Harvey and Automobiles

[imoldernu]

Depending on who tells it, 500,000 cars destroyed in Houston alone.

https://www.washingtonpost.com/national/storm-flooding-destroyed-hundreds-of-thousands-of-cars-in-a-city-that-relies-heavily-on-them/2017/09/03/1dd22680-90b8-11e7-89fa-bb822a46da5b_story.html?hpid=hp_hp-top-table-main_harveycars-7pm%3Ahomepage%2Fstory&utm_term=.220a9746999d

whaddya know about this?

What kind of insurance pays for the cars? % covered by comprehensive insurance?
What constitutes a "destroyed" car?
Titling a flood car?
Dealers quoted as sending their entire lot inventory to the crusher. All of the "destroyed" cars?
What about buying or selling a "Flood" car?

So I'm thinking about one time, long, long ago, when my car went into water well above the floorboards. After a drying out, and a little work, it was fine.
What happens to flooded cars besides upholstery and some wiring?... Even dropping the pan, removing the head and replacing some electronics (along with reupholstering} shouldn't cost as much as crushing a $30 thousand dollar car. Can a few days under water cause that much damage?
Couldn't most parts be recycled?

I don't pretend to know these answers, but if all the 500,000+ cars go through the crusher it's gonna make one big pile.

 

[brucethebroker]

googled it and got this from Forbes, www.forbes.com/sites/jimgorzelany/2...d-getting-stuck-with-a-flood-damaged-used-car, in the last 4 days:

"In addition to the obvious damage done to upholstery and carpeting, flood water is a corrosive and abrasive mixture of water and dirt (and sometimes salt) that works its way virtually everywhere within a vehicle and can especially damaging to electronics, lubricants, and mechanical systems. Extensive disassembly may be needed for a thorough cleaning and reconditioning. Depending on its make, model and age, the cost to restore a flood-damaged vehicle could exceed its value, in which case the owner’s insurance company would consider it “totaled.”

Such vehicles are legally bound to have their titles labeled as being salvaged. They’re usually sold at auction to auto graveyards and vehicle rebuilders, and are typically scrapped and recycled, often with some components harvested and reconditioned. But as is the unfortunate case following major storms, as many as half of them are likely to be cleaned up, repaired, and sold to unsuspecting buyers, according to the title-search company CarFax. Some will be repaired and sold with titles that are clearly marked as having been “rebuilt” – in which case it’s buyer beware – but many others will carry illegally altered titles. And still more that were either not insured or weren’t damaged enough to be declared as total wrecks will be spiffed up and offered with otherwise clear titles."

 

[brucethebroker]

Goes on to say the greatest danger is buying directly from the owners or "sleezy" car lots.

Guess Carfax is one way to check, but it would most likely only show up if repairs were done at a dealership or an insurance claim was filed.

 

[imoldernu]

googled it and got this from Forbes, www.forbes.com/sites/jimgorzelany/2017/08/30/how-to-avoid-getting-stuck-with-a-flood-damaged-used-car, in the last 4 days:

Good find... Would probably guess most of the answers... but the sheer numbers (some quoting as many as one million cars) makes the "fixing" part sound overwhelming. Then, who will do the repairs? Not as if it were like an oil change. Am imagining that 2016 Mercedes being hauled out of a flooded parking lot and being brought to a crusher, or tossed on a heap of other cars.

Apparently Katrina or Sandy left hundreds of thousands cars destroyed, but a half or maybe one million? There are only about 750,000 auto mechanics in the United States.

 

[Bamaman]

Depending on who tells it, 500,000 cars destroyed in Houston alone.

Most of the new cars on dealers' lots are insured by the manufacturers' own insurance companies.

Modern autos/trucks are full of as many as 125 fuses and dozens of relays. They'll never be reliable once wet. And manufacturers could be found liable of negligence if someone gets killed in a car that stalls out in the wrong place. Any new automobile gets into a flood, they really need to be crunched.

If a used car is flooded slightly, it may be titled with a salvage title and sold as such. But who knows how high the water in the car was. It wouldn't be a smart buy to buy any Texas car in the future with a salvage title.

Dealers and individuals will be turning over their flooded cars to their insurance company. They'll make the decision on what to do with them--most likely to be crunched. Some vehicles may be disassembled and parts sold in salvage yards. I just feel sorry for the individuals that are "under water" on their flooded cars.

