U.S. automakers get reprieve from two problems
Storm sales boost gives U.S. carmakers chance to cut oversupply
Thursday September 28, 2017
Article Highlights
- Cox Automotive chief economist Jonathan Smoke says that 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 cars 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.
By Nick Carey — DETROIT, Sept 28 (Reuters) – The two storms that battered southeast 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 inventory and an oversupply of nearly new, off-lease vehicles.
Automakers are scheduled to report U.S. sales on Oct. 3, offering the first indications of the boost to demand for vehicles to replace those damaged or destroyed in Houston’s record floods and the pummeling much of Florida got from Hurricane Irma. Analysts expect September to show the first monthly increase in vehicle sales this year.