US car sales get boost from hurricane recovery

3 min

Chicago (AFP)

The US auto industry was boosted in September from shoppers replacing vehicles destroyed in major hurricanes, and was poised Tuesday to show the first reversal of this year's sales declines.

The recovery in Texas and Florida from hurricanes Harvey and Irma, which destroyed hundreds of thousands of vehicles, was expected to help the industry in September, October, and even in November.

The growth would reverse steady declines every month this year following record-setting sales in 2016 capping a seven-year growth streak.

Virtually all car makers in the North American market reported a significant sales boost, including the biggest among them, Toyota, GM and Ford. FCA US, the American arm of Fiat Chrysler, struggled, but showed slight improvement in its retail sales.

The industry could notch a one-percent boost in September with 1.44 million vehicles sold, according to a forecast by auto research firm Kelly Blue Book.

"Demand across the spectrum was up," said analyst Alec Gutierrez of Kelley Blue Book, emphasizing that smaller cars and sedans, as well as popular trucks and SUVs, sold well.

"We know that there was an increase in retail volume driven by the hurricanes," he said.

- Strong retail sales -

GM, the biggest US car maker, reported an 11.9-percent sales boost compared to September 2016 -- with a 17-percent jump in Chevrolet models driven by its newest crossovers.

Toyota had sales growth of 14.9 percent -- with a skyrocketing 43.2 percent jump in SUV demand.

Ford sold 21.4 percent more of its popular F-Series pickup trucks, compared to the year-ago period, helping lift the company's overall sales 8.7 percent.

The F-Series trucks are particularly popular in the Houston area, where Hurricane Harvey led to record-breaking flooding and more ruined cars than caused by Hurricane Irma in Florida, analysts said.

"Houston was the market that was most affected. We think it could be as high as 580,000 vehicles. And that is a truck market," Michelle Krebs of Autotrader said.

FCA US's retail sales to individual buyers were up only 0.3 percent, with overall sales declining 10 percent due to what the company said was a planned drawdown of fleet deliveries to businesses and government agencies.

Nissan reported 9.5 percent sales growth, bucking some analysts' expectations of a decline, with its popular Rogue SUV by far the strongest model in its lineup.

- 'Short-lived party' -

While the car industry was reporting the first good news so far this year, analysts cautioned that the reversal would not last.

"We can't stress enough the impact of the hurricane," Krebs said. "This will be a short-lived party."

Another complicating factor were shoppers replacing hurricane-damaged cars with used vehicles instead of new ones. The used car market has a lot of inventory, thanks to recently leased cars returning to dealerships.

"There are some growing headwinds from an increasing supply of gently used vehicles," said economist Charlie Chestbrough of Cox Automotive, the parent company of Kelley Blue Book and Autotrader.

"The availability of these lightly used vehicles is likely holding down new car sales growth."

Still, the short-term growth in September was virtually across the board.

Asian brands Honda, Kia and Mazda reported gains, with Honda's Civic sedan bucking the SUV trend to power a 6.8 percent sales boost. Kia's Forte sedan was also a strong seller.

European car makers had mixed results. VW brand vehicles gained 33.2 percent, while Mercedes-Benz slipped 2.2 percent and BMW was down 0.4 percent, including sales of its MINI brand. FCA US's Fiat brand sales dropped by 24 percent.

Electric car maker Tesla, which does not break down monthly figures, reported Monday a 4.5 percent increase in third quarter deliveries compared to the year-ago period, despite a production "bottleneck" affecting its highly-anticipated mid-priced Model 3 sedan.