Hurricane Katrina Devastates New Orleans Auto Business

Posted on September 8, 2005 by LCT Staff - Also by this author - About the author

NEW ORLEANS – It will be a very long time before the next new or used car is sold in New Orleans. With water from Lake Pontchartrain draining into the city in the aftermath of Hurricane Katrina, New Orleans' 80 new-car dealerships may be a total loss.

"All of the New Orleans metro stores are assumed to be gone because of the rising water," Brett Brown, DaimlerChrysler district sales manager in Baton Rouge, told Automotive News. His territory also includes some New Orleans suburbs. Brown said 15 stores in New Orleans are in "unknown status. Most of the cars are underwater or have water damage. The devastation is unbelievable.”

Many automakers said they don't know the extent of the damage to their dealerships in the coastal regions of Alabama, Louisiana and Mississippi, the area that took the major impact from the Category 4 hurricane late Sunday and early Monday.

"The automobile business has just about come to a halt," said Marshall Hebert, owner of Hebert's Town and Country Jeep in Shreveport, La. Hebert, the National Automobile Dealer Association state director for Louisiana, said dealers in New Orleans are out of business for the foreseeable future. He said dealers did not have time to move their inventories. "I have a friend who decided to ride it out, and we're still trying to find him," he said. Hebert also said some dealers on the coast may not have been carrying enough insurance to cover their buildings and inventories. He said some of those dealers found that insurance was too expensive or that companies wouldn't write policies because of damage caused by past storms.

The National Automobile Dealers Charitable Foundation (NADCF) is raising funds to offer emergency relief to dealership employees who have suffered loss or damage of personal property by Hurricane Katrina. Louisiana and Mississippi dealer associations and their dealers are working hard to get the message to dealership employees.

The finance arms of General Motors Corp. and Ford Motor Co. said they are allowing customers affected by Hurricane Katrina to defer their car payments. General Motors Acceptance Corp. (GMAC) spokeswoman Joanne Krell said customers should contact local GMAC offices for an extension of up to 90 days. The company also will waive late charges for people who have been affected by the hurricane. "We take a very commonsense approach to this," Krell said. She added that GM and GMAC plan to donate at least $500,000 to the relief effort.

Ford's program is open to customers living in counties that have been declared disaster areas by the Federal Emergency Management Agency. The offer includes customers of Ford Motor Credit Co., Jaguar Credit, Land Rover Capital Group, Mazda American Credit, PRIMUS Financial Services and Volvo Car Finance.

Eligible Ford customers should receive a letter within a week and must register within 60 days to qualify. Customers also may contact the companies if they believe they're eligible but haven't been notified.

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