ADVERTISEMENT

November 8, 2012

The Associated Press

Damaged and destroyed cars sit haphazardly on a street in Hoboken, N.J., last week in the wake of superstorm Sandy.

Sandy might mean sticker shock for used cars

Los Angeles Times

Expect used car prices to rise nationally because of Hurricane Sandy.

The storm destroyed about 250,000 used vehicles on the East Coast, and maybe more, according to estimates by the National Automobile Dealers Association.

That puts pressure on what already is a tight supply of good-condition, late-model used cars and could push prices for such vehicles up by 0.5 percent to 1.5 percent in December, said Jonathan Banks, an analyst with NADA.

The dealer group said that amounts to a little more than $50 to $175 for the average used vehicle.

Auto information company Edmunds.com projects a higher estimate, saying that used car prices will climb $700 to $1,000 "in the short term."

While this will be felt most keenly on the East Coast, the rest of the nation is not immune, Banks said.

"We have seen a trend for dealers, regardless of where they are located, buying inventory online and that means that geography is not as important as in past," he said. "It used to be that dealers would buy cars from a physical auction near their dealership."

Pulling such a huge number of vehicles out of the U.S. fleet will have an impact at the national level, Banks said.

The problem is compounded by at least tens of thousands of new cars that were destroyed both at dealerships and storage yards in the New York and New Jersey areas hit hardest by the storm.

"Many dealers lost a significant amount of inventory. One Honda dealer told me he lost 600 new units," Banks said.

Fisker Automotive, the Anaheim, Calif., maker of $100,000 plug-in hybrid sports cars, said it lost 30 vehicles with a retail value of $30 million at a port storage facility in New Jersey. A spokesman said the cars were insured and the company won't suffer a financial loss.

Toyota has said it might have lost as many as 4,500 new Toyota, Scion and Lexus vehicles to flooding and storm damage.

"Prices could really shoot up for consumers buying cars right away, because they will run into a severe inventory shortage," Banks said.

The dealers group believes that some replacement buying will start this month but will pick up in December and run through February.

It takes time for people to collect payments from insurance companies and go shopping for a replacement car.

The buying, however, should provide a boost for the economy, said Edmunds.com chief economist Lacey Plache.

"Even if 100,000 damaged vehicles are replaced by the end of the year it could boost auto sales 3 percent to 4 percent for the quarter, and that has a positive effect on the economy overall," Plache said.

Edmunds.com estimates that 20 percent of new car sales in the U.S. come from the Mid-Atlantic and Northeast region that was affected by the storm.





Further Discussion

Here at PressHerald.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)


  • Back to Business

News
Sports
Politics
Opinion
Life & Culture
People

© 2014 The Portland Press Herald - All Rights Reserved.
MaineToday Media
One City Center, 5th floor, Portland, ME 04101-5009
(207) 791-6650
contact@pressherald.com