On the 20th anniversary of the greatest terrorist attacks in history, we compile the consequences for the industry, mainly in the United States, in the different businesses related to the automobile. The one who suffered the most was the insurance sector.
The year 2000 was especially good in the United States, with a volume of sales of light vehicles (passenger cars, SUV and pick-up) of 17.35 million units. It was the largest car market in the world, and both the almighty General Motors and Ford and DaimlerChrysler were having a good time.
But on September 11, 2001, many things changed in a traumatic way. Leaving aside the human, social, economic consequences … of the attacks – which are not the thematic scope of Motor.es– we will focus on the consequences for the automotive sector. First, the impact was stock exchange due to generalized falls in values after the attacks.
In the first days after the attacks, new vehicle sales came to a sudden halt due to great uncertainty about what would happen, and if a serious economic crisis was coming. Detroit manufacturers (the “Big Three”) and Japanese, European and Korean competitors stimulated demand so that it does not fall.
For example, General Motors offered since January 2002 a interest-free financing of practically all its range, except the Cadillac, Corvette, Saturn L100 and VUE. The offer applied to financing for three years or more. This campaign, with a massive advertising injection, was called “Keep America Rolling” (Let’s keep America running).
Other manufacturers began to apply discounts or incentives in models that had never needed them, except those that stopped marketing or with a bad sales rhythm, declared Jalopnik Tyson Jominy, Vice President of JD Power PIN Consulting. The market in general was forced to copy the play, reducing sales margins when adjusting prices. Manufacturers such as DaimlerChrysler or Suzuki announced warranties of seven years or 160,000 km.
This custom of introducing discounts in a generalized way has been maintained for years in the United States
At the end of the year the market recovered and ended with figures not very different from those of 2000, with 2001 being the second best year of sales in the historical series so far. 17.1 million units. It was necessary to wait for the economic crisis of 2008 to see a real collapse in sales, which brought General Motors to its knees and required a government bailout; Chrysler too, but Ford held on.
Vehicles like the Ford Crown Victoria P71 Police Interceptor had to be replaced in large numbers, more than 100 units were lost
Restrictions on domestic flights due to new security measures and fear of new terrorist attacks – encouraged by the federal government itself – reactivated road trips as an alternative to the plane. They were much longer trips at medium distances – the country is huge – but perceived as much safer.
On the other hand, the inevitable increase in the price of oil gradually made consumers prefer more efficient models, such as with four-cylinder engines, early hybrids or crossover less heavy than full-size derived from pick-up. This hurt US domestic manufacturers in the medium term.
Regarding the used market, prices fell as there was a greater supply, on the one hand due to the increase in trade-ins (cars that are given in exchange for a new one) and rental companies that slackened stocks due to the decline of their business, in order to obtain liquidity.
Destroyed vehicles in the vicinity of the Pentagon (2001) – Photo: Michael W. Pendergrass (US Navy)
For example, the rental company Budget Rent-A-Car filed for suspension of payments due to falling rents, which Cendant / Avis benefited from in 2002. The company was sold for $ 110 million, very little, but with a burden of 2,800 million in debt. Cendant became the second largest renter in the US.
Some garages had financial difficulties by not immediately returning the vehicles to their owners (some, for obvious reasons, never went to get their cars) or by the cancellation of payments of people who lost their jobs
Where the impact was most strongly felt was … in the insurance. More than 4,000 vehicles were damaged, both private and public services such as fire, police, ambulance, etc. The latter were the most expensive as a whole. It was the largest claim to insurers so far for the same event.
The largest losses were for the New York Fire Department (NYFD), which was left without about a hundred vehicles, worth 50 million dollars. The most expensive were the pumper and ladder trucks, some costing $ 750,000 and produced in very low volume by specialist companies like Seagrave.
Fire truck on the outskirts of the WTC (2001) – Photo: Eric J. Tilford (US Navy)
Alone in the underground of the complex of the World trade center there were about 2,000 parking spaces. The volume of vehicles lost there is difficult to determine due to the physical loss of information, since many were turned to dust when the Twin Towers fell on top, more than 100 stories high.
After a year, some 4,300 claims had been claimed from insurance companies, of which 300 corresponded to the Washington DC area, due to the attack on the Pentagon. Many accidents were minor, such as bumpers dented by crowds fleeing in terror, or by accumulation of dust and debris that fell from buildings.
However, some cars were declared a total loss only because they accumulated dust inside when one or more windows were broken, due to the fear of contamination by asbestos and other toxic particles. The US government covered many of those losses with taxpayer money, having made fleet insurance backed with its own funds.
And that was only the beginning … but that’s another story.