Hurricane Sandy will cost the East Cost billions in loss and repairs, and used-car shoppers will have to open their wallets even wider to buy a replacement vehicle. The storm took out thousands of vehicles, and the National Automobile Dealers Association predicts that prices of used cars will rise 0.5% to 1.5% as a result.
"The loss of used-vehicle supply and the increase in replacement demand after Hurricane Sandy will have the greatest impact on used-vehicle prices in December," Jonathan Banks, executive automotive analyst with the NADA Used Car Guide, said in a statement.
NADA is using the flood damage and its impact on used-car sales seen in the aftermath of Hurricane Katrina as a guide to predict Sandy's effects on prices. According to NADA, the reduced supply of used cars coupled with increasing demand after Katrina caused prices to increase by about 3%, or $309, in the four months after the 2005 storm.
The agency has adjusted its prediction based on the estimated number of vehicles affected during Sandy and the cost of the damage. EQECAT, a catastrophe risk analytics company, puts insured losses related to Sandy between $10 billion and $20 billion and projects total loss between $30 billion and $50 billion. The National Oceanic and Atmospheric Administration reports that the insured loss cost of Hurricane Katrina was $46.5 billion, and the total cost was $145 billion.
"Although Sandy's reach encompassed an area with a greater population density than Katrina, the number of vehicles damaged by flooding doesn't appear to be as high as the number lost to Katrina," Banks said.