It’s been more than a week since Hurricane Sandy tore apart parts of New Jersey and New York but the storm’s aftermath will be felt for quite some time to come. A new report from the Detroit Free Press says that around 250,000 used vehicles–possibly more–were destroyed in wake of Hurricane Sandy. According to the National Automobile Dealers Association, gently used vehicles will be in high demand in the coming months and to expect a 0.5 to 1.5 percent hike in prices in December.
If that doesn’t sound like a lot, it’s not. It only works out to be about a $50 to $175 bump in overall price. However, expect dealerships to take advantage of the shortage of used vehicles with prices climbing anywhere from $700 to $1,000 depending on the condition of the vehicle. Obviously, with Sandy’s destruction affecting mainly the eastern seaboard, prices are expected to be inflated the most but the rest of the country could also feel the storm’s effects. It’s estimated that 20 percent of new car sales in the United States hail from the Mid-Atlantic and the Northeast.
“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 past,” said Jonathan Banks, an analyst with National Automobile Dealers Association. “It used to be that dealers would buy cars from a physical auction near their dealership.”
To make matters worse, over 15,000 new cars were also destroyed by Sandy while waiting in the Port of Newark not to mention all of the dealerships around New Jersey and New York. Banks told the Detroit Free Press that dealerships have been hit hard, one Honda store lost 600 new units in the storm. Fisker Automotive, who is desperately trying to get its Karma model off the ground, saw 30 units go up in smoke after each caught fire after being submerged for hours. In all, Fisker is expecting to lose $30 million in damages but luckily for the Anaheim, Calif.-based automaker, it was all insured. Toyota, Honda, Nissan, Ford, General Motors, Hyundai, and Kia all lost vehicles to Sandy’s wrath. Nissan lost around 6,000 units while Toyota believes about 4,500 units, between itself, Lexus, and Scion were lost to the storm.
Dealerships believe their new stock will begin getting on track again sometime in December but they won’t be running at full capacity until at least February of 2013. This lag in replacement units takes time as insurance companies need to disperse payment to those who lost a vehicle and then more waiting as people shop for the right vehicle. However, some industry experts believe this will spur the economy back into a more favorable situation.
Source: Detroit Free Press