Gulf Coast Dealerships Working on Recovery

While industry analysts are reporting that about one-third of New Orleans-area dealerships are slowly opening for business, there are still widespread problems in the region when it comes to buying or selling a car.

Some franchised dealerships in that area are waiting on shipments of new cars, which aren't able to get into the devastated areas. Many dealerships are reportedly waiting on insurance adjusters to make determinations about the thousands of damaged cars on their lots, while other dealers report a boom in business.

The variation in business depends on where the dealer is located and how badly it was hit.

State Farm reports that 85,000 automobile claims were filed from residents of the Gulf Coast region after Hurricane Katrina hit. There were fewer — about 4,600 — claims after Hurricane Rita hit the southwest region of the state.

Vehicles that have been declared a total loss will be taken to a secure area for disposal, says Dick Luedke, a spokesman for State Farm. The insurance company has sent 3,400 adjusters to the area to help with the overwhelming number of claims. He says state and federal officials are still negotiating on a consistent approach for disposing of the damaged vehicles.

When it comes to buying a used car from the Gulf Coast region, those in the industry are saying it will be two to three months before these cars appear on the market, if at all.

"Let's face it, these are nasty, nasty, cars," says Mike Robair of Moss Motors in Lafayette, La. "I'm dealing with customers who tell me they don't want to open the door of their damaged cars. They stink, they have green mold and fungus growing on the inside, and the stench is unbearable."

The waterlogged cars from Hurricane Katrina have not yet left the New Orleans area, Robair says. The dealers are waiting on insurance companies, and some adjusters simply can't get in there, he says.

Once water hits the floorboard, Robair says it will be impossible and extremely costly to repair.

"You're talking about water in the car, then it starts drying out. The moisture has to go somewhere, and it starts to rise. It goes in the dashboard, in the computer system and then it's history," he says. "You're talking very, very expensive to repair — and in most cases, [it's] not worth it."

Moss Motors — a BMW and Mercedes-Benz dealership — reports higher traffic after the hurricanes from customers who leased vehicles and now need a new car. Most leased vehicles include GAP insurance, which pays the difference between what's owed on a car and what it's actually worth. This allows customers to trade in their car immediately for another similar vehicle when theirs is damaged.

"We want consumers to be informed," Robair says, and he encourages consumers to have the vehicle identification number traced. "People should be smart and informed about any car they are thinking about buying, no matter where it came from."

Metairie, La., dealership Premier Nissan is reporting "crazy amounts of traffic" since reopening around Sept. 15. The dealership had few damaged vehicles from the hurricanes and was able to reopen quickly.

"People are getting their insurance payments and coming in and buying cars, both new and used," says Doc Waggoner of Premier Nissan. "We just received new shipments from the manufacturers, and they're going fast."

Posted on 9/29/05