Tuesday, September 13, 2005

Todd McInturf / The Detroit News Dealership owner Otis Favre's 1992 Viper, which had less than 600 miles on it, was damaged when the floodwaters busted down a concrete block wall in his body shop. Favre said all of the vehicles on his Slidell, La., lot -- about 300 new and used -- were destroyed by the hurricane.

Hurricane Katrina aftermath

Car dealers pick up pieces

Big Three struggle to revive 230 showrooms

By Brett Clanton / The Detroit News

Todd McInturf / The Detroit News Chrysler exec Joe Eberhardt, right, gives encouragement to dealership owner Otis Favre. Damaged cars As many as 500,000 vehicles have been damaged by Hurricane Katrina's high winds and flood waters. In many cases, vehicles have been corroded by saltwater and should be scrapped or used for spare parts. To protect consumers, a vehicle's title must disclose whether it has been damaged by flooding or has been salvaged. Some scam artists attempt to "wash" a title by transferring a damaged vehicle from state to state, where damage disclosures can be dropped during the titling process. The National Automobile Dealers Association recommends consumers have a vehicle inspected by an authorized mechanic. Related links Hurricane Katrina photo gallery Screen-size images Interactive: Evacuees, troops deployed Interactive: New Orleans' devastation Interactive: Katrina's aftermath Interactive: AP poll on hurricane response Latest news on Katrina aftermath Evacuees angry to lose out on debit cards Rescue workers locate elderly woman FEMA director pulled off Katrina recovery job Storm evacuees growing frustrated New Orleans satellite image Airport status Airline Web sites More AP coverage Todd McInturf / The Detroit News Chrysler executives William Jones, left, Michael Milad and Joe Eberhardt talk with Bayside Chrysler Dodge Jeep owner Larry Hart outside his wind-damaged offices in Biloxi, Miss. Comment on this story Send this story to a friend Get Home Delivery

SLIDELL, La. -- When floodwaters rushed into his house and rose four feet within 30 minutes, Otis Favre knew his auto dealership across town was in trouble. But he wasn't prepared for what he saw upon arriving -- by boat -- at the lot last Tuesday morning.

Cars were stacked on top of cars. The showroom was filled with water like an aquarium. Filing cabinets floated on the front lawn. And a 500-gallon gas tank -- from where, nobody knows -- squatted on a row of new SUVs.

"I've never seen anything like it in my whole life," said Favre, owner of Lakeshore Chrysler Dodge Jeep in this hurricane-ravaged suburb of New Orleans as he walked the muddy grounds of his business Friday.

Among the casualties of Hurricane Katrina are dozens of new car dealerships just like Favre's.

The storm damaged about 230 Big Three dealerships across the Gulf Coast region, with the automakers reporting that nearly 50 stores were all but wiped out.

It may be weeks before the extent of the destruction is known since so much of New Orleans is still under water and Mississippi's coastal cities are in tatters. Now automakers are working feverishly to get storm-battered stores back online, knowing there is huge opportunity in replacing lost vehicles and in building goodwill with customers in their time of need.

In addition to the new and used cars destroyed at dealerships, tens of thousands of hurricane victims lost their cars and trucks to the storm. Most of the vehicles will be replaced with insurance money, which could create a surge in demand.

Detroit automakers may have the most to gain by moving swiftly to get their dealerships running again because the Deep South is big pickup country and many trucks will need replacing. General Motors Corp., Ford Motor Co. and DaimlerChrysler AG's Chrysler Group also will have the opportunity to promote themselves -- as they did so successfully after the September 11 attacks -- as a vital part of getting America rolling again.

"Everybody is trying to pick up the pieces and move on," says a Ford TV ad that began running in the region Monday to promote a discount program for hurricane victims. "We are doing our part to help."

But as a group of executives from Chrysler discovered late last week, there are many challenges in rebuilding a dealer network ravaged by one of the worst natural disasters in U.S. history.

Flying into Baton Rouge, La., on Friday, a small group of Chrysler executives met with dealers who had experienced everything from destroyed street signs to complete annihilation of their businesses and reassured them that help is on the way.

"It's really not a message from us to them," said Joe Eberhardt, the automaker's executive vice president of sales and marketing before the meeting. "It's listening to them to find out what they need."

Katrina damaged about 40 of Chrysler's dealerships in the region, leaving 10 or 11 with severe damage and dealing major hits to 10 stores.