Look for the big auto auctions in Dallas, Memphis, Nashville Atlanta and Lakeland, Florida to be very, very active in the coming weeks. I can also see the rental fleets dumping their excess cars on the retail market. And expect the relatively low prices of cars recently to increase dramatically. Also look for the new car manufacturers to be sending train loads of their excess new vehicles to Texas to replace those vehicles on new dealers' lots that were flooded.

 

[aja8888]

In Houston, where we live, many of the cars will be totaled and sold to Copart, a scrapper. Copart will auction the cars off to dealers and individuals who can qualify to join their program. The cars will either become parts hulks or, if salvageable, be sold with a Salvage title.

Here's a link to Copart Houston:

https://www.copart.com/locations/houston-tx-11/

Our Houston, TX location auctions clean-titled, salvage-titled and non-repairable vehicles for all types of buyers.
Copart's online vehicle auctions include lots that can be used by dismantlers, dealers, body shops, individual buyers looking for project cars and more! All are welcome to visit our Houston location to examine the large variety of vehicles available for auction. We even offer inspection services to make sure buyers have thoroughly covered off on exactly what has been purchased in the vehicle auction.

Copart is not limited strictly to auto sales. Instead, we offer a wide selection of vehicles. Here you'll find boats, RVs, ATVs, municipal vehicles, tractor trailers, industrial vehicles, motorcycles and other vehicle types.

 

[W2R]

IIRC, after Katrina Carfax (or somebody?) flagged every car that was registered in a flooded zip code during the hurricane. Like mine, for example, which was parked up high so it did not flood, but was still flagged. You could check this database at a link online for free to see if a given car was flagged. At any rate, there were numerous articles in local and national news media saying that used car buyers and the general public had access to this info, and that consequently prices for used cars that were flagged were very, very low, even if undamaged.

What many with undamaged cars did, was keep the car a long time. Then, a low price would be less of a problem since not much could be expected either way.

 

[steveark]

Not sure how much water it takes but both my brother's cars were totaled by Harvey in League City TX. They only got 8.5 inches of water in the house.

 

[Car-Guy]

Buyer beware. Many years ago, I unknowingly bought a flood damaged used car from a well known and "reputable" (so I thought) car dealer. Yes, I know, the word "reputable" and "car dealer" don't seem to go together. This was a new car dealer that sold his better trade-ins on his used car lot. This was back in the days when I could only afford a used car. For some reason I bought an extended warranty. After three engine "rebuilds", a new transmission and a rebuilt third member, I finally sold it back to the same dealer I bought it from.

I found out it had been in flood waters one day when I pulled one of the rear tail light housings. It was easy to see that dirty water had at one time, filled the enclosed area of the body.

 

[Jerry1]

I hope/wish there is a program so salvage the parts from these cars that are good. For example, it didn't hurt the wheels to be flooded. I'm sure there are many other parts that are worth saving. Of course in our replace instead of repair world, the cost to capture the good parts is probably too expensive, but the recycler in me is hopeful something can be salvaged. Maybe if they flood (no pun intended) the market with some cheap wheels, for example, maybe it will impact the low life's that are stealing them in our neighborhood.

 

[MichaelB]

Some of these cars will be shipped overseas and sold as new, with no indication of any water damage.

 

[kcowan]

I am in the market for a 3 year old SUV next May. Looking forward to depressed prices for dry used cars owing to the glut caused by wet ones.

 

[OldShooter]

I am in the market for a 3 year old SUV next May. Looking forward to depressed prices for dry used cars owing to the glut caused by wet ones.

It's probably the other way around. All the people with flood cars are now in the market for new and used cars, so prices are expected to rise. Maybe in six months this will have abated, but the hurricane victims' quickly taking a large number of used cars out of the market will have to have some lingering effect.

 

[pb4uski]

ah... that wretched supply and demand thing.

 

[omni550]

I am in the market for a 3 year old SUV next May. Looking forward to depressed prices for dry used cars owing to the glut caused by wet ones.

Higher prices no doubt, as others have said...plus you'll need to be extra vigilant that some scammer isn't selling you a Harvey or Irma car.

omni

 

[braumeister]

There is some good info available on how to spot a flood-damaged car. Here is one:
https://www.carfax.com/press/resources/flooded-cars

325,510 Flooded Cars Back In Use Nationwide

 

[Blue Collar Guy]

When Hurricane Sandy hit, I heard people their cars into the water to get rid of them. Book value is a lot more than the price they could have sold the cars for. Especially the leased cars.

