Car dealerships invest heavily in buying cars wholesale and reselling them in retail. However, unpredictable weather conditions, including hailstorms, leave dealerships susceptible to immense loss. Therefore, they’ve invented ways to protect their vehicles from hail damage.
Dealerships protect cars from hail damage by installing canopies and solar hail protection systems. Moreover, some dealers opt to buy comprehensive insurance policies to get covered if hail damages the cars.
Since hail poses a significant danger to dealerships, many have found solutions to secure their inventory. The rest of this article explores a few topics related to these protective measures. Keep reading to learn more.
Why Dealerships Protect Their Cars From Hail
Hailstorms usually occur in summer and spring when thunderstorms strike and are more prevalent in regions within the “Hail Belt” or “Hail Alley” that include Colorado, Texas, and Nebraska.
However, due to climate change and extreme weather conditions, the frequency and intensity of hailstorms are currently unpredictable.
Hail can wreak havoc on property, including buildings and vehicles, depending on its frequency and the size of the hailstones. The National Weather Service estimates that hail diameter can range from ¼” to 4.5” (0.64-11.43 cm).
Therefore, hailstones can be as small as peas or as large as grapefruits.
In the past decade, hailstorms have resulted in massive property loss. For instance, in 2019, hail damaged property worth $13 billion in the US, and car dealerships are among the worst-hit victims of hail damage.
Here are the reasons why dealerships protect their cars from hail.
To Prevent Car Damage
Over 70,000 dealerships operate in the United States, and most have no indoor parking for their vehicles. Therefore, their inventory is susceptible to hail damage, and depending on their size and intensity, hailstones can cause various damage to cars.
Despite the intensity of hail damage, a dealer will incur repair costs to ensure that the vehicle still attracts potential buyers. The situation may worsen when hailstorms are severe or if auto dealers haven’t insured their cars. Even so, if they are insured, the repair cost can still surpass the car’s value.
Some insurance companies don’t have premiums for minor car dents caused by hail damage.
If a car’s repair costs exceed its value, an insurance company can render it totaled or salvaged. Therefore, they would instead offer the dealership money to buy another one than repair the car.
But, in some situations, the insurer may opt to provide finances to repair the vehicle, and the auto dealer can still sell the rebuilt vehicle.
Here are the types of hail damage that auto dealers experience:
- Cosmetic damage: This refers to hail damage resulting in minor dents on your car’s exterior. It can either leave your car’s paint intact or scratched, and if the hail hasn’t scratched the car, a mechanic can fix the dents. But, if the dents have scratched paint, you need to replace the affected panel.
- Severe damage: This occurs when hail affects a car’s mechanical systems. And, like cosmetic damage, it can also scratch the paint or leave it intact. Therefore, you have to repair the affected mechanical systems and replace any scratched exterior panels.
Loss of Profits
Unlike most car buyers believe, auto dealers don’t gain high profits from selling vehicles, as most only get 2.2% profit from the resale prices. So, hail damage can only worsen the situation and even dwindle any profits a dealership would have gained.
Despite its intensity, hail damage undoubtedly affects a car’s value.
Therefore, even if the damage is minimal, an auto dealer must restore the vehicle to its original condition. To do so, they have to pay some repair costs.
If the hail only damages a car’s exterior, repair may involve repainting or dent removal. The procedure will cost the dealership approximately $2,000 per vehicle. But, rebuilding the entire car body is more expensive, amounting to around $4,000.
Due to the hefty repair costs, some auto dealers resort to selling unrepaired hail-damaged vehicles at throw-away prices since their values have diminished. But, if the dealer manages to repair the damaged car, they increase the selling price to cover the expenses, which can repel potential buyers.
Skyrocketing Insurance Costs
Insurance costs have escalated due to the high risk that hail damage poses for insurance companies. In just a few years, the annual insurance premiums to cover cars worth $20 million have shot from $160,000 to over $600,000 per annum.
Moreover, some insurance companies are no longer interested in covering hail damage.
How Dealerships Protect Their Cars from Hail Damage
Necessity is undoubtedly the mother of invention. Due to the adverse effects of hail damage, auto dealers have invented ways to protect their inventory from this harsh weather element. Here are preventive measures that dealerships have come up with to save their cars from the impact of hail.
Installing Hail Canopies
Dealerships in hail-prone areas pioneered the invention of hail canopies to protect cars from hail damage. For instance, Stapp Interstate Toyota partnered with VPS, a sought-after supplier of protective structures, and IPower Alliance to manufacture hail canopies.
Hail canopies comprise mesh fabrics and powder-coated steel structures that prevent hailstones from reaching the vehicles. The shelters also protect from other weather elements, including rain, and they provide an excellent shade for the cars, protecting them from weather-related damage.
Using Solar Panels
Auto dealers install solar panels in their car yards, apart from canopies.
These solar-powered systems consist of panels that shield vehicles from hail damage and provide sufficient electricity to cater to the dealerships’ needs.
Auto dealers can relax knowing that these solar panels are unaffected by hailstorms and other harsh weather elements. So, they don’t have to worry about high electricity costs or the repair expenses for hail-damaged cars.
Solar panels have also become popular in other parts of the world, including the UK.
Hailstorms have been a nightmare for numerous auto dealers who’ve counted massive losses from hail damage. However, in recent years some dealerships have found long-lasting solutions to protect their inventory from the adverse effects of hail. Therefore, dealerships are now installing hail canopies and solar panels to curb the impact of hailstorms on their properties.