fbpx
Friday, 17 September 2021 22:44

Hurricane Ida Destroyed so Many Cars, It Could Raise Prices Further

Written by Sean Tucker, Kelley Blue Book

Index

Share This:

 

The average price Americans pay for a new car has set a new record for five consecutive months. It’s likely to climb still higher this month.

We can cite all the usual culprits---supply shortages, an economic recovery, people nervous about public transit during a pandemic, and so on. But there’s a new factor pushing prices higher, and it’s one you may get used to hearing about---storms.

 

Hurricane Ida hit the Gulf Coast in late August as a massive Category 4 storm. It caused more than $50 billion in damage to property and took at least 86 lives. Among the property damaged: hundreds of thousands of cars.

 

AIR Worldwide, a risk modeling and damage assessment firm that serves the insurance industry, estimates insurers will pay out claims on more than 250,000 vehicles destroyed by the storm. That figure leaves out the many who don’t carry comprehensive insurance on their cars and thus won’t be eligible for a claim.

 

Prices for both new and used cars have been climbing all year. The average transaction price for a new car crossed the $43,000 threshold for the first time in August. Used cars sold for an average of $25,500 at the end of July, up more than a quarter in just one year.

 

It’s difficult to predict what havoc Ida will cause in the car market. After Hurricane Harvey destroyed nearly 500,000 cars in 2017, CNN Business said used car prices climbed by 3% for several months. That increase occurred amid a plentiful supply of new cars.

 

This year, new cars have been in short supply due to a worldwide microchip shortage. Dealers have had trouble obtaining enough used cars to sell, as rising new car prices sent shoppers...


Previous Page Continue reading »