Floods may pull up auto sales

When she bought her Hyundai Veloster last July, Natasha Marshall was sure she’d be out of the market for a vehicle for at least a few years.

But last week, knee-high waters swirled into her Cypress apartment complex, flooding her car.

“I opened the door and ... it was soaking wet. Everything was soaking wet,” Marshall said.

An insurance adjuster arrived Saturday and declared her car totaled. Then on Tuesday she drove off the lot at Helfman Dodge Chrysler Jeep Ram Fiat with a brand new Fiat 500X.

Marshall’s story likely will be repeated thousands of times in coming weeks and months as flood victims replace their totaled vehicles, breathing new life into what so far has been a flattening auto sales market in the Houston region.

After back-to-back years of record high sales volumes, the area’s auto market in March logged its third consecutive monthly sales decline for 2016. But auto dealers are hoping recent floods could reverse the trend.

There were 27,054 vehicles sold in March across the nine-county area tracked by TexAuto Facts, a monthly report compiled by Sugar Land-based InfoNation. Local volume

is down about 10 percent from one year ago, while nationwide, sales rose 3.1 percent to 1.6 million vehicles.

For the first three months of 2016, Houstonarea total sales are down 5 percent. Truck sales — so far running 2 percent above 2015 levels — continue to outperform car sales, the report shows.

InfoNation predicted earlier this year that Houston-area auto sales would fall 4 percent from 2015’s record by year’s end.

“The decrease in 2016 sales following the past two record years is relatively modest, particularly in light of the changes in the local economy and job market,” InfoNation owner Steve McDowell wrote in his analysis of the March numbers, referring to the thousands of job losses in the energy industry.

McDowell added that low interest rates, competitive pricing and low fuel prices continue to drive sales.

Still, the local market’s retail sector, or vehicles sold through dealers and individual vehicles purchased by businesses, posted a heavier monthly decline of 13 percent.

The strongest retail declines occurred with car and truck sales in the region outside Harris County, according to the report. Dealers reported varied results.

“I think consumers down here are worried because of the oil and gas industry,” said Ryan Kirkpatrick, principal with Ryan Ford and Ryan Chrysler Dodge Jeep Ram dealerships in Sealy, about 50 miles west of Houston.

Kirkpatrick said his business is down about 15 percent for the year, with new vehicles showing softer sales than used vehicles.

Virgil Skinner, Houston Auto Dealers Association chairman and owner of Fort Bend Kia, said while it may be too soon to tell if energy is the culprit, there does appear to be some uncertainty pulling people away from large purchases.

Still, Skinner said, the Houston economy is more diverse than it was a few decades ago, and lower gasoline prices continue to pad household budgets enough for people to afford new cars. Robust sales in recent years mean newer vehicles traversing the region’s roads.

“We sold so many cars last year that the demand’s not there right now,” Skinner said.

There remains the possibility of a stimulus as customers replace vehicles that were totaled by the flood, or use minor damage as motivation to buy something new.

The floods’ impact won’t be measurable until potential buyers complete the insurance process, which can take weeks.

“I have no doubt in my mind that May is going to be a strong month for the auto business in Houston,” Skinner said.

Print, radio and television advertisements went out in the days after the flood from dealers offering incentives to exchange and replace flood-damaged vehicles.

In 2015, replacements of the thousands of vehicles wiped out during the Memorial Day floods partially are credited with boosting vehicle sales by 3.9 percent to the region’s best June on record.

Steven Wolf, general manager at Helfman, said dealers have been able to secure a good inventory of high in-demand models. Lending and incentives will remain conducive to sales, though probably not at 2015 levels.

“2015, I would say was a 16-0 season. I think 2016 is going to be 15-1,” Wolf said.