships in Maryland. None lost power and no inventory was damaged, said Tammy Darvish, vice president of the group.
Darvish said there was a loss of business since the dealerships closed early Monday. but she wasn't' complaining. "When you have no damage and all of your associates are safe, you can't ask for more than that," she said.
Bob Barton, vice president of Beach Ford Inc. said his dealerships in Virginia Beach, Va., held up surprisingly well, with no damages or lost inventory.
However, the rain and heavy wind did keep customers away. The group only sold two vehicles Monday at the Virginia Beach dealership and none at the Suffolk location, a suburb of Virginia Beach.
"If any damages were caused, it's business damage," Barton said. "It put a damper on the end-of-the-month sales," Barton said.
The National Automobile Dealers Association is letting affected dealers know they can apply to receive emergency relief funds on behalf of their employees through the NADA's Charitable Foundation.
The NADA said it's too early to know the extent of damages because of power outages and downed phone lines.
NADA, which is based in Virginia and has offices in Washington D.C., closed Monday and Tuesday.
"The difference this time is we got hit, too," NADA Vice President David Hyatt said.
The Greater New York Automobile Dealers Association is sending a survey to dealers today to assess the damages. The results will help dealers learn tips from each other to prepare for the next storm, a spokesman said.
Automax Recruiting and Training, a dealership staffing company in Mays Landing, N.J., is ready to help employees at car dealerships who may find themselves out of work after the storm. They're also prepared to help hard-hit stores that need help hiring staff, whether it's a fill-in manager or sales help, the company said today.
Said Automax CEO Craig Lockerd: "Everyone has been instructed to contact via e-mail and phone all of our dealer clients from Connecticut down through Virginia, Pennsylvania, Delaware and New Jersey just to check in on them to see what we can do to help them."
Analysts weigh in
TrueCar analyst Jesse Toprak said that although the storm was more damaging than he thought, 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.
"(Sales) are turning out to be slightly better nationwide, so we hope the rest of the sales from other regions will at least mostly make up for the loss of sales in the Northeastern region," he said.
New York City, northern New Jersey, Long Island, and part of Pennsylvania account for 7 to 8 percent of the nation's new-car sales, said Mitch Phillips, global practice director at Urban Science, a Detroit-based dealer consultant.
Typically there is a sales dip the first 30 days after a hurricane. Sales levels rise to levels higher than normal 60 to 90 days after the storm, Phillips said. Despite the initial sales loss, he said, shoppers will come back and sales will level out in the long term.
Vince Bond Jr. and Ryan Beene contributed to this report.
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