While Hurricane Sandy is Gone, Automakers are STILL Recovering
Hurricane Sandy devastated the Northeastern United States like no storm ever to hit the region, causing billions in damage and leaving thousands without power. While the immediate crisis is largely over, the auto industry still feeling the effects of the “Superstorm.”
From new cars awaiting sale or delivery to the massive devastation to consumer-owned cars, Sandy’s aftermath means drivers will need to replace as many as hundreds of thousands of vehicles with new or used models. Prices will rise, and supplies of the current most-desirable models could become scarce as automakers and car-buyers cope with the devastation.
Car Companies Lose Hundreds of Millions
In the densely populated Tri-State Area, car companies commonly store thousands of vehicles at port or in other locations away from dealerships. Unfortunately, Hurricane Sandy destroyed more than 16,000 brand-new cars that were sitting waiting to be sold or delivered to customers.
Nissan USA suffered irreparable damage to around 6,000 new Nissan and Infiniti models the company has deemed “unsaleable,” representing a market value of around $180 million. Toyota lost more than 4,000 new cars parked at the Port of Newark in New Jersey.
Electric car startup Fisker Automotive lost around 300 brand-new Karma luxury sedans, each carrying a base price of more than $100,000. For Fisker, Hurricane Sandy also caused potential damage to the Karma’s reputation, as a handful of cars spontaneously caught fire after suffering water damage to their electric drive systems.
Consumer-Owned Cars: Massive Hurricane Damage
According to the National Automobile Dealers Association, between 100,000 and 250,000 privately owned vehicles in hurricane-battered areas were damaged beyond repair. This will have a profound impact on used car prices in the months to follow.
A new car purchase is typically accompanied by a trade-in, which then enters the used market. Because thousands of consumers will spring for brand-new vehicles without a trade-in, used car supplies will dwindle, while simple supply and demand means that prices will go up. The typical used car price may rise by up to $1,000 in the short term, according to researchers at Edmunds.com, even in areas far from the Hurricane Sandy’s path.
Disaster-Relief New Car Incentives
For those who choose to replace their damaged car with a brand-new model, there is a bit of light at the end of the tunnel. Several automakers now offer disaster-relief incentives. Both Ford and General Motors have pledged an extra $500 customer cash for customers with insurance documentation showing hurricane damage. Hyundai is offering $750 and Toyota Motor Corporation is deferring payments for up to 3 months for buyers who lost a new Toyota or Lexus to the storm.
Author Gib Goodrich writes for GMPartsOnline.net, a website offering OEM Chevy replacement parts at wholesale prices.