On Friday, some of those affected dealers stuffed into an airport conference room in Baton Rouge to say they needed everything from new computer equipment and generators to temporary office buildings and relief in maintaining a payroll while their stores are closed.

"Right now, I'm paying my guys out of my wife's Mary Kay account," said Mike Comisky, co-owner of Orleans Dodge Chrysler Jeep in eastern New Orleans, which opened a store in April only to see it disappear last week under 20 feet of saltwater.

Steve Bonner, Comisky's business partner, nearly choked up as he addressed the dozen or so dealers gathered in the drab conference room and looked to Eberhardt and Gary Dilts, Chrysler's senior vice president of sales, for answers. Darkly tanned, with slicked-back white hair and the gravelly voice of a smoker, Bonner said he had also lost his house in the storm and that, after a hasty evacuation, all he owned was three pairs of shorts and three Hawaiian shirts.

"I'm looking for some assistance," he said. "Or should I just cut my losses and move on?"

Other dealers, less impacted by the storm, said Chrysler was losing the message war in the region and urged the automaker to begin running ads stressing its compassion for hurricane victims, as its competitors are doing.

To this point, Chrysler has chosen to operate more quietly with its relief efforts. It is matching employee contributions to the American Red Cross, and this week it will donate 100 Dodge trucks to local and federal officials in the region.

But Chrysler is also readying for hand-to-hand combat for replacement sales in the area, which could number in the tens of thousands in the coming months. Chrysler, Ford and GM are now all offering a $750 cash incentive to hurricane victims on top of existing promotions, and discounts are likely to keep creeping up as consumers return to their normal lives.

"The question," Dilts said, "is when the market is going to come back."

From Baton Rouge, the Chrysler executives loaded up in minivans and headed for Slidell, a New Orleans suburb that suffered a direct hit from the hurricane. On the drive, signs of the storm were everywhere along U.S. Interstate 12. Whole clumps of pine trees are folded over, as if bowing to passing cars. Blue tarps cover holes in roofs torn open by wind and rain. Military trucks drive by in solemn convoys. And families are piled into SUVs, pulling trailers packed with couches, washing machines and wheelbarrows -- driving away from this chaotic place, perhaps forever.

Arriving in Slidell, the minivans have to swerve around a police barricade to get to Otis Favre's Lakeview store, which sits on an interstate access road along a row of mangled auto dealerships.

Favre said all of the vehicles on his lot -- about 300 new and used -- were destroyed by the hurricane. After using a forklift to unstack the cars and trucks, Favre parked the damaged vehicles in tight rows, as if they were on sale again. But most are not driveable.

"These cars out here you figure were 7 or 8 feet under water," Favre said, surveying the lot from the back of a beat-up pickup.

Though Favre says he will be back in business within weeks, it's hard to look at the thick mud still caked on his showroom floor and the rows of hanging ceiling tiles and share his optimism.

Other Chrysler dealers pounded by the storm are equally determined.

Larry Hart, owner of Bayside Chrysler Jeep in Biloxi, Miss., has bribed telephone repairmen with cases of beer to fix his lines, and he hung up homemade signs to say the business is open even though whole sections of the store's façade have been ripped off.

"That's our sales office right there," Hart said, pointing to a fold-up table and chairs covered by a tent and sitting in the middle of the car lot.

But while the Chrysler executives have come to ask what he needs, Hart knows it will probably be up to him if he wants to get back on his feet. He points to his store's big street sign that still has Plymouth in the title, even though Chrysler killed the brand several years ago.

"I've had that sign up for six years, and they still haven't changed it," Hart said, laughing as the train of executives walked away. "But that's the least of my problems."

Ford says about 50 of its dealerships were damaged in the storm, with only 10 still closed.

To help during the recovery, Ford is offering bridge loans to stores that are awaiting insurance payments, and it fast-tracked claims by dispatching a team of adjusters through Ford Motor Credit. It also sped up vehicle shipments to dealerships that needed to replace entire inventories.

GM, meanwhile, said as many as 140 of its dealerships in the Gulf Coast region sustained damage, with 13 to 15 of those practically destroyed.

But with or without the backing of a massive automaker, dealers such as Favre seem so committed to resurrecting their sodden businesses that they would do it on their own if they had to. It would take more than a hurricane to force them from doing what they love -- and to dampen their pride.

"You can't kill bad grass," Favre said, smiling in his mud-caked clothes. "Don't you know that?"

You can reach Brett Clanton at (313) 222-2612 or bclanton@detnews.com.