Hurricane Ian forces Mercedes, Volvo to shutter S.C. plants after blasting Florida

overhead view of hurricane

Published September 29, 2022 | Link to story

John Huetter, Urvaksh Karkaria and Hannah Brock also contributed to this report

Mercedes-Benz and Volvo, heeding Hurricane Ian's potential impact, are idling their South Carolina plants ahead of the deadly storm's predicted return to landfall on Friday afternoon as a Category 1 hurricane.

The Mercedes plant, near Charleston, S.C., employs about 1,600 workers who build the Mercedes Sprinter and Metris vans. The automaker said it will idle operations on Friday.

Volvo's plant near Charleston in Ridgeville, S.C., was idled at 11 a.m. EDT Thursday and will remain closed through Friday, Volvo Cars USA said in a statement. The 2.3 million-square-foot plant employs about 1,500 people and produces the Volvo S60 midsize sedan. Next year, the factory will begin building two electric crossovers.

"Hurricane Ian has the potential to impact our U.S. operations," the statement said. "The safety of our employees and their families is our highest priority. Therefore, our Ridgeville plant halted operations at 11 a.m. and will remain closed through Friday."

Tropical storm

Hurricane Ian on Thursday was downgraded to tropical storm status, but returned to sea and is now a Category 1 hurricane looming off the South Carolina coast. Wind, storm surges, flooding and tornadoes were expected along the Atlantic coast from the Carolinas to Virginia, the Weather Channel reported.

A hurricane warning was issued for nearly 300 miles of coastline from the South Carolina-Georgia border to Cape Fear, N.C. Ian made landfall again at 2:05 p.m. Friday near Georgetown, S.C., as a Category 1 hurricane with 85 mph sustained winds.

North Carolina Automobile Dealers Association President Robert Glaser said Friday morning that dealerships in the potential path were closing and sending their staff home.

"It's raining sideways," Glaser said. But he said Ian seemed like it would be less problematic for North Carolina than other storms in recent years that had lingered over the state.

Glaser said most dealerships "have pretty good real estate," and the state's retailers knew how to prepare for hurricanes.

"We've been through this drill before," he said.

In Florida as well as the Carolinas, flood-damaged vehicles could prove a problem for the industry, Morse said. Many dealerships around the country were already short on supplies of new and used vehicles.

The National Weather Service said major, potentially record flooding from rivers would continue "through next week" in central Florida, and significant flooding was expected in coastal northeast Florida, southeastern Georgia and eastern South Carolina through Friday. "A tornado or two" could occur in the coastal Carolinas on Friday, the weather service said.

As of Thursday afternoon, 2.6 million Florida customers — 23 percent of the state — lacked power, according to the Florida Division of Emergency Management. Only 30 customers in all of Hardee County had power as of early Thursday morning, and more than 90 percent of Charlotte and DeSoto counties had gone dark. More than 75 percent of customers in Highlands, Lee and Collier counties were without power early in the morning.

Stores closed

Nearly all stores on both coastlines of Florida remained closed on Thursday in the aftermath of Ian. Sources tell Automotive News they have not heard of severe dealership damage in many cities, but there has been limited contact so far with businesses hardest hit by the storm.

Asbury Automotive Group had no injuries at any of its 24 Florida locations, nor had any facility sustained damage as of about 4 p.m. EDT Thursday. The publicly traded dealership group had tapped more than half of its Florida footprint for closure Tuesday ahead of the storm, and the remaining stores were closed Wednesday

“Most of our car inventory was moved indoors into service areas or parking garages so they were protected from the wind and debris,” spokeswoman Angela Hong wrote in an email Thursday.

Only two of Asbury stores lacked power on Thursday aftrernoon: Courtesy Toyota Brandon, in Brandon, Fla., and Coggin Deland Hyundai, in Deland, Fla.

Asbury’s stores in Fort Pierce and Tampa and its other Brandon, Fla., locations had reopened by early afternoon Thursday. Its Jacksonville, St. Augustine, Orlando and Deland facilities were still closed, “and we will reassess if they can open tomorrow,” Hong said.

“Most dealers are good,” Central Florida Auto Dealers Association CEO Evelyn Cardenas wrote in an email late Thursday afternoon. “Some flooding but not bad. Some will be back in business tomorrow.”

Ted Smith, president of the Florida Automobile Dealers Association, said that the owners he's talked to with stores on the west coast have not seen significant damage.

Douglas Jeep-Chrysler-Dodge-Ram in Venice, Fla., which sits halfway between Tampa and Fort Myers, has seen no damage. In Brandon, near Tampa Bay, a store suffered damage to its roof and surrounding fence.

"It's a miracle, though, where the storm went," Smith said. "That could have been so much more damage."

He cited Lee County, which includes Fort Myers and Cape Coral, as the hardest hit in the state, but could not confirm any details due to the difficulty of reaching dealers.

Smith had also heard of damage to a number of Gettel Automotive stores in Charlotte County, which includes Punta Gorda. The extent of said damage was not clear at time of publication.

"We're just waiting to hear what's going on in Lee County," Smith said. "That's where it appears to be the most destructive."

Ed Morse Automotive Group's four dealerships in Brandon and Tampa were spared the worst of the storm, but still experienced flooding and damage from debris, CEO Teddy Morse said. To the best of his knowledge, his staffers are doing OK, too, he said.

"We've been communicating with everybody," Morse said. "They all made it throughOK, maybe minimal damage, branches down, some trees, but nobody suffered any catastrophic losses."

Morse's dealerships closed Wednesday ahead of Ian, remain closed Thursday and are planning to reopen Friday. From past experience, Morse said he knows service inquiries are going to increase in the aftermath of the storm.

The "Tampa area got a lot of rain. There's going to be cars with flood damage and I'm sure body damage from tree branches and debris that was getting blown around," Morse said.

Another problem Morse foresees is the sale of flood-damaged vehicles in the coming weeks.

"It's worrisome that you've got dealers who may be very hungry for inventory, who may be paying way more than they should for a car that has flood damage," Morse said. "So when those two things collide right now, (there is) still a need for used vehicles and people looking to dump cars that got flooded. It could get a little hairy."

Financial issues

Dan Bucherer, spokesman for the American Financial Services Association, said Thursday that floorplan lenders tend to offer similar courtesies to dealerships after a catastrophe as lenders would do with consumers' auto loans.

For example, a floorplan lender would discuss adjusting a dealership's payment schedule on its floorplan debt, he said.

State and federal banking regulators on Thursday encouraged lenders to work with borrowers in areas affected by Hurricanes Fiona and Ian.

"Prudent efforts to adjust or alter terms on existing loans in affected areas are supported by the agencies and should not be subject to examiner criticism," they said in an interagency statement.

Even dealerships protected by insurance can take a significant financial hit, Steve Gibson, president of dealer insurance vendor Dealer Risk Services, told Automotive News on Wednesday. He said inventory policies for catastrophe-prone areas often impose a weather deductible on each damaged unit in the claim, and these amounts can reach as high as $5,000 per vehicle.

Dealership property coverage also often carries wind deductibles between 2 percent and 5 percent of the dealership's property value. For a dealer whose property is worth $20 million, that's still a large check, he noted.