The auto business is “at a standstill” in the flooded Houston area due to Hurricane Harvey, said Mike Jackson, CEO of the nation’s largest dealer chain.
“Thousands upon thousands of vehicles have been destroyed,” Jackson, chairman and chief executive of AutoNation, told CNBC on Tuesday. They’re going to “have to be scrapped.”
“[But] there will be a substantial snapback either in the fourth quarter or the first quarter of next year because that’s the American way. We rebuild,” he said.
The center of Harvey, which originally made landfall late Friday, has moved off the coast. But it’s expected to return Wednesday, according to forecasters, bringing continued heavy rains
Houston, the nation’s fourth-largest city, accounts for about 40 percent of auto sales in Texas. Eighteen of AutoNation’s more than 360 dealers in 16 states are in the Houston area. Those locations remained closed Tuesday, and that’s going to hurt Houston sales even further.
“Houston’s vehicle sales are already down at [the] retail [level] 25 percent year to date,” Jackson said in a “Squawk Box” interview. “So Houston has been struggling.”
Harvey disruptions will reduce the overall auto industry August sales rate by between 100,000 and 300,000 units, predicted Jackson, whose company is headquartered in Florida.
Wall Street estimates peg the sales rate for August in the 16 million unit range.