By Erin Spandorf
Freehold Buick GMC of New Jersey was one of the few East Coast dealerships to escape catastrophic damage wreaked by Hurricane Sandy this past week. Chris Bell, F&I manager at the Freehold, N.J., dealership, said the store was fortunate it didn’t see damages like the rest of the Jersey shore, and he was sympathetic for dealers like Circle Dodge of Brick, N.J., which he says lost more than 80 cars in the flood.
“When you see this stuff on TV in other parts of the country, it doesn't even compare to actually living through it,” Bell said.
Since his dealership is more inland than many stores affected, about 30 miles from the coast, it was able to dodge the center of the rare, hybrid storm, but it wasn’t completely unaffected.
As Bell drove up to the dealership on Wednesday, he saw that the dealer’s front sign was blown off, which he says General Motors will fix, telephone poles stood at crooked angles and there was still no power in the area. “I think the biggest thing is going to be power,” said Bell, who doesn’t expect electricity to be turned on for at least the next seven to 10 days.
According to the Associated Press, total damage from Hurricane Sandy could reach $50 billion, and the National Automobile Dealers Association (NADA) is stepping in to help with the disaster. Dealership employees who have been affected by the hurricane are eligible for financial help from the emergency relief fund of the NADA, according to a recent press release from the association.
“It’s too early to know the extent of the damage to auto dealerships from the storm. Widespread power outages have disrupted communications, including phone service, in many of the hardest hit areas,” said David Hyatt, vice president of public affairs for the NADA, in the release. “It will likely take days or even weeks before we start to get a clear picture of what's needed for storm relief.”
Ricky Beggs, vice president and managing editor at Black Book, said he spoke to some of the companies his firm deals with in the affected region. “They say it’s pretty devastating up there,” he said.
He anticipates the damage to vehicles on dealer lots and to those owned by consumers will drive “a tremendous demand for replacement vehicles.” He noted that there is a higher penetration of lease sales in the Northeast than any other place, which means most of the vehicles that will need to be replaced were probably still within their lease term.
While there may be more new-car sales than used, Paul Taylor, chief economist for the NADA, said he expects prices for used cars to increase due to great demand and a fixed supply. He says that this does not necessarily apply in the case of new cars since there is already an ample supply.
But Black Book’s Beggs does expect delays in getting new vehicles on dealer lots due to damage to transportations routes caused by the super storm.
As for gas prices, Beggs said disasters generally cause gas prices to increase automatically by about 10 cents. But on Wednesday in Atlanta, Ga., Beggs only saw the price of gas decrease. He assumed it would be different for the affected areas, where several East Coast refineries had to be shut down, a prediction that was affirmed by Taylor.
According to Taylor, gas prices did rise on Wednesday due to concern over gas supplies, but the price increase was in the single digits and is predicted to be short term. “We know that the storm stopped activity at many of the East coast refineries,” Taylor noted. “So the question is: how fast can these refineries come back online?”