The full economic impact of Hurricane Harvey on the auto industry has yet to be determined, but in the short term it’s clear that many consumers are going to need financial assistance and a number of lenders have stepped up to provide donations and consumer relief.
Cox Automotive estimates between 300,000 and 500,000 vehicles could be totalled from the flooding, Chief Economist Jonathan Smoke said in a statement. To put that in perspective, the entire Houston DMA [designated market area] has seen 325,000 new-vehicle sales in the last 12 months.
Additionally, some 500 dealers have been impacted in Houston, which accounts for 2.3% of total U.S. new-vehicle sales, Smoke noted. The initial flooding could delay the sale of 20,000 to 40,000 new vehicle sales.
However, among that devastation the industry is also anticipating a medium-term uptick in sales. Houston has the second highest rate of vehicle ownership in the country at 91% after Dallas’ 95%.
“Sales of new and used vehicles typically fall during the month of a hurricane in the impacted area, but then spike in months following,” Smoke said. “NY DMA saw a 49% increase in new vehicle sales in November, the month following Sandy, which came ashore on Oct. 29, 2012.”
Back then, a short supply of used vehicles following the recession limited the gains on the used market, he said. But, today there is an excess of used vehicles on the market.
“In a disaster scenario when vehicles are scrapped, the market simultaneously has a spike in demand corresponding with a decline in supply and potential supply,” Smoke said. “We saw wholesale prices strengthen in the three months following Sandy. The vehicle damage in total in Houston is likely to be just as severe, if not worse.
For now, lenders are trying to focus on how they can help their struggling consumers as well as the population in general. The following is a list of donations and financial relief auto lenders are offering Houston residents.
- The company is handling consumer concerns on a case-by-case basis. Assistance includes suppressing late charge assessments, offering extensions, waiving upfront charges, and reimbursments for pay-by-phone fees.
- The company has donated $60,000 to the American Red Cross for hurricane relief efforts.
- Automatically waiving or refunding late fees for mortgage, credit card, business banking, and auto loans and leases through Sept. 10.
- The firm will donate $1 million to the American Red Cross and other nonprofit organizations. It also will match employee donations to these organizations.
- Daimler AG, the parent company of Mercedes-Benz Financial Services, will donate $1 million to the Red Cross.
- Ford is extending a special “Texas is Family” assistance bundle for customers whose vehicles were lost or destroyed. The package includes the same no-haggle, below-invoice price as Ford employees and their families receive, payments deferred until next year, low Ford Credit APR or lease rates, and a simple online application process.
- Existing customers affected by Hurricane Harvey can apply to have their payments deferred for up to two months by contacting Ford Credit or Lincoln Automotive Financial Services online.
- First responders in hurricane-affected areas are eligible to receive a special $1,000 discount (in addition to all available incentives) toward the purchase of any Ford or Lincoln vehicle.
- Ford Motor Co. has dedicated to raising $3.5 million in relief for the area.
Hyundai Capital America:
- Hyundai Motor Finance, Genesis Finance, and Kia Motors Finance borrowers are eligible for payment extensions, redirected billing statements, and phone or online payments free of charge.
- Hyundai’s nonprofit organization, Hyundai Hope On Wheels, is donating $200,000 to five Texas-area children’s hospitals.
Santander Consumer USA:
- The Dallas-based lender has suspended loan collection and automotive repossession activities, and is offering temporary loan assistance to customers in the form of loan modifications and suspended late fees.
- Santander is also donating $100,000 to local charitable organizations assisting with disaster relief, as well as increasing it’s typical employee donation matching efforts.
Toyota Financial Services:
- TFS and Lexus Financial Services borrowers can take advantage of financial relief efforts that include loan extensions, lease deferred payments, redirected billing statements, and the arrangement of phone or online payments. The lender will proactively reach out to impacted customers.
- Pre-owned Toyota and Lexus vehicles will be made available to help move people and property as part of the recovery efforts.
- The OEM will provide $3 million in relief to the area.
Wells Fargo Dealer Services:
- “We will work with affected customers, one-on-one, to understand their situation,” a spokeswoman told Auto Finance News. “Based on individual circumstances, we have programs to help customers who are facing payment challenges manage through hardships such as temporary interruptions in income. These include fee waivers and other repayment options.”