'Sandy' an ill wind for used-car market

Hurricane Sandy might not be done wreaking havoc on the U.S.

Next up: The used-car market, expected to suffer from the storm months after the fact.

Analysts expect tens of thousands of cars to be scrapped because of storm damage, mainly flooding, saying the result is likely to be higher prices at used automobile lots nationally.

Making matters worse, an estimated 16,000 new cars were destroyed in the New York area – but that figure doesn’t include losses by the “two biggest automakers by U.S. sales, General Motors Co. and Ford Motor Co.,” which haven’t given estimates yet on the number of their vehicles that were total losses.

“The storm destroyed about 250,000 used vehicles on the East Coast, and maybe more, according to estimates by the National Automobile Dealers Association,” wrote Jerry Hirsch of the Los Angeles Times in a report distributed online Nov. 8 by the Detroit Free Press. “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.”

“That amounts to a little more than $50 to $175 for the average used vehicle,” according to the Times, but “auto information company Edmunds.com projects a higher estimate, saying that used car prices will climb $700 to $1,000 ‘in the short term.’” The impact on supply would spread across the country because “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.”

If there is good news in all of this for the auto industry, the storm and flooding losses eventually could lead to an increase in new car sales, automakers and dealers said, according to a Nov. 8 report from New York’s Daily News online.

Santander Consumer USA is providing assistance and waiving certain fees for customers affected by Hurricane Sandy. Visit our website here for more details.

By: Mark Macesich

Posted in News, Used Cars

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