Does Hurricane Season Affect Car Prices?
Lisa Steuer McArdle
· 4 min read
People always talk about the damaging impact the strong winds and excessive amounts of water brought on by hurricanes have on houses, commercial buildings, and the local water supply. What is seldom discussed is the effect storms have on the auto market.
The reality is that every time a hurricane reaches the shore, thousands of cars are damaged. Some of these
hurricane-damaged cars
are totaled by falling/blowing debris, but the vast majority suffer significant flood damage
that forever impacts their performance. Not only do these hurricane-damaged cars impact the car market, but they also have an immediate impact on the car insurance industry.
Why hurricanes impact the car market
In August 2021,
CNN Business
reported that it looked like used car industry prices had finally peaked and that consumers should get some from the sticker shock they'd been encountering all year. But then hurricane season struck.
Hurricane Ida
and an increase in flood-damage insurance claims connected to the storm left the car industry hurting. Car prices are expected to increase in the wake of the 2021 hurricane season, but no one really knows how much storm-damaged cars will impact prices.
Road Show
reports that in 2017, Hurricane Harvey elevated new car prices by 3%, and that was when the market was stable. Considering that the 2021 car industry is anything but stable, it's reasonable to assume that damage done during this hurricane season will result in a significantly larger price hike."Excuse the pun, but it's the perfect storm situation. There has never been something like this before," said David Paris, senior manager of market insights for J.D. Power, according to
Ford Authority
. "We definitely see used vehicle prices pick up for two to three months after a storm. But that's when there's a healthy level of inventory. This is uncharted territory."Why are car prices already so high?
When COVID-19 hit the United States, some car factories were forced to shut down. This, plus a
global microchip shortage
, contributed to a decrease in new cars and drove demand in the used car market. For consumers, it resulted in higher car prices and weeks and months spent waiting for their new car.
"There hasn't been one component that has hampered this many companies and products," Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions said according to
Cars.com
. "It touches so many parts of the car, from power controllers to navigation, to power seats, everything like this has a semiconductor in it. It can stop everything. Any one of them can be a linchpin that brings everything down." The good news is that automakers have continued to make new vehicles and fill orders. They have been parking those new cars and as soon as they get an order of chips, they install them on the vehicles and immediately ship that batch out.
When is the car market supposed to level out?
If you're in the market for a new car and don't want to either wait or pay an extremely high price, it's in your best interest to kick back and be patient. While industry experts do expect that the market will eventually level out, they don't think it will happen anytime soon. One industry expert doesn't think the prices will settle into place until later in 2022.
"I think we should see a little bit of relief by the end of the third quarter," Jessica Caldwell, executive director of insights at Edmunds.com said according to
Slate
. "But it will take time for chips to make their way into vehicles and vehicles to make their way into the market. And that's why we aren't out of the woods yet." Considering that car prices have increased, the last thing you want is to get into an accident without being sufficiently insured. Sign up with
Jerry
and gain instant access to the most affordable car insurance rates. You'll save money and gain peace of mind.
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