The storms couldn’t have hit at a worse time. “Any new problem with car inventory is one problem too many,” mentioned Kayla Reynolds, supervisor of financial and Industry insights for Cox Automotive.
That’s means large issues for the hundreds of people that misplaced their automobiles as Hurricane Ida battered the Gulf Coast earlier than storming up to the Northeast.
Retired faculty academics Ira and Ruth Steinberg have been completely proud of their 2020 Honda Accord. Then the stays of Hurricane Ida hit their suburban hamlet of Hartsdale, about an hour north of New York City.
A flash flood burst via the condominium’s storage doorways and flooded it. No one was injured, however all 130 vehicles parked there have been misplaced.
The Steinbergs referred to as the Honda supplier at which they’d purchased their earlier automobile. “He said he didn’t have a lot of cars to begin, and he had lost 85% of his cars in the storm,” mentioned Ruth Steinberg.
Fortunately the Steinbergs’ loss can be coated by their insurance coverage, which has a provision to lease a automobile after a loss, however they cannot discover one. They’re 2 hundredth on the record for rental from Enterprise.
The couple is counting on their grownup son, who lives close by, to get round. They do not know what they will give you the chance to afford as soon as they get a settlement on their automobile, or after they’ll give you the chance to purchase it. But they’re making an attempt to preserve a very good angle.
Historical excessive automobile prices
But that pattern will not possible proceed in Ida’s aftermath.
“Excuse the pun, but it’s the perfect storm situation. There has never been something like this before,” mentioned David Paris, senior supervisor of market insights for JD Power. “We definitely see used vehicle prices pick up for two to three months after a storm. But that’s when there’s a healthy level of inventory. This is uncharted territory.”
Why floods destroy vehicles
Major storms can have an effect on automobile prices nationwide for a lot of months, as a result of so many vehicles are misplaced concurrently.
“A car that has been through a flood is basically rotting from the inside out,” mentioned Patrick Olsen, government editor of CarFax, which tracks injury to vehicles. “Anytime you get mud or silt in the connections it can create a short in system, which can cause a car to stall while driving.”
Hurricane Harvey, which hit the Houston space in late August 2017, is believed to have been essentially the most damaging when it comes to automobiles severely broken or destroy. Cox Automotive estimates that up to 500,000 automobiles in Texas have been misplaced from that storm, in contrast to 250,000 for Superstorm Sandy in 2012 and 200,000 for Hurricane Katrina in 2005.
Hurricane Harvey pushed used automobile wholesale prices nationwide up about 3% within the month after the hurricane, and prices remained elevated via November. Experts worry it will likely be worse this time, even when fewer vehicles are affected.
“This is an historically tight market, so it’s going to be much more inflated impact we saw in previous storms like Harvey,” mentioned Cox Automotive’s Reynolds.
CarFax estimates that a minimum of 212,000 automobiles have been misplaced within the storm. And AIR Worldwide, which estimates insurance coverage business losses from pure disasters, believes that insurers will cowl losses of greater than 250,000 automobiles from Ida. And solely about 78% of the automobiles can be insured for this type of loss, in accordance to the Insurance Information Institute, which signifies that the variety of automobiles misplaced can be even larger than the insured losses.
“if you see a price that is too good to be true, it’s probably too good to be true for a reason,” mentioned JD Power’s Paris.