Superstorm Sandy Raises Used Car Prices

The Los Angeles Times recently ran an article discussing the fact that the estimated 250,000 cars flooded by Superstorm Sandy will drive up used-car prices across the nation.   Nearly all of the consumers who lost their vehicles in the storm will need to quickly find replacements.  As detailed in the article, this price increase is not only due to an inventory shortage, but can also be attributed to the already tightened used car market due to the recession.  “Some experts say prices could rise $700 to $1,000 on the typical used car in the short term.”

“‘Cars that have been submerged in saltwater, and contaminated by bacteria and various toxins, will soon start to appear all over the country, even in states far from the center of the storm,’ said Rosemary Shahan, president of Consumers for Auto Reliability and Safety.   She urged shoppers to look for signs of flood damage, including engines that hesitate or run roughly, musty interior smells or signs of silt residue or premature rust.”

Other advice given in the article includes running the vehicle identification number through the National Motor Vehicle Title Information System at vehiclehistory.gov.  “Insurers, salvage pools, auctions and junkyards in all 50 states are required to report all total-loss vehicles to this federal database within 30 days, Shahan said.”

The problem is of rising prices for used cars is “compounded by at least tens of thousands of new cars that were destroyed both at dealerships and storage yards in parts of New York and New Jersey hit hardest by the storm. ”   One Honda dealer alone reported a loss of 600 new vehicles.  “Toyota Motor Corp. has said it might have lost as many as 4,500 new Toyota, Scion and Lexus vehicles to flooding and storm damage. American Honda Motor Co. said that more than 3,000 new vehicles at its dealers and storage yards suffered flood damage.”