Sandy Brings Storm of Rising Used Car Prices: How Should You Prepare?

In the wake of late October's devastating hurricane, industry experts are now telling us to  prepare for another storm, albeit one of a different variety. While as predicted, hurricane Sandy brought with it rain, wind, floods and power outages, it also brought with it something that was a little more unexpected – Rising used car prices.

The reasons for this seems simple enough: As hurricane victims begin their search for replacement cars, they will do so by turning to the local dealerships in the Northeast, an area which accounts for almost twenty percent of all new and used car sales in the United States. Unfortunately, those local dealerships were hit just as hard, and their inventories are already at record lows.  

So what is going to happen when consumers come knocking and those dealers have only limited options? Yep, you guessed it: prices are going to rise. In fact, in an interview with Auto Remarketing, Edmunds.com director of analysis Ray Zhou predicted that "Used vehicle prices will increase $700 to $1,000 in the impacted area"

Unfortunately, while the immediate impact will be on the Northeast, car buyers across the country should begin to prepare for a rising price storm. Because those local dealerships are going to cast a wide net to meet demand, pulling in cars from all over the country, used car prices everywhere will be affected throughout the upcoming months.

Prepare yourself for the rising price storm.

The question then becomes:  If you are one of the thousands of consumers in need of a car during the next several months, how do you avoid paying those higher prices?

Well I sought out the advice of the used car buying experts over at UsedCars.com. As the prominent online used car search engine, they were able to shed a little light on a few money saving tips:

·         Buy now:  While this may seem like a contradiction in terms, you should not wait for prices to go down – especially if you anticipate needing a car within the next several months. Right now, the hurricane has interrupted car sales in October and early November, and we have yet to see the prices jump.  This means that if you have the opportunity to buy a car within the next week or two, it’s almost imperative that you strike while the iron is hot.

·         Think Compact: The compact car industry was best prepared for the increased demand. New and used inventories for compact cars were in surplus before the storm, which means that there may be enough supply to meet this demand.

·         Avoid Luxury: According to Edmunds.com, New York, Philadelphia and D.C. account for 25% of all luxury cars sold in the United States. This means that now may not be the best time to think about buying a luxury car.

·         Shop Online: The dealerships in the Northeast are turning to the internet to replace their inventories, and truthfully, there is no reason you cannot do the same.  Car buying search engines have made it easy for car buyers to shop for deals all over the county. You simply enter in the make or model you are interested in, and the search site returns a list of dozens of cars that meet your criteria.

One final piece of advice shared, is the potential for flood damaged cars infiltrating the market. Car buyers over the next several months need to be on the lookout for cars that were damaged during the massive flooding that accompanied the storm.