The Detroit Bureau website reported that it is likely that consumers as far away as the West Coast could feel the pinch of the effects on Hurricane Sandy on automobile pricing.
Early estimates suggest that tens, perhaps hundreds of thousands of vehicles were damaged to the point they will need to be replaced. This is likely to drive up prices for both new and used vehicles in the weeks and months ahead.
The hurricanes to the Gulf Coast region in 2005 destroyed an estimated 640,000 vehicles. “The damage from this storm was more widespread across a more populous area than was ht by Katrina, so the number of vehicles that will need to be replaced will likely be much bigger” warns Rick Beggs, VP of the Black Book. “In fact, the impact will have a “ripple effect in other parts of the country” as dealers and customers in storm damaged regions race to find replacement vehicles”.
Complicating matters, used vehicles already were in short supply because of declining sales of new vehicles during the recession of the last four years. Prices have already been nudging record levels for much of 2012 and Mr. Beggs predicts there will be another “bump” in the months ahead.
He further noted that new care prices may also be heading up, especially in markets with high lease penetration. These customers will be more likely to replace damaged vehicles with new ones. How man other motorist buy new vehicles could depend on whether they’re covered by insurance, and how much they get in a settlement.
While it may prove to be more expensive to purchase a vehicle, it could be a positive side for consumers for those looking to trade in a car. “It might be a good time, event his week, for getting maximum value for a trade in as dealers scramble to line up used vehicles to replace those destroyed by Superstorm Sandy”, he added.