(Reuters) - Americans in hurricane ravaged cities are replacing their damaged vehicles and that is set to lift the pace of vehicles sales for September to its highest level this year, according to consultancies J.D. Power and LMC Automotive.
September retail sales are expected to come in at an annualized selling rate of 15 million vehicles, flat from a year earlier.
"The effect of hurricanes Harvey and Irma is expected to boost retail light vehicle demand through the remainder of 2017 and into 2018, as recovery continues," Jeff Schuster, senior vice president of forecasting at LMC Automotive, said on Friday.
Hurricane Irma hit the United States on Sept. 10, about two weeks after Hurricane Harvey plowed into Houston, Texas, causing billions in damages, mostly from flooding.
"With the need to replace 500,000 or more damaged or destroyed vehicles, the U.S. auto market slowdown will see some relief as demand over the next 6-9 months will likely be upwardly distorted," Schuster said.
"However, this does not change the overall expectation of level to weaker demand in the U.S. over the next 2-3 years."
Retail sales in September are expected to fall 2.6 percent to 1.2 million vehicles, compared with September 2016, the consultancies reported.
Incentives have hit all-time highs as manufacturers continue with discount aggressively to clear out record inventories of prior year vehicles, J.D. Power and LMC Automotive said.
"While the industry will benefit from additional replacement demand from storm damaged vehicles in the coming months, elevated incentives remain a threat to the overall health of the industry," Thomas King, senior vice president of the data and analytics division at J.D. Power said.
(Reporting by Subrat Patnaik in Bengaluru; Editing by Arun Koyyur)