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Harvey Crimps Hopes for US Auto Gains as Nissan Leads Declines

Sept. 1, 2017
Nissan deliveries plunged 13%, while fell for Fiat Chrysler, Honda but sales for General Motors and Toyota Motor Corp. gained.

The largest carmakers in the U.S. posted mixed sales results after Hurricane Harvey slammed one of the country’s largest auto markets, with Nissan Motor Co. leading declines in what might otherwise have been the first month of growth for the industry this year.

Nissan deliveries plunged 13%, missing analysts’ average estimate for a drop of just 0.6%. Sales also fell for Fiat Chrysler Automobiles NV, Honda Motor Co. and Ford Motor Co., while General Motors Co. and Toyota Motor Corp. gained.

The varied performance for six of the largest U.S. automakers comes as Houston, a top-10 market for new-vehicle purchases, lost nearly a week of selling days due to heavy rain and flooding from Harvey. Kelley Blue Book and LMC Automotive trimmed sales projections they had released before the hurricane hit. Ahead of the storm, some analysts had been expecting U.S. sales to record their first monthly gain this year.

“Harvey is an unprecedented storm and it’s going to take time to fully comprehend exactly how much it will impact the automakers,” Jessica Caldwell, an analyst at car-shopping website Edmunds, said in an email. “Texas is the second-largest auto market in the U.S. so an event of this magnitude is going to make a dent in sales.”

Analysts surveyed by Bloomberg News on average predicted the industry’s annualized selling rate, adjusted for seasonal trends, may have dropped to 16.4 million vehicles in August, from 17.2 million a year earlier. GM also estimated an industry sales pace of 16.4 million.

Nissan struggled as deliveries of the Rogue crossover dropped 9.5 percent. Compact sport utility vehicles like the Rogue and Toyota’s RAV4 are poised this year to pass family cars like the Camry sedan for the first time as the top-selling models after Detroit’s big pickups.

Soft Close

“Though demand softened in the last part of the month, August was still a good month for the industry,” Jack Hollis, group vice president of U.S. sales for the Toyota brand, said in a statement. The RAV4 leapfrogged Nissan’s Rogue in year-to-date deliveries with a 30% jump in August. Toyota outsold Ford in the market for the second straight month.

Deliveries of GM’s Chevrolet Equinox, redesigned for the first time in seven years, surged 85% and nipped at Rogue’s heels. The largest U.S. automaker also reported big gains for the larger Chevy Traverse and GMC Acadia SUV models.

“GM outperformed our expectations,” Michelle Krebs, a senior analyst with car-shopping website Autotrader, said by phone. “With the new SUVs, they are introducing products that are right at the heart of what consumers want.”

Replacement Demand

While the storm may have muted sales in August, car buying is expected to pick up as drivers buy replacement vehicles and reconstruction work spurs demand for full-size pickups. The Houston metro area ranks eighth nationwide in registered vehicles, with 5.6 million in operation, and accounts for about 2.3% of U.S. new-vehicle sales, according to Jonathan Smoke, chief economist at Kelley Blue Book’s parent company Cox Automotive.

Houston may have lost between 300,000 and 500,000 cars and trucks, potentially more than the 325,000 new vehicles sold in the region during the last 12 months, Smoke said. That compares with the 250,000 autos lost following New York’s Hurricane Sandy in 2012, he said.

Among the biggest automakers, only Honda, Toyota and GM were expected to report increases in August sales. Volkswagen AG, the world’s biggest automaker, may report a rise in combined sales for its VW and Audi brands following the recent addition of the Atlas SUV made in Chattanooga, Tennessee.

As many as 130,000 new vehicles that were on dealer lots in the Houston area may be scrapped as a result of flooding damage, Matthew Stover, an auto analyst for Susquehanna Financial Group, said in a report Wednesday. The losses may actually turn out to be a silver lining, alleviating concerns about bloated car and truck supply that surged earlier this year to the highest level since 2004.

“Harvey may have solved the industry’s inventory problem,” said Joe Spak, an auto analyst for RBC Capital Markets.

By David Welch

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