Dealer Inventory High and Dry After Hurricane Matthew

Ever wonder what impact natural disasters have on car sales?  It’s a fairly specific thought, but it’s one that we can answer.  Below, we have a guest article from David Greene — Manager of Data Insights at Cars.com.  Here, David has analyzed Cars.com data from areas affected by Hurricane Matthew to better understand what impact natural disasters can have on the auto industry, dealerships, and consumer purchasing.  It’s food for thought when anticipating another hurricane for those in regions prone to these natural disasters and can help with future planning for their aftermath.

Impact of Hurricane Matthew on Dealer Inventory

Inventory challenges and a sales lull continue challenging dealers in designated market areas (DMAs) along the southeastern coast two months after Hurricane Matthew ravaged a thousand miles of coastline from the southern tip of Florida to Virginia on October 5th -9th, 2016.

 

 

An analysis of dealer inventory on Cars.com from this timeframe shows the flood of inventory dealers are faced with after Matthew for the five hardest-hit states: Florida, Georgia, South Carolina, North Carolina, and Virginia.

As new cars have steadily piled up in the wake of a severe drop in consumer demand, dealers are flooded with new inventory two months after the storm. Dealers in affected areas collectively had 8 percent more new vehicles on Dec. 1 than Oct. 1., but many would-be shoppers opted or needed to delay a purchase.

Sourcing quality used inventory has left dealers dry after the storm. Used inventory declined 4 percent from the first of Oct. to Dec. in coastal DMAs, as storm damage and falling sales brought in fewer trades of clean used vehicles.

Black Friday Reins In Supply

Black Friday is notoriously effective for enticing shoppers and releasing pent-up demand. And car buyers did come out for the annual shopping event, which helped to finally break the rise in new inventory. OEMs further helped shoppers get into new vehicles with record-high OEM incentives of $3,741 per vehicle sold in November, nationally, according to Motor Intelligence/Autodata Corp.

Sales Dampened After the Storm

Sales of new and used vehicles fell 9.8 percent in coastal DMAs for the first 20 days of October vs September, or about twice the 4.8 percent sales slowdown for inland areas of those same five states. New vehicle sales decreased much more than used sales, both due to seasonal fluctuations in demand, as well as higher pricing of new cars.

New vehicle inventory has leveled off since Black Friday, while used inventory has increased modestly. Industry watchers and pundits are anticipating strong December sales nationally, bolstered by continued OEM incentives, and a good sales month can’t come soon enough for dealers along the coast that need to clear out inventory before the seasonal slowdown of January and February.

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