De­struc­tion’s eco­nomic boost

Up to 500,000 pas­sen­ger cars — worth $4.9 bil­lion — could be re­placed.

Los Angeles Times - - BUSINESS - By Russ Mitchell russ.mitchell @la­ Twit­ter: @russ1mitchell The As­so­ci­ated Press con­trib­uted to this re­port.

In the Hous­ton area, as much as $4.9 bil­lion worth of de­stroyed or dam­aged cars could be re­placed.

Flood­wa­ters in and around Hous­ton se­verely dam­aged or de­stroyed hun­dreds of thou­sands of cars and trucks, many of which will be re­placed. Those new and used ve­hi­cle sales will ben­e­fit au­tomak­ers and the econ­omy, pro­vid­ing a glint of sil­ver lin­ing amid ter­ri­ble tragedy.

The storm “is the worst in terms of ve­hi­cle dam­age in his­tory,” said Jonathan Smoke, chief econ­o­mist at Cox Au­to­mo­tive.

Between 300,000 and 500,000 pas­sen­ger ve­hi­cles were de­stroyed or dam­aged in the Hous­ton metropoli­tan area alone, Smoke said; trans­lated into dol­lars, that’s between $2.7 bil­lion and $4.9 bil­lion.

Fig­ures did not in­clude ve­hi­cles on Hous­ton-area dealer lots, which are now be­ing as­sessed.

Har­vey did more ve­hi­cle dam­age than Hur­ri­cane Ka­t­rina in 2005, Smoke said, be­cause Hous­ton’s pop­u­la­tion is much larger than that of New Or­leans, and worse than Su­per­storm Sandy in 2012 be­cause flood­ing from Har­vey is more wide­spread.

Af­ter a nat­u­ral dis­as­ter, au­to­mo­bile sales snap back fast. A month af­ter Sandy hit, New York City-area ve­hi­cle sales jumped 49%.

Re­place­ment sales will af­fect both new and used cars.

Between 60% and 70% will be used cars, Smoke es­ti­mated. Some cars will not be re­placed, but the num­ber will be rel­a­tively small, he said.

Au­tomak­ers re­leased na­tion­wide auto sales fig­ures for Au­gust on Fri­day. Hur­ri­cane Har­vey took a toll on new-ve­hi­cle sales as Texas res­i­dents coped with dis­as­ter, but that could re­verse it­self soon as peo­ple with flood-dam­aged cars buy new ones.

U.S. auto sales ini­tially were ex­pected to in­crease slightly in Au­gust com­pared with a year ago, but an­a­lysts say lower sales in the Hous­ton area could erase those gains. Har­vey likely cut U.S. sales of new cars and trucks by 1.3%, or 20,000 ve­hi­cles, in Au­gust, fore­cast­ing firm LMC Au­to­mo­tive said. The Hous­ton metro area is the ninth-largest ve­hi­cle mar­ket in the na­tion.

Mean­while, Au­gust was a healthy month for Gen­eral Mo­tors and Toy­ota.

Af­ter four straight monthly de­clines, Gen­eral Mo­tors sales shot up 7.5% com­pared with Au­gust last year. Fleet sales to cor­po­ra­tions, govern­ment agen­cies and rental car com­pa­nies helped, but GM also “re­ally knocked it out of the park with sport util­ity ve­hi­cles and crossovers,” said Michelle Krebs, an­a­lyst at Au­to­trader.

That bodes well for the com­pany’s near-term fu­ture, said Krebs, with four new GM mod­els in those cat­e­gories com­ing in the new model year this fall. “Those couldn’t be more per­fectly timed,” she said.

Toy­ota sales rose 6.8%, largely on the strength of its RAV4 cross­over, which is drub­bing com­peti­tors from Honda, Ford, GM and oth­ers.

“The RAV4 sold a daz­zling 43,000 units,” Krebs said, adding that she be­lieves Toy­ota in­tends to make the RAV4, not the Camry, the in­dus­try’s best­selling non­truck as con­sumers shift to crossovers and SUVs from sedans and other tra­di­tional car mod­els.

Volkswagen sales were up 5.5%. Honda’s were near f lat, down 0.5%.

But the month was bad for Ford, worse for Fi­atChrysler and grim for Nis­san. Ford said its sales fell 2.1%, Fiat-Chrysler 7.7% and Nis­san 13.1%.

U.S. pas­sen­ger ve­hi­cle sales over­all are ex­pected to fall a few hun­dred thou­sand in 2017 from last year’s record high of 17.5 mil­lion.

David J. Phillip As­so­ci­ated Press

HUR­RI­CANE HAR­VEY “is the worst in terms of ve­hi­cle dam­age in his­tory,” said Jonathan Smoke of Cox Au­to­mo­tive. Up to 500,000 ve­hi­cles were de­stroyed or dam­aged in the Hous­ton metropoli­tan area alone.

LM Otero As­so­ci­ated Press

RHONDA WOR­THING­TON talks with an emer­gency dis­patcher Mon­day as she tries to exit her car.

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