(MoneyWatch) The combination of flood damage to dealers' inventory during Superstorm Sandy and rising demand from victims who need replacement cars will push up used car prices, analysts say.
Price increases could add up to 1.5 percent nationally in December and 3 percent over the four months following the storm, says analyst Jonathan Banks of the National Automobile Dealers Association Used Car Guide . That's what happened to used car prices after Hurricane Katrina in 2005. And in New York and New Jersey where the damage was concentrated, prices could rise even more, Banks says.
Not only did wind and flooding damage used cars on dealers' lots, but in many cases new supply must be brought in from other states.
Look for price increases to be especially sharp among luxury used cars as well as pickup trucks, where contractors and others who lost vehicles need to get replacements for their work.
If you are among the storm victims who are considering a used car replacement, the analysts at Edmunds.com have this advice:
- If you can postpone the purchase, wait until used car prices -- which were declining prior to the storm -- settle down again.
- Research whether a new car might be a better deal. Auto loan rates remain low, and several auto makers are offering special incentives to storm victims.
- If you buy used, be careful not to get a cleaned-up car that has been flooded. Look for discolored carpet and unusual odors in a car you are considering. Check the Vehicle Identification Number with The National Motor Vehicle Title Information System to make sure the car has not been designated as a flooded car.
Photo from Flickr user Jason A. Howie