With hundreds of auto dealerships closed and vehicle imports slowing down, or in some cases stopping completely, Hurricane Harvey is slamming the brakes on the auto industry in southeastern Texas.
By extension, the entire industry will feel the impact of the storm that continues to inundate the Houston area.
"This is bad; real bad," said Marc Cannon, an AutoNation executive vice president. "Right now, we are focused on making sure all of our employees are safe and taken care of. At the same time, we're focusing on getting all of our stores up and running."
That may take some time.
AutoNation's 18 dealerships in the Houston area are shut down. Widespread flooding has not only swamped thousands of buildings in the Houston area, it's likely damaged hundreds, perhaps thousands of new cars and trucks parked on dealership lots.
"We're holding calls with our staff every three hours," Cannon said. "We have reopened our stores in Corpus Christi and Austin, but some of the Houston stores may take some time."
With more than 500 dealerships, the Houston metropolitan area is a major driver of auto sales in the state of Texas and the entire Gulf Coast.
Given the widespread flooding that will swamp dealerships and kill potential sales, analysts are bringing down estimates for the August new vehicle sales in the U.S.
Citi analyst Itay Michaeli has cut his estimate for the rate of monthly auto sales in August, which are reported on Friday. He estimates Harvey will affect some 125 counties in Texas and about 60 percent of the state's auto sales.
Before Harvey, Michaeli estimated the August sales pace for the country was going to be in the mid-$16 million range. As the storm lingers over the area, Michaeli has dropped his estimate.
"Our analysis suggests that Hurricane Harvey could push this down to the low-$16 million unit range," Michaeli wrote in a note to clients.
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