Editor's note: A previous version of this report incorrectly stated LMC's forecast percentage change in sales. It has been corrected.
DETROIT -- The two storms that battered parts of Texas and Florida in the past month have given U.S. automakers a reprieve from two problems that have cast a shadow over the price of their shares all year: bulging new-vehicle inventories and an oversupply of off-lease vehicles.
Automakers are scheduled to report U.S. sales on Tuesday, Oct. 3, offering the first indications of the demand for vehicles to replace those damaged or destroyed in Houston's record floods and the pummeling much of Florida got from Hurricane Irma.
Some analysts expect September to show the first monthly increase in vehicle sales this year -- though their previous forecasts of sales gains for the industry in March, May and August proved inaccurate.
Any increase likely would be minimal; Edmunds projects a 0.4 percent rise, and Kelley Blue Book expects a 0.7 percent gain. However, either amount would be enough to push the industry's annualized selling rate to 17.5 million units -- the highest of the year.
LMC estimates September sales will drop 0.1 percent to 1,433,268 cars and light trucks and that the SAAR will come in at 17.5 million.
“Hurricanes Harvey and Irma have disrupted -- and will continue to disrupt -- new-vehicle retail sales in September and beyond,” said Thomas King, head of data and analytics at J.D. Power and Associates.
King said retail sales in the south central region, which includes Houston, were up 14% in early September as shoppers replaced storm-damaged vehicles and completed purchases that were postponed during the storm. But retail sales in the Southeast, which includes Florida, were down 16 percent as the region and dealers returned to normal operation.
"The effect of hurricanes Harvey and Irma is expected to boost retail light vehicle demand through the remainder of 2017 and into 2018, as recovery continues," said Jeff Schuster, senior vice president of forecasting at LMC Automotive.
New-vehicle incentives were tracking at a record high of $4,050 early in the month, J.D. Power said, as automakers and dealers "continue with aggressive discounting to clear out record inventories of prior model year vehicles."
U.S. sales have dropped 2.7 percent this year through August, threatening the industry's streak of seven consecutive annual gains.
According to data compiled for Reuters by car-shopping website CarGurus, during the height of the storm, online car searches in Houston were down 25 percent -- from an Aug. 4 baseline -- but as of Sept. 17 were up 18 percent.
"Business has been very brisk at our 26 dealerships [in southeast Texas] this month," said Pete DeLongchamps, vice president for manufacturer relations at Group 1 Automotive Inc., the third-largest U.S. auto dealer group. "That's true for both new and used vehicles."
Cox Automotive Chief Economist Jonathan Smoke says the "immediate replacement demand" following the storms is around 600,000, including 400,000 in southeast Texas. Around 200,000 of the replacement vehicles will likely be new and the rest used.
Most of the vehicles will be used either because many people lack flood insurance, their insurers only pay them the current replacement value, or they owe more than their vehicle is worth so they will not be able to afford a new car.
"This is a great opportunity for the automakers ... as this will lead to a reduction in the excess supply that's been on the market," he said.
High demand around Houston has already prompted dealers in other states, automakers and their captive finance companies to shift nearly new vehicles into that market for auction.
Forecasts that hundreds of thousands of vehicles would need to be replaced boosted shares of General Motors and Ford Motor Co., despite disappointing sales figures for August. GM shares are currently trading near a three-year high; they closed Thursday at $40.50.
The Edmunds and KBB forecasts for September show GM and Toyota Motor Sales U.S.A. each gaining more than 1 point of market share from a year ago, followed by smaller increases for Ford, Volkswagen Group of America and American Honda. Fiat Chrysler Automobiles, Nissan North America and Hyundai-Kia are seen losing share.
Before the storms hit, U.S. automakers were facing the largest levels of unsold inventory in 13 years, said Joe Langley, a senior analyst at economic forecasting and data company IHS Markit.
IHS estimates automakers have 500,000 to 600,000 more vehicles in stock than they need. GM accounted for about half that oversupply, Langley said. GM has cut production and said earlier in September that it is on track to reduce inventories to about 850,000 vehicles at the end of the year from 938,000 as of Aug. 1.
There are concerns that competition for market share amid declining sales mean automakers will not cut production enough.
"Inventory will likely be a lingering problem because everyone wants to fight for share," said Jessica Caldwell, executive director of industry analysis for Edmunds.