 

[Winemaker]

I don't foresee a great problem but again buyer beware, and reminds me of a catastrophic auto/truck flood issue I had.

I help out at a local winery and also make wine at home. Several years ago, after pressing almost fully fermented grapes, I had 2 6 gallon carboys in the cab of my truck. About a half a mile from the house, one of my carboys tipped, hit my tool bag, and broke, spilling 6 gallons of fresh wine onto the floor of my truck. It ran from the behind the seats and flooded both sides, filling the floorboards up to my ankles. Between the tears of losing a very good California Cabernet, I was laughing as I watched a real "Wine Trail" in my rear view mirror on my street. Then I stopped laughing when my truck began sputtering and died just as I got in my driveway. Much to my chagrin, I found out where all the onboard computers are kept......under the seats!

It was an insurable event, but it cost me my $250 deductible to replace 2 computers, new carpet and loss of a truck for a week. $3000, I believe was the total cost.

I don't know if a dealer would spend at least $3000 a car to get it back in operating condition. I would think there would be more money in parts.

 

[kcowan]

Higher prices no doubt, as others have said...plus you'll need to be extra vigilant that some scammer isn't selling you a Harvey or Irma car.

omni

Agreed. But I see this as 500,000 extra cars in the used market.
Over the next few months. This should depress prices. If the other 500,000 that are crushed are all used car demand, then it is a wash. But some percentage of the 1,000,000 will undoubtedly buy new. Maybe a short term bubble followed by a gradual decline.

 

[Chuckanut]

At least one source is predicting a rise in used car prices for six months or so, as people replace ruined cars but can't afford to buy new ones. I assume the Auto Industry will get a small bump also since trade-ins will be worth a bit more.

 

[OldShooter]

Agreed. But I see this as 500,000 extra cars in the used market.
Over the next few months. This should depress prices. If the other 500,000 that are crushed are all used car demand, then it is a wash. But some percentage of the 1,000,000 will undoubtedly buy new. Maybe a short term bubble followed by a gradual decline.

Sorry, @kcowan, but I don't think you have the arithmetic quite right.

Every one of the flood cars was owned by someone and virtually all of those owners will be replacing their cars. So the net number of cars purchased will be equal to the number flooded or (using your numbers) a million. A quick trip to the ever-reliable internet give me a historical new car share of 30%, so that leaves 700K used cars being purchased. (Probably that 30% is high, because we are talking economic destitution in many cases.) So subtracting your estimated 500K salvage-title cars (which seems high to me), we are left with a net drawdown of 200K units. Compared to total annual auto sales this is not a huge fraction, but the point is that there will not be an increase in available used cars, there will be a decrease. The amount of the decrease is:

Total flood cars - Cars Sold on Salvage Titles - New Cars sold to Victims = Net increase in Used Car Demand.

or, the same thing another way:

Total Flood Cars Scrapped - New Cars sold to Victims = Net increase in Used Car Demand.

There is no scenario where the net number of used cars increases unless new car demand exceeds the number of flood cars that are crushed, and that seems very unlikely. Said yet another way, the only way that all the salvage-title cars are a net add to to the used car market is if 100% of the flooded cars are replaced by new ones.

IMHO, anyway.

 

[kcowan]

So just working through a simple example:
1000000-500000-300000=200000 new cars?
Solving
1000000-500000=300000+200000 new cars?

So lots of new cars and 500000 salvage cars dumped on the market?
New car prices go up. Will they drag used car prices up?

 

[gretah]

Clark Howard has an article on his website warning people about dishonest people selling cleaned-up flooded cars as never flooded.

Here's an excerpt from the article at Clark Howard | Advice You Can Trust. Money in Your Pocket

"Dishonest people take flooded vehicles into certain states where they can easily wash the titles. That action removes any evidence that the vehicle was ever in a flood. Cars with washed titles can then be sold to any dealership across the country that either doesn’t know or doesn’t care that they’re buying a flood vehicle.

These cars often end up in the hands of ‘curb stoners,’ which are illegal dealers who run ads in the paper. They pretend they’re selling their sister’s car or their mother’s car and they hope you don’t know what they know.

To the naked eye, there’s no telling that anything is amiss with these cars. But you’ll know you’ve got a flood car when you encounter failed electrical systems throughout the vehicle."