Hurricane Harvey's wake of damaged cars and trucks

Industry analysts urge caution before buying used vehicle.

HOUSTON — Perry Smith tried to race Hurricane Harvey. He lost. Now his white Toyota Corolla sits with a broken axle in the parking lot of a Strips convenience store in Rockport, Texas. It is, he admits, probably the end of the road for his trusty car with almost 190,000 miles on it.

“The hurricane was right on my tail,” Smith said. “It caught me. It lifted the back of the car up, and I was look- ing down at the road through my windshield. Then — bam! — it slammed back down and that was it.”

Smith, 56, hasn’t filed a claim with his insurance carrier yet; he’s been busy helping his parents clean out their wind-damaged house along the coast. He said he doubts he’ll get much anyway and is instead hoping for some assistance from the Federal Emergency Management Agency.

Texans already have filed more than 100,000 storm-related claims on their car- and truck-insurance policies, said Mark Hanna, a spokesman for the Insurance Council of Texas trade group, and some analysts estimate that figure will climb as high as 500,000.

With hurricane season in full swing and the tally from Irma just beginning, Harvey has been projected to be one of the costliest disasters in U.S. history, with experts estimating damage could exceed $100 billion. Texas Gov. Greg Abbott has sug- gested damage could reach $150 billion to $180 billion.

About 15 percent of Texas motorists don’t have vehi- cle insurance, even though liability insurance is mandatory in the state.

Of the remaining 85 per- cent of motorists, three-quar- ters of them carry comprehensive coverage, which would include protection against flooding, Hanna said.

“That’s very good news,” he said, for getting Texans back on the road.

There are slightly less than 14 million passenger vehi- cles and 6 million trucks in Texas, according to the Texas Department of Motor Vehicles.

Of that total, 3.5 million vehicles were registered last year in Harris County, which includes Houston, according to the DMV.

“We’ll see people want- ing to replace their cars in a pretty quick fashion” because Houston is a sprawl- ing city heavily dependent on the car for transporta- tion, said Jessica Caldwell, director of industry analysis at Edmunds.com.

“You will see auto sales higher in the affected areas, probably for the rest of the year, with people needing to replace their vehicles,” she said.

“It’s hard to go without a car in a place like Houston.”

The typical surge in vehi- cle sales after a natural disas- ter provides some economic boost to the affected area. A month after Superstorm Sandy slammed New Jersey and New York, New York City-area vehicle sales jumped 49 percent.

Edmunds estimated that 366,000 new vehicles on dealer lots in Texas were damaged by Harvey, includ- ing 150,000 to 200,000 new vehicles in the hardest-hit areas such as Houston and Corpus Christi.

Many of those new vehicles are trucks; Texas is the top market for new-truck sales in the United States.

One dealership, McRee Ford in Dickinson, southeast of Houston, had temporarily closed because all of its 500 new and used vehicles were damaged by the storm.

But the Houston Automo- bile Dealers Association, which represents about 175 franchise dealers selling new cars and trucks, said 85 percent of its dealers in Houston were fully operational with zero or minimal damage.

“All but a handful of deal- ers I spoke to this morning are all open today at full service and regular hours,” association spokeswoman RoShelle Salinas said Aug. 31, only the second day of sunshine for Houston after Harvey’s deluge.

“This is a great position to be in to help Houstonians get back into transporta- tion and on to moving about the city.”

She said some dealers “have multistory parking garages, and a lot of them put their vehicles into those garages” before the storm hit “so they wouldn’t suffer damage if the water was to rise.”

For those dealers who lost cars, replenishing their lots with new vehicles “is not an issue” because “there’s an overabundance of new cars” in the U.S. market, Michelle Krebs, executive analyst for Autotrader, said in an email.

“All of this inventory can be shuttled around the coun- try,” Krebs said. “In fact, Auto-Nation, wh i ch has numerous dealerships in the Houston area that were hit by Harvey, said it would do exactly that.”

But it could be a tougher situation for Texans who can afford only a modestly priced used car that’s a few years old, Krebs said.

“Shortages exist in the very affordable (market for) 4- to 8-year-old cars,” she said. “That could spell trouble for consumers with few resources or with resources stretched.”

It’s also unclear how rapidly flood-weary Texans will jump into the market for another car.

“The hard thing to figure out are the insurance claims, and how fast that process will work,” Caldwell said. “Most people can’t buy a new car while waiting for an insurance check for the old one.”

Dealers also carry insurance to cover losses for the vehicles on their lots — notably for hail storms that are common in Texas — so the insurers would suffer the biggest financial hit from the storm, Hanna said.

Dean Crutchfield, chief information officer at CDK Global, a provider of soft- ware and services to auto dealerships, said many Hous- ton-area dealers removed or relocated their comput- ers ahead of the storm “and now they’re coming back into their stores and trying to re-establish normal operations.”

“One of the key themes we’ve seen is the dealers’ interest in maintaining their payroll operations” so that their employees don’t miss a paycheck even though car sales were disrupted by Harvey, Crutchfield said.

And what of the flood-damaged cars?

“Most of the vehicles are sold to parts companies who dismantle them and resell usable parts that were not damaged by the flooding,” the National Insurance Crime Bureau, an insur- ance trade group, said in an advisory.