The estimated 250,000 cars flooded by Hurricane Sandy will drive up used car prices in places as far away as California. In the short term, some experts say prices could rise $700 to $1,000 on the typical used car. Even though these effects will be more felt by those closest to the flood zone, the increasingly digital and national market for used cars will spread the price shocks widely. The amply supply of Sandy damaged vehicles further pose the risk that many will wind up in the hands of unscrupulous dealers peddling to unwitting consumers. These vehicles pose financial and health risks.

“Cars that have been submerged in saltwater, and contaminated in saltwater, and contaminated by bacteria and various toxins, will soon appear all other the country, even in states far from the center of the storm,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety. Shahan urges shoppers to look for signs of flood damage including engines that hesitate or run roughly, musty interior smells, or signs of silt residue of premature rust.

Rising prices by the storm might be one reason why people would turn to such cheaper options of fall victim to attractively priced vehicle with hidden flood damage. The number of Sandy-damaged cars is putting more pressure on the supply of late-model cars. According to Jonathan Banks, an analyst with the National Automobile Dealers Association, prices will go up at least 0.5 to 1.5 percent in December. The dealer group said that amounts to about $50 to $175 for the average used vehicle.

“We have seen a trend for dealers, regardless of where they are located, buying inventory online, and the means that geography is not as important as in the past,” said Banks. “It used to be that dealers would buy cars from a physical auction near their dealership.” The problem is amplified by at least ten s of thousands of cars that were destroyed at dealerships and storage yards in parts of New York and New Jersey hit hardest by the storm. Toyota Motor Corp. has lost 4,500 new Toyota, Scion, and Lexus vehicles to flooding and storm damage, while American Honda Motor Co. has calculated a lost of more than 3,000 new vehicles at its dealers and storage yards suffered flood damage. Image courtesy of Brad Hamilton Photo