KBB.com: Sandy should have only a modest impact on used car prices

By KBB.com Editors on November 12, 2012 8:19 AM

Although Superstorm Sandy cut a nightmarish swath of destruction through the Northeast destroying an estimated 100,000-200,000 vehicles in the process, the Kelley Blue Book Analytic Insights group anticipates it will place only minimal upward pressure on the price of used cars in the months ahead. According to senior analyst Alec Gutierrez, the effects that do occur should be largely confined to the East Coast and likely be fairly short-term in duration. The sharpest spikes are expected to occur over the next 6-8 weeks, primarily due to acute demand from franchised dealers in the area as they attempt to replenish inventories lost to Sandy's high-intensity wind and rains.
Gutierrez cites two main underlying reasons for this KBB.com prognosis. First, Sandy hit late in the year, at a point in time when the used-car market was already in its cyclical 4th quarter decline. As a result, rather than undergo their traditional 1-2 percent value drop at the wholesale level, used vehicle prices are now expected to stay fairly flat for the most part. Second, the storm devastated a large number of key ports along the east coast. Because of that, many vehicles normally headed to auction for subsequent export to Europe or Africa will now likely remain here, further mitigating upward price pressure until the supply/demand curves move back into equilibrium. Where are we apt to see the biggest upward moves? Mostly among older used models that will be sought after by individuals with less-than-ideal credit ratings who need to find affordable replacements for their damaged vehicles.

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