Will the Auto Industry Survive The Perfect Storm?

hurricane sandy flooded cars perfect storm
Cars float in underground parking garage after Hurricane Sandy

With the fourth quarter now well underway, the time has come to predict how October 2012 sales will pan out. Economic turmoil in Europe has severely affected American automakers GM and Ford, with continued scaling down of operations and elimination of factory jobs planned over the next few months. On the home front, the arrival of Hurricane Sandy in the northeast (which represents some 20% of domestic auto market) during the last three selling days of October will take a major toll on overall sales. With widespread flooding throughout NY, NJ, and PA the atmosphere was anything but ripe for buyers. Thousands of dealerships will remain closed until power is back and physical damages can be repaired. Even if dealers can reopen within the next few weeks buyer morale won’t be restored as quickly. Despite this unexpected hurdle however, the overall market may still be able to outperform analysts’ expectations for the month. Expanded product lines and the start of the holiday season will ensure that year-end sales quotas are met.

The new Honda Accord and Nissan Altima will be major gainers within the midsize sedan segment while Toyota is expecting growth to be upwards of 20%. Europe isn’t stopping Detroit from holding its own in the US. Chrysler, Ford, and G.M. have made serious progress throughout the year and the hope is that they will continue to do so. With Election Day just around the corner and President Obama having hit the campaign trail hard in key manufacturing states, Detroit’s Big Three are poised to end 2012 at the top of their game with both consumer and political support.  Meanwhile, luxury brands including Acura, BMW, Mercedes and Volvo will be the hardest hit by Sandy because up to 25% of their annual US sales are in northeast. It will be no surprise if they are unable to surpass results from earlier in the year.

Some may say that Sandy’s arrival at the eleventh hour will leave the industry in pieces well into 2013, but only time will be the true judge of that. Too much has been accomplished this year for it all to be in vain. Diverse product lines and a cooperative economy have put the industry back on track in the recent past.   In times of turmoil America has always found its way back to normalcy and it will undoubtedly do so again. As more data is released over the next week, keep on the lookout for a more comprehensive analysis of how the industry fared in October.

Please enjoy this TFLcar Mashup that involves Lexus, Acura, and Volvo.

Jibbin Abraham is an undergraduate student pursuing a degree in Business and Marketing at Binghamton University. He enjoys following the latest automotive trends and developments in the U.S. as well as abroad and spends his free time reading various auto websites and blogs. His ultimate goal is to pursue a career where he can mesh his passion for business and for cars. Jibbin brings an unique perspective to TFLcar with a passionate eye toward the latest trends and comprehensive, expert and in depth automotive industry analysis.