As car carrier fire dies out, damage assessment begins

The toll from the fire that broke out Feb. 16 aboard the Felicity Ace cargo ship may end up being even higher than early estimates of $355 million, given the breakdown of Volkswagen Group vehicles believed to be on board, according to dealer and company sources.

After delays caused by bad weather and lingering effects of the fire, a salvage team boarded the vessel on Friday, Feb. 25, and started to tow it to a safe location from where it had been adrift, about 100 miles southwest of the Azores islands. Ship manager Mitsui O.S.K. Lines said the Felicity Ace remained stable, and the smoke that for days billowed from the vessel had stopped.

"We fear that the fire on the ship has damaged a large number of the nearly 4,000 Group-brand vehicles to such an extent that they can no longer be delivered to customers. More detailed information is not yet available," Volkswagen Group of America said in a statement emailed Friday to Automotive News. "Brands and dealers have already begun informing their customers and finding individual solutions."

The damage to the vehicles will be covered by insurance, the automaker said.

VW Group has been tight-lipped about the exact breakdown of the U.S.-bound vehicles aboard the Felicity Ace, which departed the German port of Emden on Feb. 10 and was scheduled to arrive in the Port of Davisville in Rhode Island on Feb. 23, according to a posting on Marinetraffic.com. More than 100 of the nearly 4,000 vehicles on board were headed for the Port of Houston in Texas.

However, dealer and company sources tell Automotive News that nearly half of the vehicles were Audis, followed in volume by Porsche vehicles, which were believed to outnumber the VW-brand vehicles on board by more than 2 to 1. Two of the group's big-ticket brands also had substantial numbers of its vehicles aboard, sources said, including 189 Bentleys and 85 Lamborghinis.

Bugatti, which also is part of VW Group, delivers its bespoke vehicles bound for North America from Europe by air.

While the number of each brand vehicle on board may be known, the extent of damage to individual vehicles may not be available for some time. Andrea Baldi, CEO of Lamborghini of America, told Automotive News last week that he was hopeful that at least some of the Urus SUVs and Huracan and Aventador supercars were in sections of the ship that were spared the worst of the conflagration.

"We'll be looking forward to hear after somebody really can climb on the ship and maybe get some of the details" on the condition of the vehicles, Baldi said. "The photographs gave me the impression that perhaps one side of the ship wasn't that damaged, but we don't know. If any electric cars were on the ship, you can imagine the effect with fires [of lithium ion batteries is] not the best."

Among the Lamborghinis aboard, Baldi said the vast majority were Urus SUVs, with what was believed to be just a handful of Huracan and Aventador models. The Aventador is being wound down and is sold out.

For Volkswagen, Audi, Porsche, Bentley and Lamborghini dealers in the U.S., the fire exacerbates already tight vehicle inventories because of the ongoing microchip shortage, and it means they will have to find ways to satiate customers whose ordered vehicles were aboard.

Porsche dealer Robert DiStanislao has a customer-ordered Cayenne on the Felicity Ace.

Porsche is updating dealers daily on the status of the vessel, said DiStanislao, president of Porsche of the Main Line in suburban Philadelphia.

The potential loss of the Felicity Ace is likely to make an already-challenging inventory situation worse. "It's going to cause us even more shipping delays because we now have one less transport vessel," DiStanislao said.

The dealership has reordered a Cayenne for the customer, who should receive it in June, instead of this month. But, there's a silver lining for the customer, who will receive an upgrade: Because of limited product availability, Porsche of the Main Line had to order a Platinum-edition Cayenne.

"The Platinum is more expensive than the original order," DiStanislao said. "But we are keeping the pricing the same for the customer."

Like Porsche, almost all Audis — with the exception of the Mexico-produced Q5 — are imported to the U.S. from Europe via car-hauling freighter. Audi of America has not publicly disclosed how many of its vehicles are aboard the Felicity Ace, but dealers put the number at about 1,800.

Michelle Primm, managing partner of Cascade Auto Group in Cuyahoga Falls, Ohio, which includes Cascade Audi, said that two of her customers had ordered vehicles aboard the Felicity Ace — a Q3 and a Q7, both gasoline-powered crossovers. Both orders were "refilled from allocation," Primm said, adding that the customers understood what happened, though they responded differently: "One was very OK and one was [upset]."

At VW, the hardest losses to deal with will be the ID4s, the brand's compact-crossover EV that went on sale last year.

Dealers said less than half of the VWs aboard the Felicity Ace were ID4s, with the remainder made up of Golf R, GTI and Arteon models. Volkswagen of America executives have said that they are still trying to fulfill orders placed in the U.S. for ID4s, which, for now, are being manufactured in Zwickau, Germany. VW's plant in Chattanooga is expected to begin local salable production of the ID4 this spring.

Fred Emich IV, general manager at Emich Volkswagen in Denver, said his store lost five vehicles aboard the ship, including three that were sold orders. Emich said that the brand is "trying to replace the sold orders" from elsewhere in stock and that the dealership is waiting to hear the results of that search before reaching out to the customers involved.

Urvaksh Karkaria and Reuters contributed to this report.