Hurricane Florence Impacts Used Car Industry, But Not Like Last Year’s Storms Featured

By Ted Craig September 28, 2018

While Hurricane Florence’s impact on the Carolinas was tremendous, the storm’s impact on the used-car business overall will be less than last year’s combination of Harvey and Irma.

Those storms struck heavily populated areas with large numbers of vehicles. Harvey was especially damaging, taking hundreds of thousands of vehicles out of operation.

Florence struck less populated areas and therefore destroyed fewer vehicles.

Cox Automotive estimates that 20,000 to 40,000 vehicles could be lost due to flooding in the Carolinas.

However, Cox Automotive Chief Economist Jonathan Smoke points out that the used-car market of last fall differs from this year, so Florence’s impact might prove greater for its scale.

“Even though the replacement need will be smaller in this case, we could see values increase temporarily especially in the region due to limited supply,” Smoke said.

In related news, Insurance Auto Auctions used Florence as an opportunity to demonstrate its latest tool -  IAA Tow App.

The IAA Tow App utilizes inventory management software to automatically push tow assignments directly to IAA contracted towers with capacity on their tow trucks or haulers. 

“One of our primary commitments is to quickly and efficiently transport customer assets to our facilities," said John Kett, CEO of IAA. “This is particularly important during catastrophic events when impacted vehicle volumes surge.”

 In advance of Hurricane Florence and its subsequent flooding, IAA secured nearly 1,100 acres available to store recovered vehicles, obtained commitments from over 1,300 towers and had more than 400 IAA team members ready to respond.

IAA has 16 branches in Virginia, North Carolina, South Carolina and Georgia with capacity for the anticipated vehicle volume as a result of Hurricane Florence and historic flooding. All IAA branches, including Wilmington, N.C., are open and fully operational.

Sometimes, all this extra business comes at a high cost.

Rival salvage auction chain Copart Inc. recently reported a pre-tax loss of $12.8 million for its latest fiscal year, which ended July 31, due to “abnormal costs” of $79.7 million incurred as a result of Hurricane Harvey.

These costs included temporary storage facilities; premiums for subhaulers; labor costs incurred from overtime; travel and lodging due to the reassignment of employees to the affected region; and equipment lease expenses to handle the increased volume, as well as cost of vehicle sales.

 

 

 

Last modified on Friday, 28 September 2018 16:03

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