Auction Execs: Market Impact from Irene, Flooding Not As Severe As Initially Thought

During August, close to 12,000 claims related to vehicle flood damage were processed by insurance companies with membership in the National Insurance Crime Bureau.
The vehicle damage, according to NICB, likely stretched from Maine to North Carolina; but it appears the wholesale market may have dodged a bullet in the aftermath of Hurricane Irene and flooding along the East Coast.
Jerry Tassone — Manheim’s market vice president for the Northeast — said that in his region, which covers northern New Jersey, New York, Rhode Island, Massachusetts and Canada, there hasn’t been a “huge influx” of flood-damaged cars coming into auction.
“Candidly, we didn’t see a huge influx of cars related to flood damage. We expected more than we actually received,” he told Auto Remarketing on Tuesday afternoon.
Tassone added, “What we did see, we didn’t see any branding issues or anything like that.”
However, his region did gather up roughly 300 flood-damaged units for a special event sale at Manheim New York Metro Skyline, which is located in Fairfield, N.J.
“Consistent with National Auto Auction Association disclosures, obviously flood damage was announced on all of those units. Other than that, most of the other locations in my region didn’t see a huge influx of flood cars. What we did see at the other locations was in the tens, not in the hundreds," Tassone said.
“And again, all of those vehicles were disclosed and sold during a normal sale,” he added. “They might have gone through our TRA lane as opposed to the regular lanes, but (we) really didn’t have that much volume.”
Looking at NICB insurance data in more detail, the bureau reported that its members processed 11,789 flood-damage claims in August, up from 994 in the same period of 2010.
More than a third of these claims (4,121) were from New Jersey, by far the leading state. Second on the list was New York with 2,809 claims, while North Carolina was third with 2,585 claims.
Shortly after Hurricane Irene, Lynn Weaver of Harrisburg Auto Auction in Pennsylvania — and others in the Northeast — had to deal with massive flooding in September, leading to what Pennsylvania Gov. Tom Corbett called the most severe emergency level in the state since the Sept. 11, 2001 terrorist attacks.
However, Weaver, the auction’s owner, said flood-damaged units coming back into auction have been minimal and far from the massive expectations.
“It’s probably too early for the title-brand situation to pop up. And that goes through the insurance process for total-loss claims and things like that. Normally, that is more consumer-oriented, although they drift back into the wholesale auto auction business very quickly,” he told Auto Remarketing.
“But we have seen a number of cars starting to come through, not a huge number … a couple a week, maybe,” he continued. “A lot of them are from our commercial clients. They, of course, want to announce it properly, so once we determine it is a water-damage or it is flooded vehicle then we make the appropriate announcements.
Weaver added: “The volume is nowhere near what the industry publications were saying — tens of thousands and so on. I didn’t think at the time that it was that drastic, and I don’t think even now it’s anywhere near that.”
When asked what fellow auctions in the area were saying, Weaver said he hasn’t heard much about any issues, so he believes “it’s not as big of problem as it could have been.
“The way those storms occurred gave most of us enough time to prepare for it and get our vehicles to higher ground,” Weaver noted. “It kind of became a consumer issue where they were caught somewhere or somewhere they weren’t expecting water.”
As far as consumers turning in flood-damaged claims to insurance companies, “that’s a different animal,” Weaver said, noting that those units “may or may not drift back through the wholesale industry.”
The ideal thing would be for those units to be scrapped, he added.
But what about outside the affected areas?
For Jason Hockett, who is the vice president and managing partner at ABC Auctions — with locations in, Illinois, Kentucky, Georgia and Florida — he managed to dodge Irene’s path.
But obviously, flood-damaged units sometimes find their way into other parts of the country.
Thankfully for ABC, that doesn’t appear to be the case.
“To date, we haven’t had any problems or issues arise from these units,” he said. “We’re grateful for that.”