How Dealerships Can Stay Afloat in the Aftermath of Natural Disasters

By David Metter

The residents of Missouri and Illinois had a rough start to 2016 after the detrimental flooding of the Mississippi River and other waterways spanning the two states. In some areas, more than two feet of rain graced the Midwest with its presence, resulting in over 25 deaths and thousands forced from their homes in freezing temperatures.

The vicious results of natural disasters can have snowballing impacts (no pun intended). Mother nature doesn’t simply affect individuals, families, and their communities but on a larger scale, both businesses and entire industries feel the consequences. Urban Science data revealed the flooding in Missouri had a direct impact on their auto sales when compared to all other states. In January, sales in Missouri were down about 10%, compared to a 4% increase throughout the rest of the country.

More recently, the East Coast was hit with monumental and even record-breaking snowfall accumulation due to late January’s winter storm, Jonas. The storm’s heartless medley of snow, ice, high winds, and coastal flooding proved the unyielding domino effect of weather-related damage that expands far beyond vehicle sales. Over 80 million Americans were affected, including at least 31 deaths and of course, property damage.

According to Automotive News, the “Jonas Effect” forced Toyota to temporarily close 200 of its dealerships. Herb Gordon Volvo, in Silver Spring, Maryland experienced a roof collapse due to the overly dense snow. Fortunately, there were no human injuries; however valuable inventory was lost (seven Volvos to be exact). General Manager, Ed Sarecky reported the damage would take about 45 days to be restored. The silver lining – they plan on rebuilding the area with a more enclosed, highly stabilized rooftop to prevent losses like this in the future.

This is not the first time the auto industry has suffered from natural disasters, nor will it be the last. Back in 2005, on a much larger scale, Hurricane Katrina became infamous as one of the five deadliest storms in the history of the U.S. But there is a light at the end of the tunnel. As an industry, we did learn a few things that can benefit dealerships in the case of yet another unwarranted disaster.

The following are the top three findings dealers should be aware of in order to prepare for, or minimize the damages associated with natural disasters such as these (excluding the obvious of securing a good insurance policy).

1. Sales will skyrocket after 30-90 days following a natural disaster. What dealers don’t necessarily expect is that directly following this lagging bounce-back period is when vehicle sales reach record highs. A trend we’ve seen with unprepared dealerships is they often lack the necessary inventory to meet the soaring demand. In addition, we have to consider not just the quantity of inventory to prepare for the spike in sales, but also the right variety of vehicles to keep in stock depending on the geographic location and nature of the storm.

Urban Science conducted an extensive data study one year after Katrina hit. According to Wards Auto, the study revealed, “While Hurricane Katrina sparked a human exodus and crippled many car dealerships in the metropolitan region, automakers scrambled afterwards to get the right vehicles to market because of an ensuing surge in demand.”

Mitch Phillips, Global Director of Data at Urban Science, toured the city of New Orleans and its dealerships to witness the aftermath six months after Katrina. Phillips noted, “Car sales dropped, but pickup truck sales nearly doubled. As people came back to the city, they were fixing their homes and hauling away debris. They needed pickup trucks.”

2. The odds of real-time data will always work in your favor. And by real-time, I mean real-time. I don’t mean data from 30 days ago. I mean real sales and transactional data from this very instant that can be used to your advantage. Big data alone won’t cut it. The data you use to optimize your strategy during a storm-induced sales coma should be fast, intelligent, and purposeful – meaning you can use it to craft your sales strategy right away. Accept nothing less than real-time data, as this is the only truly efficient source towards improving your sales and marketing efforts.

3. You’re going to get fewer leads, so make the most out of the ones you have. This means optimizing your website, lead forms, and overall marketing efforts for conversion. I’d recommend beginning with mobile and working your way down. Make all calls to action, including directions and your phone number prominent and easy to find. Make forms short and to the point. If you’re going to ask for someone’s information, they are more likely to provide it if you offer them something in return. Consider a gift card incentive just for coming in for a test drive. You always have a better chance of converting a customer once they are physically in front of you.

While looking back on his visit to New Orleans, Phillips adds, “It’s not just hurricanes. Any natural disaster, such as an earthquake, can cripple a dealership. There need to be provisions for natural disasters in areas susceptible to them.”

Personally, I like to consider myself an optimist. Over time, the snow will melt, water levels will recede, and the material damage will be restored. Roads will be cleared and safe once again, and the revival of new hope will begin to set in. I believe that with every misfortune or tragedy comes a valuable lesson. What we can learn from the unstoppable, unpredictable force of Mother Nature is how to prepare for the aftermath should it happen again.