Used car prices are expected to increase after Hurricane Sandy destroyed 250, 000 used vehicles on the US East Coast.
The National Automobile Dealers Assn estimates that the storm has destroyed more than 250, 000 vehicles, which means that prices for used cars might increase up by 0.5% to 1.5% in December. Jonathan Banks, an analyst with NADA, said that prices will likely rise with $50 to $175 for the average used vehicle. Edmunds.com expects a higher increase, between $700 to $1,000 in the next months.
“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,” Banks said. “It used to be that dealers would buy cars from a physical auction near their dealership.”
Banks also draws attention that not only used cars were destroyed, but also thousands of new cars flooded in storage yards or dealerships in New York and New Jersey. Fisker declared it had lost 300 Karmas valued $100,000 each, which is a $30 million loss. Toyota said it lost 4,500 Toyota, Lexus and Scion new vehicles due to storm damage and flooding.
“Prices could really shoot up for consumers buying cars right away because they will run into a severe inventory shortage,” Banks said.