Roughly half a million vehicles are possibly damaged beyond repair by Hurricane Harvey, according to Cox Automotive. Hurricane Harvey flood waters have caused massive devastation to Houston, America’s fourth largest city and the surrounding area since it made landfall last week.
Harvey is the cause of what experts say will likely amount to over $100 billion of damage. Now, car retailers, especially used car dealers, are set to benefit. The used car industry will experience some gains as the storm has left hundreds of thousands of cars submerged under water.
“It’s supply and demand,” chairman of the Houston Automobile Dealers Association, Steven Wolf said on CNBC‘s “Power Lunch” on Wednesday. “And obviously there’s going to be a tremendous demand for vehicles. I think that you’re going to see some price pressure on used cars.”
Wolf also offered a vote of confidence in auto insurance companies. “The insurance companies are going to step up and do the right thing and get these claims handled quickly.” He noted that companies will “send more people down there to help with the claims.”
All of this signals a potential windfall for car dealerships in the area, but also for online car sellers and rental car companies.
And just one day after President Donald Trump visited Texas, the tropical storm hit land once again on Wednesday. This time it hit southwestern Louisiana, as well the Houston area again.
But the economies of Houston and southwestern Louisiana won’t be halted forever, and one of the first consumer facing industries that could experience a big boost is the used car market.
Shares of used car giant CarMax jumped 3.82% on Wednesday, while online car dealer Auto Trader AUTO climbed 2.49%. The relatively new, online-only used car dealer Carvana Co. saw its stock price skyrocket 11.37%. AutoNation, a massive automotive retailer that sells both new and used vehicles mostly in the Sunbelt, shares gained 4.09%.
Rental car industry powers Hertz and Avis Budget Group CAR shares popped by 6.55% and 4.78%, respectively.
With reports from Y! News
