The Northeastern United States was hit hard by Hurricane Sandy, which caused billions of dollars in damage and left thousands without power. Although the immediate crisis has passed, the auto industry is still suffering from the “Superstorm.”
New cars are in queue to be delivered, but there is still a lot of devastation for consumer-owned vehicles. Drivers will have to replace hundreds of thousands of damaged or new vehicles after Sandy’s destruction. As automakers and car-buyers deal with the devastation, prices will rise and supply of the most desirable models may become scarce.
Automobile companies lose hundreds of millions
Car companies often store thousands of vehicles in the Tri-State Area’s densely populated Tri-State Area. Hurricane Sandy decimated more than 16,000 brand new cars that had been sitting in storage, awaiting to be sold or delivered.
Nissan USA sustained irreparable damage to approximately 6,000 new Nissan and Infiniti vehicles that the company deemed “unsaleable” representing a market worth around $180million. Toyota lost more that 4,000 cars that were parked at New Jersey’s Port of Newark.
Fisker Automotive, an electric car startup, lost 300 brand-new Karma luxury sedans. Each had a base price exceeding $100,000. Fisker also suffered potential reputational damage from Hurricane Sandy, when a few cars spontaneously caught on fire after suffering water damage.
Massive Hurricane Damage to Consumer-Owned Vehicles
The National Automobile Dealers Association estimates that between 100,000 and 250,000 private vehicles were destroyed by hurricanes in areas where they are not repairable. In the months ahead, this will have a significant impact on used car prices.
A trade-in is usually required when a new car purchase is made. This allows the vehicle to enter the used market. Used car supply will decrease as thousands of people will buy new cars without trade-ins. However, simple supply and demand will cause prices to rise. Edmunds.com researchers found that the average used car price could rise by as much as $1,000 over the short-term, even for areas far away from Sandy’s path.
Disaster-Relief New Car Incentives
There is some light at the end for those who decide to replace their car with a new model. Many automakers offer disaster-relief incentives. General Motors and Ford have both pledged $500 extra customer cash to customers who provide proof of hurricane damage insurance. Toyota Motor Corporation and Hyundai are offering $750 to buyers who were unable to purchase a Toyota or Lexus after the storm.