As Houston
residents contend with flooded homes and lost belongings in the upheaval left
in the wake of Hurricane Harvey, many face another urgent priority: getting a
new car.
Having a
vehicle is a necessity in the sprawling Texas metropolis with few public
transportation options.
But as many
as a half million cars were washed away or irreparably deluged after the storm
dumped a year's worth of water on the city in a matter of days.
Local auto
dealerships that survived the storm are reporting brisk business as Harvey's
victims seek an essential tool for traversing a city that was built for the
automobile and features two massive highway loops that surround the downtown.
"There
is a high demand going on now," said Ezequiel Zepeda, a salesman at
Houston Direct Auto, a used car company.
Zepeda
these days is juggling a torrent of incoming calls and a perpetually full voice
mail from residents as well as from workers with non-governmental groups and
rescue organizations such as the Red Cross.
"I had
a couple come in earlier and both of them bought a vehicle, which doesn't
happen often," he told AFP. "I have customers even before I get to
work."
Prices of
cars have held steady for those already in Zepeda's lot prior to Harvey because
many became wet, but did not suffer damage. But Zepeda has boosted prices on
many vehicles acquired after the storm due to spiking demand.
More car
casualties than Katrina
Major
hurricanes like Harvey usually result in numerous car losses, but the toll is
expected to be even bigger than other catastrophic storms in recent years.
Appraisal
firm Black Book estimates about 500,000 cars will need to be replaced due to
Harvey, double the more than the 250,000 hit by Hurricane Sandy in the New York
region in 2012, and the 200,000 pummeled by Hurricane Katrina in the Gulf coast
in 2005, according to Cox Automotive.
That could
give Detroit a boost at a time when the American car industry is feeling the
effects of a cooling North American auto boom. But analysts do not expect to
see the impact immediately in car industry financials.
"When
it does occur, (it) is likely to be greater than was the case with Sandy,
because more vehicles are estimated to have been damaged this time
around," said Ryan Brinkman, an auto industry analyst at JPMorgan Chase.
Around
150,000 people already have notified insurers of losses, but far more filings
are expected, according to the Insurance Council of Texas.
"It
might take weeks for victims to be compensated because of the inability to
reach or even locate some vehicles," said Mark Hanna, a spokesman for the
Insurance Council of Texas, who estimates the total economic impact at $2
billion.
Typical
insurance policies allow holders to purchase a small car if their vehicle is
damaged in a storm, or receive reimbursement for a rental, Hanna said.
Rental car
giant Avis has waived late and extension fees in the hurricane-ravaged area.
"We
are moving vehicles into the affected areas as quickly as possible to increase
inventory to meet our customers' needs," said Katie McCall, a spokeswoman
at Avis Budget Group.
Ford is
offering $1,000 rebates for the purchase of new cars.
Some will
go without
Unsurprisingly,
car purchases are easiest for those buyers who don't need to line up financing,
or await an insurance payout.
"If
there's a cash deal, I show them the vehicle, they sign the contract and 45
minutes later they walk out the door with the vehicle," said Zepeda.
But some
Houstonians will no doubt go carless as they await insurance payouts while
putting any available cash into vital home repairs.
"There
will be thousands that will be unable to replace their cars immediately,"
said Andrea French, executive director of TAG Houston, a non-governmental
organization that advocates for more public transit solutions.
That could
boost the odds that more consumers opt to go into the "black market"
of used cars that are not insured, which already accounts for about 15 percent
of the Texas market, she said.
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