The devastating impact of Hurricane Harvey could ultimately cost automakers thousands of sales, particularly pickups built by the three major U.S. automakers, according to industry research firm IHS Markit.
Automakers may have lost 10,000 to 25,000 sales during the last week of August, said Chris Hopson, forecast analyst for IHS Markit.
Houston, which took the brunt of the August storm, is the 10th largest auto market in the country, but is ranked third for pickup truck sales. The three most-registered vehicles in the Houston area through the first six months of 2017 were the Ford F-Series, Chevrolet Silverado and Ram 1500-3500, according to IHS Markit.
Sales of full-sized trucks topped 37,000 in the Houston metropolitan area through July of this year. Only Dallas/Fort Worth and Tulsa ranked higher.
“Sales in Houston are expected to continue to be affected in September,” said Stephanie Brinley, analyst for IHS Markit. “As this impact coincides with the typical Labor Day sales push, September results may also be dampened from earlier predictions.”
Houston has been a battleground for the Detroit Three automakers this year. Through the first half of 2017, Ford, General Motors and Fiat Chrysler Automobiles accounted for 50 percent of all vehicle sales in the Houston region. The domestic nameplates made up just 44 percent of national sales.
Ford was the auto sales leader in Houston during that time period, capturing a more than 18 percent market share, with GM in a close second. Toyota and FCA rounded out the top four.
“FCA, Ford and GM may see a stronger negative impact on August sales from the storm than other automakers,” Brinley said.
U.S. sales of pickup trucks continued to climb in August. Through the first seven months of 2017, full-size pickup sales jumped 4 percent to more than 1.5 million vehicles. The mid-size pickup segment grew by 1.1 percent to more than 295,000, compared with the same period last year.
Lost business over the final week in August and into September was enough to knock the expected anualized sales pace for the month down by 100,000 to 300,000 vehicles to 16.3 million units, according to IHS Markit.
However, the automotive industry dodged more serious consequences. There are two manufacturing plants in Texas: a GM facility in Arlington and a Toyota plant in San Antonio – both were unaffected by the storm. Automakers are not expected to increase production in an effort to replace lost vehicles, Brinley said.
Even vehicles on dealer lots that were damaged or destroyed can be replaced by moving inventory in from other places, she said.
“In many cases, automakers can reallocate volume to the Houston area rather than have it pile up in other markets that are well stocked,” said Joe Langley, an analyst for IHS Markit.
What’s more, swift reaction from insurance companies will enable consumers to replace their vehicles fast enough that light vehicle sales could rebound by the end of the year.
“The lost sales are expected to be recovered,” Brinley said, forecasting a “silver lining of opportunity” for dealerships to earn business by fixing damaged vehicles as well as “a potential sales bump” toward the end of the year for dealerships in the affected region.
There could even be a sales increase on a national level.
“With incentives still rising, ample inventory available and potential for replacement demand to help move the sales pace, the [fourth quarter] is shaping up to realize an uptick in the overall pace of sales when compared with the previous monthly levels [reached] in 2017,” Hopson said.