Used-car values are already at a record high, and prices could climb even higher over the next couple of weeks due to the tighter supply.
Thousands of cars and trucks have been totaled, with water up to their windows and in some cases, over the roof.
The flooding is so extensive that it is estimated that a half-million vehicles may wind up being scrapped.
Jonathan Smoke, the chief economist for Cox Automotive, said, “This is worse than Hurricane Sandy. Sandy was bad, but the flooding with Hurricane Harvey could impact far more vehicles.”
After Hurricane Sandy hit New York and New Jersey in October 2012, there were an estimated 250,000 vehicles that had to be written off and scrapped.
The New York metropolitan area may have a bigger population than Houston, TX, but the number of vehicles per household is much higher in Houston, hence double the number of cars written off.
With so many vehicles in the flood zone, insurance companies will be busy handling claims and sorting out insurance payouts for flood victims so they can buy new vehicles.
Car prices could climb even higher over the next couple of weeks due to the tighter supply in the Houston area, but not all of the flooded vehicles will wind up being scrapped. Many will be cleaned up and resold, often without the new buyer realizing they are buying a salvaged car or truck.
Frank Scafidi with the National Insurance Crime Bureau said, “It’s going to happen, that’s inevitable. Look at all those vehicles floating around. There are people who will try to take advantage of the situation.”
The resale of repaired flooded cars is not illegal in the US, as long as the flood damage is disclosed on the title to buyers. After Hurricane Katrina, thousands of rebuilt flood vehicles were sold to unsuspecting buyers with titles that had been washed or reissued in a different state.
“We didn’t see this on a huge scale until Hurricane Katrina,” said Scafidi. “Since then, the public awareness of the problem is greater, but with thousands of flooded vehicles it’s hard to prevent this from happening.”but with thousands of flooded vehicles it’s hard to prevent this from happening.”