Hail on wheels? No problem as shoppers clamor for deals on damaged cars

After baseball-sized hail inflicted heavy damage to vehicles at Woodhouse Ford, customers converged on the dealership seeking discounts.

Woodhouse Auto Family in Blair, Neb., has been weathering a flood of new customers in the wake of a hailstorm that damaged nearly 4,400 vehicles last week at its three stores, including its “Truck Mountain” Ford truck dealership.

To clear the lots of the struck vehicles, Woodhouse declared a “hail sale” the day after the storm, marking stickers down by anywhere from $1,000 to $15,000. Lisa Cole, Woodhouse Family Auto marketing director, said in an e-mail that by Saturday, more than 150 customers were waiting to speak with a salesperson. Woodhouse’s Web site said e-mails and phone messages may not be returned for two to three weeks.

Woodhouse Ford said all of its 2,500 pickups at “Truck Mountain” were damaged. The dealership is the nation’s top-selling store for F-series pickups.

The situation in Nebraska underscores how dealerships can use “hail sales” to sell vehicles with dents or cracked windshields -- and attract new customers to their lots.

Tim Olson, president of Dent Terminator, a paintless dent repair company in Tulsa, Okla., said in such situations, customers feel as if they have the upper hand.

“It’s like blood in the water,” Olson said. “People sense that [dealerships] are at a disadvantage, bringing people into the marketplace that weren’t there before.”

Peak Kia in Littleton, Colo., has been holding a hail sale since storms on May 20 and May 24 damaged 425 vehicles, creating an average of $6,000 worth of damage per car.

Bill Byerly, owner of Peak Kia, said about one-third of the discounted vehicles were sold the weekend following the storm.

“We want to try to retail everything,” Byerly said on June 9. “We may sell them all in a month or six weeks from now.”

Byerly said past hail sales have proven profitable for Peak Kia, but they won’t know the effect of the latest storms until the end of the month. Kia has been providing the dealership with fresh inventory to replace the rapidly sold hail-damaged vehicles.

While hail sales are an effective way of clearing lots for dealers, the discounts may not be as equally beneficial for customers. Olson said that if a hail-damaged vehicle isn’t repaired after purchase, insurance companies can discount the damage from future accident coverage.

“There are benefits for consumers, but also ‘gotchas,’” Olson said. “…When [an insurance company] looks at a car and sees hail damage, they figure what that would have cost and deduct it from the current cost of the accident.”

Olson said an indicator of the severity of hail damage is if the paint is broken or cracked at the edges of the vehicle’s panels. Such damage would cause the car to rust within six months.

Dealerships can hire PDR companies to do repairs on site, or repair lightly damaged vehicles in their service centers to further incentivize customers. Olson said competitive pricing among PDR companies allows for high profit margins for the dealerships that hire them.

Cole said in an e-mail that Woodhouse was repairing some of the discounted vehicles at the dealerships. However, it is too soon to tell if the massive sale will be profitable.

Mark Cooley, general manager at Nebraska Auto Auction Inc. in Lincoln, said the auction house is expecting to receive vehicles damaged in the June 3 storm soon, though it is too soon to know how many and which dealers will be selling them.

“The [insurance] adjusters have been way behind,” Cooley said. “We usually get a couple hundred, they sell easily.”

He added that the dealerships his firm works with typically end up benefiting since their insurance has paid for the damages.

Cole said in an e-mail that salvaged vehicles will be taken away, but they will try and sell all of the damaged cars.

“The hail sale will continue until all vehicles with damage are sold,” Cole wrote.

You can reach Katie Burke at kburke@crain.com -- Follow Katie on Twitter: @KatieGBurke



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