How many cars were actually destroyed by flooding in Houston?

The media told us that flooding in Houston after Hurricane Harvey destroyed up to a million cars (example: WIRED). Yet I recently booked a rental car at DFW and Orbitz showed prices for cars ranging from $13-15 per day (compact to full size). If a million cars actually were destroyed and people in Houston do need cars to get around, how can that be consistent with the low rental prices and ample supply?

13 Comments »

  1. Tom

    October 5, 2017 @ 1:01 pm

    1

    Local media in Houston showed acres of car dealerships with flooded cars. Those cars were likely totaled and replaced with new ones, so basically for a couple weeks car dealers in Houston sold cars to the US taxpayers and insurance companies, rather than retail car buyers.

  2. Alex

    October 5, 2017 @ 1:11 pm

    2

    It’s also possible that the rental car companies are loath to increase prices even if demand has grown or supply has shrunk, to avoid being castigated for “price gouging”.

  3. Anonymous

    October 5, 2017 @ 1:24 pm

    3

    When actulaay renting I have not seen anything below $30/day fro compact vehicle in North East, much more for larger vehicles. Strange. I guess car rental in Texas is equivalent of McDonalds and is higly competitive

  4. philg

    October 5, 2017 @ 1:57 pm

    4

    Alex: That’s a good theory, except that all of the companies actually did have cars, and cars in all categories, for our rental starting October 20. With low prices and the huge demand that one would expect if in fact a million cars were destroyed nearby, they should be sold out.

  5. LF

    October 5, 2017 @ 2:19 pm

    5

    That’s interesting. Two weeks ago friends coming to DFW said the supply was very tight. They were driving an Audi with Colorado plates.

    Do you have time for a meetup while in DFW?

  6. philg

    October 5, 2017 @ 2:42 pm

    6

    LF: I am checking Orbitz right now to pick up a car for tomorrow… It says “We’re experiencing high demand at this location for your trip dates. Book soon.” and then quotes $26-$43 per day, for Economy through Full-size.

    Meet in DFW? How about Saturday morning, October 21?

  7. Neal

    October 5, 2017 @ 3:02 pm

    7

    >how can that be consistent with the low rental prices and ample supply?

    The US economy is large and efficient enough to handle it.

  8. Anonymous

    October 5, 2017 @ 3:17 pm

    8

    Still great prices. Here in NE minivan rental costs around $100/day, SUV rental – $70-$80 / day. Guess rentals are more competitive business in Texas. $15/day was diffenitely a clickbait.

  9. LF

    October 5, 2017 @ 3:28 pm

    9

    That Saturday will work great. I’m just north of the airport and can meet anywhere you find convenient.

    Maybe the rental companies over corrected and now they have an oversupply in DFW.

  10. paddy

    October 5, 2017 @ 7:29 pm

    10

    The country-wide auto inventory of the domestic manufacturers is at or near their all time highs. e.g. http://247wallst.com/autos/2017/03/13/gm-has-huge-supply-of-unsold-cars/

    GM has about 108 days’ worth of unsold inventory or so, against industry norms of 60 to 70 days. The article seems to indicate GM: 900K Ford: 678K Chrysler/Fiat: 578K cars ; so nearly 2 million between the 3 makers?

  11. philg

    October 6, 2017 @ 8:55 am

    11

    paddy: I think you’ve found another great source of objective data. https://www.cnbc.com/2017/10/03/hurricanes-lift-automakers-us-september-sales.html says “New car sales in the Houston area, the fourth most populous in the United States, jumped 109 percent in the three weeks after Hurricane Harvey compared with the three weeks before the storm, according to car shopping website Edmunds.” The article also says “GM inventory fell to 76 days supply last month from 88 days in August’.

    So twice as many people are buying new cars in the Houston area, but unless most people are waiting for an insurance payment that doesn’t support the tales of Biblical destruction we’ve heard. http://www.chron.com/cars/article/After-the-flood-Car-shoppers-grapple-with-high-12255777.php (October 5, 2017) does talk about bureaucratic delays as an obstacle. But then the same article suggests that the flooded cars will end up being re-sold to unwary used car buyers. So most weren’t destroyed?

  12. tekumse

    October 6, 2017 @ 8:56 am

    12

    Surprisingly in 2017 the internet and reality can be quite different. I was in Atlanta after Irma and the cheery virtual assistant at Hertz told me to just grab any car in lot 1. Funny thing there were no cars in any of the lots. Zero, nada, zilch. There was a line of customers and the moment a car was ready it was given to the first line. If they declined (mostly due to size) it was offered to the next in line and so forth. It took me a little over an hour in line to get a car and I jumped in front of a few people since I had no preferences.

  13. Neal

    October 6, 2017 @ 12:03 pm

    13

    From the article you linked to in #11: “Jonathan Smoke, chief economist for Cox Automotive, said Hurricanes Harvey and Irma wiped out 500,000 to 1 million vehicles.”; he then goes to predict economic impacts which are basically consistent with your (very limited) observations.

    >unless most people are waiting for an insurance payment

    certainly many are; or sharing a car with family, making do without a car, waiting for family to raise the money for a loan, or using a car which was basically “destroyed” but they were able to get running until they can afford to replace it. There are many factors which will smooth out the demand spike and therefore moderate its impact.

    #10 tells us that there were 2 million new American made cars waiting to be sold when the storm hit. To that you can add inventory from foreign car makers and used cars. Plus, on any given day about 350,000 rental vehicles sit idle and available nationwide. The vehicles destroyed in Houston represent a fairly small fraction (20%?) of the readily available vehicles in the economy. We do have roads and railroads in this country.

    The original posting doesn’t doesn’t actually provide any evidence that rental car prices a month after the hurricane weren’t still being impacted by hurricane related demand, only that those prices looked low to someone from the Boston area.

    Put all this together and it seems likely that what is incorrect was not an early estimate that one million vehicles were destroyed, but your interpretation that the estimate represents “Biblical destruction”.

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