After storm, 250K autos headed to scrap heap

Reuters

Superstorm Sandy may consign as many as a quarter of a million new and used cars and trucks to the scrap heap, a loss that could eventually lead to a spike in new auto sales, automakers and dealers said.

So far, automakers have reported that some 16,000 brand new vehicles will have to be scrapped due to the killer storm that flooded coastal areas in New Jersey and New York. Many of them were stored at the port of Newark when Sandy hit.

That figure may grow once the two biggest automakers by U.S. sales, General Motors Co and Ford Motor Co, announce how many vehicles they lost due to Sandy. By Wednesday, nine days after Sandy made landfall in New Jersey, neither GM nor Ford gave estimates of vehicles that are a total loss.

Sandy, one of the largest storms to strike the United States, left more than 8 million homes and businesses in the Northeast without electricity. All but a handful of New Jersey and New York auto dealerships were back in operation by Wednesday, some operating on generator power.

At least 121 people were killed in the storm's rampage through the Northeast, including 80 in New York and New Jersey.

Some consumers with damaged vehicles may need to replace them with a new car, which automakers have said will boost sales eventually, said Mark Schienberg, president of the Greater New York Automobile Dealers Association.

But, Schienberg added, because of the distress caused by Sandy's wrath, "Right now, I don't think car sales are on the top of everybody's mind."

Last Thursday, Toyota Motor Corp, No. 3 in U.S. auto sales, said that 30,000 of October industry sales were lost due to less customer traffic or delayed purchases by consumers.

Each of the major automakers said they expected those sales to be recovered later in November or in December.

Six of the leading eight automakers in terms of U.S. sales said on Wednesday that at least 16,000 new vehicles were damaged, and the lion's share of those will have to be scrapped.

Counting cars in consumer hands increases the total loss estimated to at least 266,000 vehicles.

"We believe that between 100,000 and 250,000 vehicles currently in operation could be removed from used vehicle supply once all is said and done," said Laurence E. Dixon III, senior analyst with the National Automobile Dealers Association.

That compares with the 325,000 cars flooded during Hurricane Katrina, according to the National Insurance Crime Bureau.

Deals abound
All major automakers are offering some form of financial relief, allowing owners to defer payments for up to three months for customers in areas hardest hit until the end of the year.


Nissan Motor Co will offer employee pricing and discounted financing for Nissan and Infiniti vehicles in areas hit by Sandy through January 2. Nissan has 225 dealerships in the affected areas.

GM, Ford and Chrysler are each offering $500 cash toward the purchase or lease of a new vehicle for those who lost one from the same automaker because of the storm.

Hyundai, which lost 400 new vehicles to the storm, will cut the cost of a new replacement vehicle by $750. Toyota also announced on Wednesday that it would delay monthly payments for three months to people in affected areas who need to buy or lease a new vehicle because they lost a Toyota or Lexus in the storm.

Honda Motor Co sent out 500,000 emails to its customers in the storm-hit region, and will handle deferred payments and lease extensions on a case-by-case basis, said Chris Martin, company spokesman.

New vehicles too
Nissan will have to scrap 6,000 new cars and trucks, the most of any automaker, according to Travis Parman, Nissan spokesman.


Toyota is next with at least 4,825 vehicles damaged, most of which will have to be scrapped, said Jana Hartline, Toyota spokeswoman in California.

Several carmakers lost vehicles stored at the port of Newark in New Jersey, including Toyota, which had about 4,000 new vehicles stored there.

Green car startup Fisker Automotive said it lost more than $33 million worth of luxury Karma plug-in hybrids, 330 sedans priced at more than $100,000, at Newark.

Auto dealers and the automakers in less densely populated areas of the country are able to store cars and trucks on their own lots. But in the New York-New Jersey area, space is at a premium, so a high number of vehicles are stored at the port rather than being shipped to dealerships, Schienberg said.

GM lost an undisclosed number of new Chevrolet Spark subcompact sedans that were at the port that had been shipped from South Korea, the company said.

The losses could have been higher, said Jim Cain, a spokesman for GM, who said many dealers moved cars and trucks away from coastal areas ahead of the Sandy's arrival.

Jim Appleton, president of the New Jersey Coalition of Automotive Retailers, said auto dealers moved to higher ground when they could, having learned their lessons from Hurricane Irene which struck the state in 2011.