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The Honolulu Advertiser
Posted on: Thursday, September 22, 2005

Dunked coast cars likely to flood used-vehicle market

By Michelle Singletary

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WASHINGTON — When the floodwaters finally recede on the Gulf Coast, no doubt there will be thousands of water-damaged cars that will flood the used car market.

If you don't want to end up unknowingly buying one of these vehicles, you had better do some homework, advises Jeff Fortson, an Atlanta-based auto consultant and the editor of jeffcars.com, a car-buying educational Web site targeted to women and minorities.

Fortson said many of the victims of Hurricane Katrina may become victimized a second time as they search for reasonably priced used cars to replace the ones they lost, or need to buy a car to get around unfamiliar cities where they've been relocated.

"Many of the people displaced did not own a vehicle," Fortson said. "Now many of these individuals are in locations that will require them to have transportation."

Unfortunately, these inexperienced and low-income car shoppers are ripe for conning by unscrupulous sellers.

In fact, it is common for flood-damaged vehicles to end up in the used car market, according to Art Spinella, president of CNW Marketing Research.

On average, about a million flood-damaged vehicles are sold each year. But these cars and trucks should not be sold as vehicles used for transportation, Spinella said.

"Flood vehicles can be sold for their parts," Spinella said. "There isn't a single vehicle that came out of Katrina that should be sold. They should all be scrapped."

There isn't anything illegal about selling a car that has been damaged by a flood, but that fact should be disclosed to a buyer, said Chris Basso, media relations manager for Carfax, which sells vehicle history reports.

Basso said an estimated 250,000 to 500,000 cars could have been damaged during Katrina.

"From previous storms, our experience has been close to half of flood-damaged vehicles will return to the road and some of those cars are cleaned up by unscrupulous sellers and sold to unknowing consumers, which is a shame," Basso said. "They're buying cars that they think are fine but are rotting from the inside out."

One way to determine if a car, truck or SUV was damaged by a flood is to check its history. This history report is available from many dealers for free or you can buy the reports from either Carfax.com or Au toCheck.com for about $20.

Carfax announced recently that GE Fleet Services will help the company identify vehicles destroyed by floodwaters following Hurricane Katrina. GE Fleet Services will provide a specific list of vehicle identification numbers for GE-managed fleet vehicles damaged in storm-ravaged areas of the Gulf states.

Prior to Hurricane Katrina, used car inventories were high due to the unprecedented new-car employee-pricing promotions, Fortson said. This meant that used car prices were good. According to CNW Marketing Research, the average used car sold by franchised new-car dealers dropped to $10,339 last month, the third straight month of declining prices.

Before you purchase a pre-owned vehicle, especially within the next few months, take this precaution:

Be sure and check the history of the vehicle. If you have to pay for a report, do it. With that history in hand you'll find out such things as whether the car was in a flood or sustained major damage in an accident. You can check for odometer fraud.

However, don't think just because you get a history report and nothing shows up, you're all clear. For instance, Fortson said he pulled a history report for a pickup truck being sold by a police officer in the Atlanta area and found nothing to indicate the car was damaged. However, after taking the truck to a certified mechanic, he discovered it had been in both front-end and rear-end collisions.

When it comes to a used car, don't be penny-wise and pound-foolish. Spend the money to have the vehicles checked out.