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Hurricane Sandy's Impact on Auto Industry, Car Rentals


Not many people feel like strolling through car lots during a hurricane, so it's not surprising that October sales of automobiles were down in areas hit by Hurricane Sandy.

The auto industry has said that "traffic at East Coast dealerships slowed as residents began to brace for the storm, which hit at the end of the month." The timing of the storm contributed to the decreased sales, since "[s]ales tend to build up late in the month." Toyota estimated the industry lost 30,000 sales, while the Ford Motor Corporation's estimates were slightly lower, at 20,000 to 25,000.  (The New York Times).

"Tens of thousands of cars" were destroyed by Hurricane Sandy. What that means to the auto industry has yet to be seen. Rebecca Lindland, Director of Research at IHS Automotive told Forbes that "there are two outcomes that we can see impacting sales:

  1. People who were NOT in the market and have to replace their damaged vehicle will probably replace their car before the end of the year….
  2. People who WERE in the market but may not be anymore because while their car is fine, their house is not… . They may delay buying a car while they deal with the aftermath."

How that will play out remains to be seen.

On the other hand, car rental agencies have seen an increase in business thanks to the storm. Think of the terrible photos of cars floating in water and crushed by trees;  their owners need to drive. As a result, rental agencies up and down the east coast are short on vehicles. Matt Darrah, of Enterprise Holdings, has said that "there are still significant waiting lists in some communities where residents are requesting replacements for their damaged vehicles." The need is amplified since rental agencies in affected areas also had cars damaged in the storm. (philly.com).

ABC reported yesterday that fewer cars mean higher prices, both for rental cars and sales of used cars. It's a textbook case of supply and demand. That said, the auto industry is not without sympathy for the people who lost their cars to Sandy. Many dealers are offering special incentives for hurricane victims. These include, but are not limited to:

  • Chrysler: $500 cash-allowance coupon to be applied toward the retail purchase or lease of most 2012- or 2013 models through January 2, 2013;
  • Ford: $500 bonus-cash savings toward the purchase or lease of a 2012 or 2013 Ford or Lincoln vehicle until January;
  • General Motors: $500 discount on vehicles purchased or leased through the end of the year;
  • Mazda: $500 toward the purchase of a new Mazda;
  • Nissan: Employee pricing and discounted financing on Nissan and Infiniti vehicles through January 2;
  • Volvo: Employee pricing on a new vehicle, plus an additional $1,000 to help offset costs through January 2.

Restrictions apply to all of the above offers. Anyone interested in purchasing a vehicle should check with individual auto dealerships.

The U.S. Census Bureau has announced that, according to its "advanced estimates for U.S. retail and food services sales for October…" there was "a decrease of 0.3 percent (+/- 0.5%) from the previous month." Reduced auto sales were responsible for some, but not all, of that decrease. This was a greater drop than anticipated by economists. However, there is some expectation that November will see "a gain sales."  (The New York Times).

On a more positive note, retail and food services sales were up 3.8% over October 2011. People who have no cars to drive still need to buy food.

photo credit: That Hartford Guy via photopin cc


Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.