In the aftermath of one of the worst hurricane seasons in decades, car rental companies, auctions, and fleet consignors are still assessing the effects on fleet replacement and vehicle sales.
Jonathan Smoke, Cox Automotive’s chief strategist, estimates that 600,000 to 1 million vehicles were severely damaged or lost as a result of Hurricanes Irma and Harvey. Of that, Cox estimates 18,000 to 32,000 were fleet vehicles.
As many as 400,000 vehicles will need to be replaced in Florida as a result of Hurricane Irma, including as many as 11,000 fleet vehicles, according to Smoke.
Much of Hurricane Irma’s damage came in southwest Florida, including Fort Myers and Tampa, as well as the Florida Keys. Unlike Hurricane Harvey, which caused heavy flooding, Hurricane Irma damaged vehicles with high-speed winds and heavy rainfall.
Commercial fleets likely suffered the brunt of the storm’s impact, as larger rental operators mostly moved their vehicles into parking garages to protect them from the wind and rain. Hertz saw minimal damage to its rental fleet in Florida, said Karen Drake, a spokesperson for Hertz Holdings.
“The westward track helped to avoid more damage in Orlando, which is home to more than a third of the total fleet in Florida,” Smoke said.
Vehicles in Georgia, Alabama, and South Carolina saw only a “small amount of damage,” Smoke said.
In Texas, Hurricane Harvey likely damaged 320,000 to 580,000 vehicles, with fleet making up 12,000 to 21,500 units. Enterprise Holdings reported it had lost 3,000 rental vehicles, while Hertz reported a loss of 500 units in Texas.
Rental operators shipped thousands of units into Texas following the storm to meet demand for insurance replacement vehicles. Enterprise sent 17,000 vehicles to the state, the company announced.
“We were able to move most of the units to cover and they weren’t damaged or flooded out,” said Lisa Martini, an Enterprise spokesperson. “That made a big difference for us.”
The hurricane effects on the salvage vehicle markets were vastly different, depending on the hurricane and location.
Copart, an online auction company, expected to process about 7,500 additional salvage vehicles in Florida as a result of Hurricane Irma, a small number given that on average the company processes about 150,000 salvage vehicles a year in the state, noted Copart CEO Jay Adair.
Harvey was a different story. In Houston, Adair expected Copart to process about 85,000 vehicles. This rise in volume is poised to double the amount of vehicles that Copart typically sells in Houston — about 60,000 units a year.
Regarding vehicle sales in the hurricane-impacted areas in Florida and Southeast Texas (primarily Houston), Smoke said Cox is expecting 400,000 to 600,000 replacement units — or incremental demand — in September, October, and November.
“Of this total, 30% to 40% should be new,” Smoke said. “This translates into as many as 210,000 units in incremental new sales and just shy of 400,000 used, if the high end of our estimate comes in.”
Cox is expecting replacement activity to remain strong through October and November, but neither of the months will likely see the same pace seen in September, Smoke said.
Through the first half of October, the Manheim Index is on track for another above-trend increase and new index record. Used vehicle prices are reflecting a surge in demand and a tightening of supply, which continued in October but had started to slow down.
Black Book sees the same trend. According to Black Book’s Oct. 9 Market Insights report, overall segment depreciation remains at steady levels, although bidding activity had begun to slow down after weeks of increased lane activity spurred by the hurricanes.
“Although consumer confidence fell slightly in September, vehicle values held very strong because of all the vehicle replacement activity caused by the hurricanes,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book.
See all comments