The Impact of Wind and Storm Damage at Car Dealerships
Brick and mortar locations for car dealerships are as valuable as any component of their business. These businesses are generational for both dealership owners and customers. Car dealerships root themselves in the local communities and own their properties for generations. That generational ownership with a base in the community leads local consumers to stick to those relationships not through only their purchasing lifetime, but the lifetime of their families, their kids, etc. This level of loyalty is helped along through a storefront location’s sustained existence, which allows these relationships to build and develop over time.
While the “Amazon effect” has been a death sentence to many retailers, those in the auto industry have rested easy as e-commerce solutions have yet to do real damage to the automotive industry’s brick and mortar business model. Why is this the case? The answer is a variety of reasons. First off, many people browse online for cars. Still, it is impossible (at least as of now) to replicate sitting in a new car, experiencing “the new car smell”, and test driving the vehicle. The purchase of a vehicle is no quick, impulse buy. Most people will spend countless hours making one of their most significant financial decisions for years to come. You simply cannot do it online. Besides, the dealerships themselves have staying power as they serve a dual purpose as sales showrooms and last-mile logistics hubs for the auto brands.
But what is the real value driver? The experience and inventory. The experience is difficult to quantify however, the end product of sales revenue can measure it. Inventory is much easier to quantify. Without an inventory, you have no sales because you have nothing to sell. To create the experience for the customer, you must have the stock. This means securing your supply chain and, once you have the inventory, keeping it safe. There are more than 16,000 new car dealerships in America. There are even more used car dealerships, to the tune of 45,000. Of these more than 60,000 locations, tens of thousands have to deal with the real threat of significant weather issues since automotive dealerships are located in many areas, but for the most part in dense population centers. Unfortunately, people do not always think about the weather implications of where they choose to live. Instead, they focus on lifestyle – resulting in these same population centers often being located in areas with a consistent threat of major dangerous weather events.
Major population hubs have historically flocked to coasts for a good reason. They have abundant natural resources, have attractive general climates, are logistically well located for shipping, etc. People enjoy leisurely activities with large water bodies. The negative effect of this is exposure to storms. Even areas as far north as Pennsylvania seem to deal with major storm events every few years. Conventional wisdom may tell you to place your dealership inland, but we must remember the horrific tornados landlocked states such as Kansas or Oklahoma have become known for. No matter where we are, there is a risk, and we have to be prepared to deal with this risk. A lack of preparation can result in devastating effects on a business, which may not recover from a lack of attention and preparation to these real risks.
We all love beautiful areas such as Miami or South Beach, but we tend to forget they are some of the most susceptible regions in the entire world to hurricanes and other major storms. This risk is not just limited to areas such as Miami. Other areas that come to mind as hurricane – risky such as New Orleans, Louisiana, Florida, Georgia, and others. These areas are susceptible to the effects of hurricane season. In these areas, Hurricane season lasts about six months, meaning half of each year and half of the lifetime of each property location, you have to worry about the threat of a major devastating event. Also, the danger is not limited to one storm. On average, there are two or more hurricanes that will hit the southeast and/or east coast along with other substantial tropical storms each year. With climate change being a significant factor in modern times, these same hurricane counts are sometimes three or four per year, and more and more often closer to each other’s landfall. With three-fourths of all storms in Florida occurring been August and October (and September being the peak month of hurricane/storm activity), it is not uncommon to see hurricanes or tropical storms arrive in our communities back to back.
How Can Car Dealerships Can Prepare for Weather and Storm Events?
So how do you and your business prepare? There are several ways, but it starts with having the right advisor. We are the top advisor to not only provide you with insurance options but a full top to bottom solution to allow you to be protected, consulted appropriately, and, if need be, not alone in the event of an actual natural disaster occurring.
We go through a specific process to allow us to analyze your needs:
To be an effective advisor and resource for you, we need to understand your needs, goals, and current conditions to know where you are currently and where we need to get you. Our goal is to understand your directives, current insurance programs, and financial capabilities, along with your correct expectations as we go through the process.
