There might not be enough inventory in Texas to satisfy the demand for new vehicles to replace the units lost during Hurricane Harvey, Jerry Liudahl, chief credit officer at Oregon Community Credit Union, told Auto Finance News.
“With the natural disasters that are occurring — with the terrible experience in Texas and with what just happened in Florida — those vehicles [destroyed in the storms] are all going to have to be replaced, either with new or used units,” Liudahl said.
Lenders have been concerned about residual values recently given the persistent, fast rate of depreciation in the used-vehicle market due to an overabundance of volume. Now, the lack of vehicles after the hurricane “might have an effect on neighboring states’ inventory” and could increase prices, Liudahl said.
Dealers in Texas are now buying cars in Georgia because they cannot find vehicles in their area, according to the latest Black Book Market Insights report.
“Dealers are actively looking to buy inventory and shipping vehicles to the Houston area, anticipating strong demand due to replacement of damaged units,” Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics, said in the report.
Two weeks ago, volume-weighted, overall car segment values decreased 0.27%, an improvement from the average weekly decrease of 0.49% in the past month. The market had been expected to soften after Labor Day, the report stated; however, values for some segments were “moving upward sooner than expected as demand picked up due to hurricane damage.”
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