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Big storm was just a fender-bender for U.S. auto sales

Despite Sandy, 1.1 million vehicles were sold in October, a 6.9% increase. And the destruction of thousands of cars could lead to a sales boost in coming months.

November 02, 2012|By Jerry Hirsch, Los Angeles Times
  • A Hyundai Elantra is seen inside of a Hyundai car dealership in Ill. in this October 2012 file photo. Major automakers are reporting Thursday, Nov. 1, 2012, that sales increased for October despite losing three days of business to the punishing rain and wind from superstorm Sandy.
A Hyundai Elantra is seen inside of a Hyundai car dealership in Ill. in this… (Nam Y. Huh / AP )

This week's East Coast storm destroyed tens of thousands of vehicles — an unfortunate fate for car owners but one that may give automakers a sales boost in the coming months.

For those who returned to their storm-damaged neighborhoods to find their cars flooded out or buried, General Motors Co. and the Nissan and Infiniti brands are offering special incentives and discounts on new vehicles.

GM, for example, is offering $500 toward a purchase or lease, on top of existing incentives, to people living in a federally designated disaster area. They must have proof of an insurance claim. The automaker said it considered the discount a way to help victims offset their insurance deductibles.

Nissan and Infiniti are extending employee discount pricing and financing to disaster victims. More automakers are expected to follow with similar offers for storm victims.

The special incentives could help automakers offset the dip in sales in the last week of October because of Sandy.

Although auto sales were generally strong in October, some manufacturers were hit harder by the storm because they have a bigger share of the market in the Northeast.

Nissan North America probably took the biggest hit in sales, analysts said. Its October U.S. sales fell 3.2% to 79,685 vehicles compared with a year earlier.

The storm caused "major disruption throughout the Northeast, which is our strongest-performing region with more than 225 area dealers," said Al Castignetti, Nissan's vice president.

Honda sales rose 9% in October to 106,973 units. But the gain wasn't as big as expected, in part because of the disruption in the Northeast region, said Jessica Caldwell, an analyst with auto information company Edmunds.com.

On average, the last three days of October account for about 17% of the monthly sales, and because only a portion of the country was affected by the storm, the hit to sales was probably about 30,000 vehicles, Caldwell said. There's no estimate yet for the number of cars destroyed, both at dealerships, storage lots and at individual homes.

Toyota Motor Corp. said it's evaluating the status of about 4,500 new vehicles parked at storage yards along the Eastern Seaboard when the storm struck. They include 4,000 Toyota and Lexus vehicles at a flooded storage yard in Newark, N.J.

Tiny Fisker Automotive Inc. confirmed that 16 of its Karma vehicles awaiting delivery at the Newark port caught fire and burned shortly after this week's storm. These luxury plug-in hybrid vehicle models cost at least $95,000 each and count Justin Bieber and Leonardo DiCaprio among its celebrity owners.

But overall, October was a good month for the industry.

U.S. auto sales totaled slightly less than 1.1 million, up 6.9% from October 2011, according to Autodata Corp. Sales are on pace to hit about 14.5 million this year, the best in five years.

Chrysler Group sold 126,185 vehicles, a 10.2% increase from a year earlier. It was Chrysler's best sales total since 2007. GM also reported its highest October sales since 2007, with deliveries up 4.7% to 195,764 vehicles. Toyota sales rose 15.8% to 155,242 vehicles. Ford saw sales rise less than 1% to 167,947.

Ken Czubay, Ford's sales chief, said any sales lost to the storm will be quickly recaptured.

"Typically, after the insurance companies come in, people use that money to buy new vehicles," he said. This could lead to stronger sales this month and next.

But in the long term, Sandy could create new risk for used-car buyers, even in California.

Previously, the National Insurance Crime Bureau estimated that Hurricane Floyd in 1999 resulted in 75,000 flooded vehicles, with more than half of those going back on the road for resale. In 2005, hurricanes Katrina, Rita and Wilma resulted in 600,000 flooded cars, and some of those are still showing up today, said Pete Moraga, spokesman for the Insurance Information Network of California.

"When Katrina hit I swore I wouldn't buy any cars from the Louisiana area for several years after. Now I feel the same way about the Northeast coast," said Karl Brauer, editor of Total Car Score.com. "If you're buying a car from the Northeast in the coming years, you really want to check its history closely and get a detailed pre-purchase inspection that checks specifically for water damage."

jerry.hirsch@latimes.com

Times staff writer David Undercoffler contributed to this report.

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