With dealerships flooded and closed, and thousands of consumers displaced in southeast Texas, Harvey is expected to dent U.S. light-vehicle sales for August and will likely dampen industry deliveries into next month, analysts say.
But many of the lost sales will be recouped down the road as the region recovers and some damaged and scrapped vehicles are replaced, analysts say.
Edmunds estimates approximately 366,000 new cars and light trucks are on dealer lots in Texas that could be affected by Harvey, now a tropical storm.
"Many of these vehicles are high-profit trucks and SUVs, so automakers will feel a slight pinch, at least in the immediate term," Jessica Caldwell, Edmunds executive director of industry analysis, said Tuesday. “Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact the automakers."
Before Harvey slammed into Texas as a category 4 hurricane, analysts expected August to produce the industry's first month of U.S. sales growth in 2017, breaking a streak of seven consecutive year-over-year declines.
Forecasts from LMC Automotive, Edmunds and Kelley Blue Book called for light-vehicle sales to rise about 1 percent from August 2016. It would be the first increase since December, though it's more a reflection of August having one more selling day this year than an increase in demand.
Texas is the second-largest new-vehicle market after California and Edmunds estimated Tuesday that 2 percent fewer vehicles will be sold in the U.S. in August as a result of the storm. Many dealerships in the storm area remain closed.
The widespread flooding is also expected to dampen overall U.S. sales into early September, when automakers and dealers typically dangle generous Labor Day holiday deals.
Barclays analyst Brian Johnson estimates the storm will trim 100,000 vehicles off the seasonally adjusted, annualized sales rate in August. Automakers report August U.S. sales results on Friday.
Jonathan Smoke, chief economist at Cox Automotive, estimates 20,000 to 40,000 new vehicle sales could be delayed in Texas following the storm.
Cox Automotive lowered its forecast for the August SAAR to 16.3 million from 16.6 million as a result of the hurricane and its aftermath.
"September will likely get a mild boost from delayed purchases and the beginning of the market’s recovery, driven by the need to replace damaged vehicles," Smoke said. "That process will likely last months, pushing higher sales in the region in 4Q."
Smoke said Cox is still reviewing how the storm will affect overall U.S. sales in 2017 but said "initial estimates indicate a potential net improvement on full-year sales once replacement sales gain speed." U.S. light-vehicle sales are down 2.9 percent through July this year.
A key market
In the cities hardest hit by Harvey -- Austin, Beaumont/Port Arthur, Corpus Christi, Houston and San Antonio -- Edmunds estimates between 150,000 and 200,000 new vehicles could be affected.
Texas generates 9 percent of U.S. light-vehicle retail sales and is the nation's No. 1 truck market, accounting for 14 percent of all full-size truck deliveries so far this year. One of every five vehicles sold in Texas so far in 2017 has been a full-size truck.
Some brands will be affected more than others by the storm, Edmunds says, noting that Texas is the top market for Ford, Ram, GMC, Cadillac and Mitsubishi.
Auto loan applications in the Houston market have dropped roughly 80 percent since the storm came ashore on Friday, according to Cox Automotive's Dealertrack service.
After Superstorm Sandy caused widespread flooding in the New York metropolitan area in 2012, "we saw all of those lost sales made up in the subsequent few months and then some because of replacements for vehicles destroyed and damaged," Cox Automotive analyst Michelle Krebs said.
A rebound in sales will depend on how quickly car owners file claims and the speed with which insurers process them, said Christopher Hopson, a senior analyst at industry consultant IHS Markit.
"If the reaction is swift, we could start to see a pickup in sales as soon as late September or October," Hopson said.
Mike Jackson, CEO of AutoNation Inc., the largest U.S. auto retail chain, said on CNBC on Tuesday that 17 of the company's dealerships remained closed following Harvey and that he did not know when they would reopen.
Reuters contributed to this report.
