Used Cars in the Storm 2: Prices & Precedence

November 12, 2012 / John Paul Strong / 0 Comments /

Image courtesy of Flicker

“The damage of Sandy is present everywhere and now it is covered with snow, the Northeast cannot get a break!”  When I heard those words on a national newscast it became even more obvious that sizing up how the used car market will be in the next few weeks is iffy right now.  Even the NADA Used Car guide has deferred any analysis until the number of vehicles that were lost or damaged is accurately detailed.

Like many of you though, I have been online reading the opinions put forward by analysts very much in touch with the used car situation, and especially now in the affected areas.  No doubt there will be price increases across most segments, as was true after Katrina.  What I think will be a key difference is in resupplying the inventories.  With online auctions and the availability of so many different roadways into the affected area, dealers will find it easier to resupply than those along the Gulf Coast in 2005 and therefore price spikes will not be as significant.

I found particularly interesting the viewpoint shared by Ricky Beggs of Black Book in an article carried by Auto Remarketing.  Beggs feels like pickup trucks could be the segment that sees high demand as well as increased prices.

With the number of businesses that appear to have been affected by Sandy, they need to find replacement trucks almost immediately.  Once again, this was the case after Katrina but that demand came from both businesses, and more surprisingly people who opted-out of a car into a truck.  One dealer observed that during the evacuation process a car was not an asset in saving valuables such as furniture items.  It would not surprise me to see cross-overs and SUVs, even vans, enjoy a similar bump after residents up and down the coastline were forced to leave valued possessions behind.  I do agree with those who say most people seek a replacement vehicle similar to the one lost in the storm.

Image courtesy of Flicker

So, just as “Frankenstorm Sandy” was a result of different climatic forces coming together, the used car market is going to be a variable dynamic.  Sandy and Katrina are in some instances alike, and in others very different.  What I think will cause an immediate sales jump is the density of population and the average available income.  The area hit by Katrina saw an average household income some $20,000 less than the Northeast coastline.  And with estimates of over 250,000 sales lost due to Sandy even before hitting land, the demand could be unprecedented.

Bottom line at this time, especially with a snowstorm so brutal it was nicknamed “Brutus” dropping large amounts of snow, we hope for a quick recovery in terms of power and shelter.


About the author

John Paul Strong: For someone who spends an average of 135 days outside of the office meeting with clients, John Paul Strong remains the driving force behind his Birmingham-based advertising agency, Strong Automotive Merchandising. Strong began his career as a fresh-faced account executive at Martin Advertising. Learning much, but never satisfied, he convinced his father to partner with him in reopening their own advertising agency in 2004, catering exclusively to the automotive industry. The company started strong but humble. The original roster of 10 employees and eight clients has exploded today, growing to 100 full-time employees and more than 220 automotive dealers. And it hasn’t gone without notice. Along the way, Strong Automotive Merchandising has been recognized as a perennial winner in Birmingham’s Best Places to Work contest and as a Top 20 Agency among Google’s National Ad Partners. Yet, Strong still finds time to share what he’s learned along the way. As an avid writer, he has published two books in the Next Day Traffic series, along with more than 1,000 automotive-focused blog posts. He is also a member of the Texas Auto Writers Association, and his success has been recognized in the Birmingham Business Journal’s 2013 “Top 40 Under 40” feature and the 2017 CEO Awards. The foundation for Strong’s career began at the University of Montevallo where he earned a bachelor’s degree in communication studies and advanced public speaking. Always staying ahead of the competition, Strong later went on to study in Harvard Business School’s Executive Education Program. Amid all of his endeavors, Strong always makes time for what matters most – his family. He is a proud husband to Amy, and father to Lilly Grace, Anne Charlotte, Hudson, and Ford.


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