The sheer number of cars destroyed by hurricanes Harvey and Irma in 2017—by some estimates totaling north of half a million vehicles—resulted a boom for both new and used car sales. That’s hardly unexpected.
The disaster-driven sales are already virtually non-existent, however, having occurred over a shorter-than-usual time frame. As a result, the average price of a used vehicle fell by nearly 1.3 percent in November in the industry’s first decline since last spring. Jonathan Smoke, Cox Automotive’s chief economist, said that prices generally decline in September and October, but that decline was delayed by the storm.
“Now we’re correcting on the used side back to old price-decline trends,” he said. “That will continue at least the next three months.”
One possible explanation for the abbreviated sales boost is the grim reality of declining credit ratings in areas impacted by the storms. According to Amy Cutts, Equifax’s chief economist, the combination of lost wages, storm-induced unemployment, and the tremendous costs of repairing property damage is only now beginning to appear on storm victims’ credit reports.
As a result, many of the replacement vehicles may be temporary in nature, with nicer, newer vehicles following in the next year or two.
“I wouldn’t be surprised if there is a slight rise in vehicle purchases over the next 12 to 18 months,” Smoke said.