As of press time, Hurricane Sandy was headed West, leaving much of the Northeastern states scrambling to recover power and get flooding under control while assessing the damage of the powerful storm.
With vehicle damage already reported, Black Book’s Ricky Beggs offered Auto Remarketing some insight into how the storm may affect the used-car market in the coming months.
The Black Book managing editor stressed that used-car inventory may become even tighter for dealers in an already difficult environment.
“There is going to be a quick influx of demand for additional used cars, especially all the way up the East Coast, and will reach up to New England and down South,” Beggs said. “People are going to need to replace damaged vehicles.”
In fact, the calls had already started coming in on Monday.
“We had a customer call out of Nags Head, N.C., yesterday (Monday), and he was already looking for a value to replace a collectable-type car that had been damaged in the storm. The effect (of the storm) will be wide reaching, for sure,” Beggs said.
And Sandy may bring prices up for used vehicles, as well, both in the lanes and on the lots. After a brief reprieve from high auction prices, dealers had been seeing some price softening this fall season while buying in the lanes.
That might all be about to change.
“I think we will see a little bit of a price bump in the market; I expect prices to definitely be impacted,” Beggs said.
However, he offered a caveat, as well.
Beggs explained that one “fortunate thing about the industry” is that not all the units needed to fulfill demand after the storm will come from one particular section of the country – in this instance, the Northeast.
With online auctions and high-tech transportation services, most of the cars needed to replace units damaged from Sandy will come from all over the country and be distributed all along the East Coast.
Spreading the buy-ups out will help wholesale prices to stay even and not spike too high in one concentrated area.
“It is not going to be that the edge of the storm gets all the business — it is going to come from all over,” Beggs added.
Auto Remarketing also asked Beggs which particular segments were going to see the biggest price spikes in the coming months.
First, he shared that all segments will rise, “because most people will go back to what they had,” explaining shoppers will replace their damaged vehicle with a similar unit.
That said, Beggs predicts the full-size pickup truck segment — which has retained relatively consistent values for the past few months — may “see some real demand” and higher price spikes.
The service industry may contribute to this price hike.
“A lot of the trucks up there in the service industry got damaged, and they will be replaced. And No. 2, people in the service industry have aging vehicles already, and they can see an opportunity and are getting in the market, as well,” Beggs said, noting these two factors will contribute to the truck segments' potential price spike in the coming months.
Lastly, the editor offered some tips for dealers that have been affected by the storm and are assessing damage.
“Prepare. Get cars; even if you are not sure what you are going to need yet. Focus on getting inventory – people are going to need that,” Beggs said.
And it looks like online auctions may see a rise in business in the coming months as dealers rush to fill their lots in the wake of the storm.
“Dealers in the Northeast will go all over the country, and you will see more activity online. You have got OVE, and all different online sources from the online auction companies. They will be utilized,” Beggs concluded.
Auto Remarketing also reported on how Hurricane Sandy — or “Frankenstorm” as people have dubbed the pre-Halloween tempest — will potentially affect new-car sales for October.
Edmunds.com offered insight into which nameplates are most popular in the areas affected by the storm as well as why November will be an “interesting” month to watch for the industry.
To view the article, see here.
NADA Foundation to Provide Emergency Relief Fund to Assist Victims of Hurricane Sandy
In other news to hit the stands in the aftermath of Hurricane Sandy, the National Automobile Dealers Association announced dealership employees who have been affected by the disaster are eligible to receive financial assistance from the Emergency Relief Fund of the National Automobile Dealers Charitable Foundation.
“It’s too early to know the extent of the damage to auto dealerships from the storm. Widespread power outages have disrupted communications, including phone service, in many of the hardest hit areas,” said David Hyatt, vice president of public affairs for NADA. “It will likely take days or even weeks before we start to get a clear picture of what's needed for storm relief.”
NADA will be working with the state and metro dealer associations in the affected regions of the country to notify dealers and their employees that financial assistance from the Foundation’s Emergency Relief Fund is available, officials shared.
Employees can apply directly to NADA for emergency assistance or dealers can apply on behalf of their affected employees.
To fill out a Emergency Relief Fund’s assistance application form, visit the link here.