Just like we interview our clients, we need to interview your property too. We do this through a thorough initial evaluation of the conditions of the property. We do this through an initial interior and exterior walkthrough to understand the current conditions and risk levels as much as possible. These days the property interview is as crucial as ever. The current building trend is glass, glass, and more glass, especially for automotive locations. Glass showrooms allow people on the road to have their eye caught by an attractive vehicle and make the dealership look beautiful and attractive. This makes customers comfortable that their financial commitment to a car is being made with a respected dealer. Unfortunately, with this type of on-trend material comes substantial risk. A major storm will wreak havoc on buildings surrounded by glass. Those glass walls, windows, and exterior elements that do not survive the weather elements can be ripped apart into pieces. Also, the cleanup and repair costs will be lengthy and expensive. Broken glass will ruin the property interior and destroy hundreds of thousands or even millions of dollars worth of on-site inventory. In addition, glass is expensive these days due to its many uses and high demand for construction. Therefore rebuilding will be costly. The property interview process will allow us to frame our policies and advisement around these conditions.
Our process to determine the current conditions is as follows:
- A review of the property perimeter will allow us to confirm that the exterior walls should are in good condition – straight and not tilting, both up and down and side to side. We will also look out for noticeable bulging.
- Looking for cracked concrete vertically in the structure and horizontally in the ground will allow us to spot and trouble areas. While concrete cracks can be expected and just a sign of normal settling, they can also be major issues. Both concrete cracks inside the structure and outside the structure may sign current or future problems. These issues can be with the soil or other elements of the property. If a soil issue in place, it can put immense pressure on the structure and its foundation.
- Initial slab and wood testing and probing are easy to do and very informative. A few jabs at the foundation with small tools will indicate the strength of the structure of a property. We will use only small handheld tools, which our professionals will utilize to dissect small pieces of material in strategic locations to show any signs of water infiltration, microbial growth, cracks, and other things.
- Basement and crawl space review will show us a great view of the property supports, soils, and the above perimeter walls’ strengths.
- Interior property walk-throughs can be very informative. The appropriately trained eye can differentiate between everyday items such as tile cracking, drywall cracking, window issues, doors not fitting frames, and other common issues being easily resolvable problems or significant structural issues.
Insurance Plan Review
We will review your current insurance plans to understand what you currently have in terms of pricing, coverages, deductibles, and to create an understanding of why that plan was selected. Our team will discuss your current plan to ensure that you understand everything that you are entitled to.
Financial Plan Review
In addition to our insurance plan review, we will review your current plan’s financials and see what you have budgeted for significant unforeseen issues. Understanding what you have budgeted will allow us to put together an appropriate safety net insurance plan in the event of a major issue.
Final Conclusion & Advisement
Following all of these reviews, we will truly understand your property, current policies, the financial capabilities of you / your property, and your expectations. Based on these collective reviews, we will provide a consolidated recommendation. This recommendation will be informative collateral of materials for you to review, including a detailed description and discussion to explain our conclusions. We will thoroughly explain why we made the recommendations, the coverages, the financial costs throughout the policy, and the economic costs in the event of a major issue. Given the many moving parts associated with an automotive location, such as inventory, blue sky value, showroom, building, and other items, we will provide you with a top-to-bottom explanation.
Moving into the right property is integral. A modern, safe, and structurally sound facility will prevent many significant points of damage. The layout is essential, as well. With inventory so valuable, facilities should have the ability to bring in all or a majority of its merchandise under the roof to avoid major damage. Other construction items such as glass quality will play a role. Dealerships love glass facades to show off their product, but they often forget that not all glass is created equal. Strong glass will keep your inventory protected. Even supposedly hurricane-proofed facilities will still be at risk, so make sure you have the appropriate policies to support your business. In the event of a loss, you could be out hundreds of thousands or millions of dollars if you do not have the appropriate insurance coverages for your property, your inventory, and your other supporting property to your business. We can help. Consult our professionals, and you will be sure that even the nightmare property damage event will not put you out of business or keep you out of business. We will get you back on your feet before you know it.