Hurricane Harvey Likely To Destroy More Cars Than Katrina: “This Is Bad; Real Bad”
by Tyler Durden
ZeroHedge.com
Aug 29, 2017
Hurricane Harvey’s historic flooding in Texas is set to wreak havoc on the auto industry and its insurers with analysts now predicting the storm could damage more vehicles than Hurricane Katrina. In August 2005, Katrina wiped out some 500,000-600,000 vehicles but William Armstrong of CL King warns that Houston has about 5x more people than New Orleans did at the time.
Hurricane Harvey could damage more vehicles than Hurricane Katrina, driving business to the salvage auctions operated by Copart and KAR Auction Services, CL King analyst William Armstrong wrote in a note.
Katrina damaged 500,000-600,000 vehicles in August 2005, and the greater Houston MSA is five times as populous as pre-Katrina New Orleans.
The cost of dealing with catastrophes can be higher than normal given vehicle extraction, towing and temporary storage and auction locations, though both companies have grown their physical presence in Texas over the last year, which should lower the need for temporary locations.
It may be 2-3 months or longer until damaged vehicles are sold at auction.
Of course, storms of this magnitude bring not only millions in salvage-related charge offs for the auto industry but a loss of critical “selling days” for one of the biggest markets in the country. As CNBC points out this morning, Citi analyst Itay Michaeli figures Hurricane Harvey could knock about 500,000 units off the August auto SAAR to be reported later this week.
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