Nearly 500,000 cars destroyed by Harvey

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Hurricane Harvey's long stay over Texas brought a number of unfortunate superlatives with it. One of note? The storm destroyed 300,000 to 500,000 vehicles, according to early estimates. The top end of that range would mean that the storm and its effects destroyed more than hurricanes Katrina and Sandy combined. Those half a million vehicles equal more than 3 percent of all new U.S. sales expected this year (and are already a significant arbitrage opportunity, too).

It's not cars that Texans want, though. "Everybody coming out wants a Jeep or truck," one dealer sales representative told The Washington Post.

That desire for larger, higher-clearance vehicles is worth looking at, especially over the 12 years since Hurricane Katrina. In 2005, there was a brief spike in truck buying to a level that wouldn't be seen again until 2016; even after Hurricane Sandy, there wasn't such a bump.

While post-hurricane buying preferences tilt to trucks for understandable reasons, general U.S. new vehicle preferences have been tilting to light trucks (which include sport utility vehicles) for the past two years — coinciding with a plunge in gas prices. Late last year, dealers sold more than a million new trucks in one month, and sold barely half as many cars.

Monthly U.S. vehicle sales are a noisy data series thanks to incentives and tax rebates. If we smooth it out a bit, by calculating the difference between light truck and car sales and then charting it as a 12-month moving average, the preference becomes clear. When oil hit all-time highs in 2008, buyers wanted more fuel-efficient cars; post-financial crisis, they still wanted more cars than trucks. As the economy recovered — and oil prices fell — Americans began tilting toward trucks and have stayed tilted that way.

Metro Houston-area residents are extremely dependent upon automobiles for personal travel, with a 94 percent vehicle ownership rate. There is perhaps one thing even more essential than a car, even in Houston. Last month, CareerBuilder surveyed U.S. adults about goods or services that they wouldn't give up, regardless of income. Five years ago, nearly 45 percent of those surveyed said driving. Internet service was higher, but fewer than 25 percent said their mobile devices. This year, more respondents said their phones were essential than those who said driving — even as driving rose in absolute importance.

Fortunately, perhaps, for those recovering from Hurricane Harvey, that one device so essential to modern life— regardless of financial circumstances — is safely in their purse or pocket right now.

Nathaniel Bullard, an analyst for Bloomberg New Energy Finance,, covering technology and business model innovation and system-wide resource transitions. For more columns from Bloomberg View, visit http://www.bloomberg.com/view.

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