Used car prices expected to rise because of Sandy's destruction
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 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 the 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 at dealerships and in 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 in 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.
All of this is going to create problems for consumers in the region who need to replace their rides quickly.
“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 United States come from the Mid-Atlantic and Northeast region that was affected by the storm.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Consol Energy cutting retiree health benefits, phasing out pension
- Fans flock to what they hope will continue ‘magical season’
- Jobs on state website include ‘private party dancing,’ ‘car dates’
- Lawmaker warns restaurant inspection grades would violate state law
- Steelers notebook: Tomlin bringing officials to practice
- Attorney General seeks halt in Conneaut Lake Park sheriff’s sale
- Steelers’ Tomlin does not like his coaching style to be characterized
- Penguins notebook: Crosby ‘confident’ despite limited preseason time
- Groups sponsor candidates forum in Monessen
- Penguins notebook: Malkin picture muddy
- Former Steelers doctor loses bid for Miranda protection