The Impacts of Sandy on Car Markets

We hope everyone weathered the ravages of Hurricane Sandy. It is amazing how an event launched by Mother Nature can alter so many landscapes -personal, physical,community and commercial among many others. You have probably seen the devastation of homes, communities and businesses. I’m going to speak from the point of view of the poor vehicle that got wasted and how there will be a shortage of vehicles in both the new and used marketplaces to replace the ruined ones and how prices will probably rise in the next few weeks. We will also show you where there is a brief window that is right here and right now to beat the inevitable rise in prices and shortage in inventory selection. Sorry for the seemingly unabashed sales pitch here but there is an opportunity and we’re not making this stuff up as politicians of all stripes are more than willing to do.

You might have noted how many cars were and still are underwater and wondered about what was going to happen to those cars. Think about how many vehicles may have been swamped or even compromised by all that water. Both individuals and dealerships were affected in a large swath of a very densely populated area of the eastern US. We think that there are going to be many people who are going to need to replace or who will want to replace their vehicles. There will also be a lot of trashed vehicles finding their way back into the market early next year that we need to watch out for.

A Perfect Pricing Storm

There will also be a whole lot of dealers who will need to replace totalled inventory and to supplement the surviving vehicles with enough inventory to meet the demand of all the consumers who are now back in the market to replace their trashed vehicle.

Even though many of us were basically unaffected by Sandy, the effects of having so many totalled and compromised vehicles will affect the market for quite a while even extending into next summer. This phenomenon is created by the fact that dealers prepare for the downturn in retail sales activity during the winter/holiday months by reducing inventories both new and used. Fewer new and used vehicles are traditionally sold from November until the Presidents birthday sales in February so dealers let inventory levels relax so they do not pay the expense to maintain and to pay the “juice” (cost of money) to keep inventory. In addition, new and used car sales this autumn have been spectacular – according to F&I magazine October is tracking at the second highest month of the year for new vehicle sales and used sales have also been amazingly strong. Consequently, we have a classic market situation that will drive prices higher in the wholesale and retail markets – low inventory – high demand.

So What Are We Doing About It?

We are aggressively encouraging all of you who need to make a move into another vehicle within the next 6 months or so to do it sooner rather than later. There is still opportunity and there will be a bit of lag time before other dealers realize that they need to think about buying future inventory instead of dealing with insurance companies and cleaning up the messed up ones. The time is now…. Next spring will be a challenge with high prices and potentially compromised quality of condition.

We are also sourcing our vehicles in the deep south before other dealers wake up. The transportation costs going north are cheaper than at other times of the year because the loads of “snow bird “ vehicles being transported to the south provide an opportunity to get a deal from transporters not wanting to go back north with an empty truck. Yesterday, October 30 we were active at the auction in Orlando and today, Halloween, we bought a BMW in Atlanta.

Don’t wait! We’re not fooling….