Current Issue

Back to ARA Magazine

The Coming Flood of FLOOD CARS

Mold growing inside a flooded car damaged by Hurricane Harvey

End-Of-Life Vehicles

For some cars, end-of-life comes at the hands of a natural disaster. In September and October, three historic storms took out almost a million cars from their normal life cycle. Get ready for another flood.
By Jay Svendsen

Recent months have seen one extreme weather event after another, each seeming to trump the previous. When the next natural disaster occurs, the media moves on, and we hear little about the aftermath of the previous events. In late August Hurricane Harvey lingered over south Texas, resulting in over 40 inches of rain in some areas, causing massive flooding. Two weeks later, Hurricane Irma came right up the Florida peninsula prompting a historic evacuation of people fleeing the coming storm. Half of the Florida Keys were severely damaged, and parts of Florida experienced 15 hours of hurricane force winds and rain. Then, a short time later, Puerto Rico was devastated by Hurricane Maria.

I wanted to share what we know is happening as a result of the aftermath of these devastating storms. In Texas, most of the attention is on Houston, where parts of the city were greatly affected by storm waters. Tow companies and insurance companies have made arrangements to store all the flooded vehicles. Dozens of vast fields, airports, and raceways have been setup as holding lots for the estimated one million vehicles flooded as a result of Hurricane Harvey.

Insurance companies and the Texas Department of Motor Vehicles are being diligent in making sure that flooded vehicles are properly branded, but because of the large volume of vehicles involved, it may take until the end of February 2018 for all the vehicles to be processed. At the 74th Annual ARA Convention in Dallas, it was mentioned that Insurance Auto Auctions will be selling 1,500 flood vehicles from Houston every day, including Sundays, until all the vehicles are sold. It is important to note that most of the Texas flood vehicles will be freshwater floods, but that many vehicles were in the water for several days, or even weeks.

In Florida, Hurricane Irma created the largest evacuation of residents in recorded history with an estimated 6 million people leaving their homes to avoid the storm. Hurricane Irma was stronger in force than Harvey, but it moved more quickly. It is estimated that insurance companies will process about 250,000 flood vehicles in Florida. Many of the Florida flood vehicles will be saltwater floods, which are the least desirable vehicles for professional automotive recyclers. This storm created a unique event in that when residents evacuated, many only took their “good” car when they left, leaving the older cars, motorcycles, and other “toys” behind. In many cases, the other vehicles might not be covered by insurance (only having liability insurance), leaving the owners to deal with the financial responsibility of any damage that occurred to vehicle. Since the storm created more damage to homes and businesses in Florida, even though the number is smaller, it will likely be February before all the flood vehicles are processed in Florida, as well.

According to recyclers I have spoken with, most don’t want anything to do with flood vehicles. For those who operate in the metal recycling/processing space, there will be many vehicles available at greatly reduced pricing since metal values are currently low and have been decreasing for the last few months. On the upside, as people are paid for their insurance claims, there has been and will continue to be a short spike in auto sales. There will likely be a corresponding increase in parts sales as people repair their owner-retained flood vehicles.

From what I can see, many of the Texas and Florida Flood vehicles will be reported to NMVTIS, as both the state DMVs and insurance companies are being diligent in reporting them correctly. There will still be issues with vehicles that are not processed through insurance companies, but recyclers can use NMVTIS inquiry reports to help identify potential flood-damaged vehicles. The major salvage auctions are very good at reporting vehicles to NMVTIS and they generally report daily, so the data is timely.

A NMVTIS inquiry will show the last state of title plus previous states of title. Both Florida and Texas are real-time with NMVTIS, meaning auto recyclers can use the reports to identify vehicles that were previously titled in either Florida or Texas before September 10th, then were re-titled in another state at a later date. If this is the case, there is a high likelihood that the vehicle was involved in the flooding and should be physically inspected or priced accordingly.

Verifying a vehicle’s NMVTIS title record can be a very good investment when looking at higher dollar vehicles.
Jay Svendsen is the National Sales Manager with Auto Data Direct.