Au­toNa­tion to scrap cars ru­ined by flood­wa­ters

Sun Sentinel Palm Beach Edition - - FRONT PAGE - By Mar­cia Her­oux Pounds Staff writer

FORT LAUD­ERDALE — Fort Laud­erdale-based Au­toNa­tion, the coun­try’s largest car re­tailer, plans to scrap ve­hi­cles dam­aged by flood­wa­ters gen­er­ated by Hur­ri­cane Har­vey in Texas, CEO Mike Jack­son said Tues­day.

The move will hurt sales for Au­gust, but Jack­son said that by early next year he ex­pects a “snap back” in auto sales in the state.

“Thou­sands of thou­sands of ve­hi­cles have been de­stroyed. Any­time you get a flood level in a ve­hi­cle

above a foot or two, you re­ally should scrap the ve­hi­cle. The dam­age that’s done to the elec­tri­cal sys­tems in these high-tech cars — just for­get about it. They’re all go­ing to have to be re­placed,” Jack­son said on CNBC-TV’s “Squawk Box” Tues­day morn­ing.

Florida and Texas make up 45 per­cent of Au­toNa­tion’s busi­ness. Dur­ing the sec­ond quar­ter, which ended in June, sales in both states were down 5 per­cent.

He said ve­hi­cles from other deal­er­ships across the coun­try would be brought into Houston to re­place those the com­pany in­tends to de­stroy.

Jack­son said there’s little ques­tion that in­sur­ance poli­cies will cover the dam­ages caused by Har­vey. Houston has got­ten more than 40 inches of rain — “more rain in a few days than it gets in a year,” he said.

“In­sur­ance com­pa­nies have de­clared it a flood sit­u­a­tion and they are go­ing to pay,” Jack­son said.

Au­toNa­tion has 17 deal­er­ships in Houston. While its Cor­pus Christi deal­er­ships re­opened Mon­day, many in Houston re­main closed, he said.

Spokesman Marc Can­non said Au­toNa­tion has “teams on the ground. They hope to start the as­sess­ment later today. Travel on the roads with the wa­ter is slow­ing down all the as­sess­ments.”

Jack­son said he couldn’t say when the deal­er­ships would re­open. “Even though we have some stores we could, em­ploy­ees sim­ply can’t get back and forth in a safe man­ner,” he said.

Au­toNa­tion em­ploy­ees at those deal­er­ships are be­ing paid dur­ing the dis­rup­tion, Jack­son said.

Houston’s ve­hi­cle sales al­ready are down 25 per­cent year-to-date over 2016, he said. But Jack­son said he ex­pects the Texas econ­omy and auto sales to re­cover in ei­ther the fourth quar­ter or the first quar­ter of next year.

“That’s the Amer­i­can way. We re­build . ... We take the punch and go on from there,” he said.

In trad­ing Tues­day on the New York Stock Ex­change, Au­toNa­tion stock closed down a frac­tion to $41.765.


“The dam­age that’s done to the elec­tri­cal sys­tems in these high-tech cars — just for­get about it,” Au­toNa­tion CEO Mike Jack­son said of ve­hi­cles swamped by the flood­wa­ters.

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