It is the odor that’ll give it away.
“You had higher get your face near carpet,” urged Ivan Drury of Edmunds, the automotive info service.
Now take a whiff.
“That gross, musty odor,” mentioned Drury, “that is a giant crimson flag.”
It means the automobile most likely has been in a flood. Quickly, these would be the perils of buying a used automobile in California.
That is as a result of tons of, if not 1000’s, of autos have been inundated in the course of the sequence of rainstorms that ripped by way of a lot of the state in January. They generated the form of flooding that may wreak havoc on cars — suppose: rusty floorboards, water-logged electronics and inoperable engines.
Within the days and weeks forward, a posh ecosystem of insurance coverage corporations, public sale homes, automobile sellers and others will course of these soggy automotive casualties. Many will finally wind up on the market once more. And at the least a few of these rides will probably be dangerous buys.
Kenneth Potiker, proprietor of Riteway Auto Dismantlers, is aware of what recommendation he’d give to folks contemplating the acquisition of such a automobile.
“I’d inform them to not purchase a automobile like that — that might be one of the best recommendation,” mentioned Potiker, whose San Bernardino firm sells used auto components. “If it floods inside a automobile, water harm is without doubt one of the worst kinds of harm.”
Many flooded autos will probably be totaled by insurance coverage corporations — that is typically carried out when the price of the mandatory restore work is the same as or greater than the worth of the automobile. These automobiles will probably be retitled by way of the California Division of Motor Automobiles with “salvage,” or “junk” designations, which alert customers to their previous harm or different points. Then, a big quantity will probably be unloaded at auctions performed by corporations similar to Copart and Insurance coverage Auto Auctions, based mostly in Dallas and Westchester, Sick., respectively.
A bunch of bidders will compete for the drowned derelicts — a few of whom could have lower than trustworthy intentions for the reselling of the rides. And that issues, as a result of automobiles which have suffered water harm may very well be perilously unsafe, each bodily and technologically, even when they do not look that manner, mentioned Drury, director of insights for Edmunds.
“Primary, your electrical system: you have bought a lot electronics on a automobile, now extra so than ever. Know-how methods stop you from moving into an accident, and now you might be in additional hazard,” he mentioned. “And there is the automobile bodily deteriorating over time.”
Following Hurricane Ian’s devastating assault on Florida and neighboring states in September, Carfax, the automobile knowledge agency, warned customers of the dangers of shopping for used automobiles with water harm. The corporate additionally estimated that flooding introduced on by the hurricane could have broken as many as 358,000 autos.
“We’re seeing these flooded automobiles present up throughout the nation, placing unsuspecting consumers in danger,” Emilie Voss, a spokeswoman for Carfax, mentioned in a press release in October. “Cosmetically these automobiles would possibly look nice, however if you happen to don’t know what to search for, it’s almost unimaginable to inform they’re actually rotting from the within out.”
Earlier than the hurricane, Carfax estimated that in 2022 there have been about 400,000 autos on the highway with flood harm of their historical past, Voss mentioned in a press release to The Occasions.
An eclectic group of consumers are more likely to compete for autos broken in California’s January storms. Many automobiles will probably be acquired at public sale by entrepreneurs and shipped abroad, the place they may very well be resold. Some will probably be bought by sellers who will recondition them and promote them as used automobiles. There are people who will probably be bought by private-party consumers, who’re capable of bid at sure auctions. And others will probably be purchased by dismantling operations that may strip the autos for components and resell their usable remnants.
Potiker is one such businessman, and he expects to see the flooded automobiles popping up at auctions in a couple of month. However he doesn’t plan to be a serious bidder.
“I am going to purchase a couple of, I am positive — however I steer clear of loads,” he mentioned, explaining that it may be troublesome to inform the extent of injury earlier than bidding. There’s additionally competitors from bidders with abroad pursuits who will usually pay greater than he is keen to bid.
Racer Yoemans has an identical perspective. He is president of salvage-parts knowledge software program firm BidCall, which is headquartered in Seguin, Texas, and he additionally offers used components.
“To be completely trustworthy with you,” he mentioned, “I do not purchase flood autos.”
A twist for the used automobile market
The introduction of 1000’s of extra autos into California’s used automobile market can be one more twist throughout an odd stretch for the trade.
Used automobile costs soared in the course of the first two-plus years of the COVID-19 pandemic, as a once-in-a-generation set of circumstances turbocharged the enterprise. The 2020 collapse of the rental automobile market in the course of the early a part of the pandemic, main manufacturing points within the new car area and droves of consumers flush with stimulus checks turned the used automobile economic system the wrong way up, resulting in stock shortages that despatched costs hovering.
Though the enterprise has stabilized in current months — costs began to drop round final fall — a deluge of previously flooded autos may very well be a welcome incidence for sellers who endured scant stock in recent times.
It’s authorized to promote a automobile with a “salvage” or “junk” title — so long as the harm is disclosed. And the foremost public sale corporations present potential bidders with detailed details about their choices.
Take Insurance coverage Auto Auctions, which operates a worldwide on-line market for the sale of total-loss, broken and low-value autos. The corporate, which auctions automobiles on behalf of its shoppers — amongst them insurance coverage and rental automobile corporations — discloses particulars that might be essential to a possible purchaser. Its on-line listings lay out particulars similar to a automobile’s title standing, mileage, driveability and the kind of harm it has incurred. Additionally they embrace a number of images and a 360-degree picture.
Nonetheless, retailers who specialize within the buy and resale of flooded automobiles usually take large dangers that include probably large revenue margins. In the meantime, customers is likely to be enticed by these automobiles, which normally include surprisingly low costs. Flood-damaged automobiles can usually be bought at a 40% to 70% low cost on Kelley Blue E-book valuations, Drury mentioned.
The slew of rides set to hit the public sale blocks might current shady operators with a serious alternative, specialists mentioned. In accordance with Potiker, the reason being easy: “Folks can repair them and nobody would know. That is the way in which it really works.”
Drury mentioned that water harm is a vexing subject as a result of it may be arduous to discern. A totaled automobile from this month’s flood may need endured a day or two absolutely submerged in water, so that each element was saturated — or it might have solely had its inside ruined because of a defective sunroof seal.
“It varies wildly between what is really destroyed and one thing that’s salvageable,” he mentioned. “That is the place you actually should have somebody you belief if you happen to’re trying to buy one.”
To keep away from buying a badly flood-damaged automobile, there are a number of issues that customers can do to inoculate themselves from a disastrous acquisition from a vendor or personal occasion.
First, specialists mentioned, would-be consumers ought to seek the advice of a service similar to Carfax to test an auto’s historical past; such merchandise will present the standing of a automobile’s title and will embrace different pertinent info.
“Dangerous guys [are] relying on folks not doing that,” Drury mentioned. “Typically consumers maintain their blinders on and simply say, ‘I need it.'”
When contemplating the acquisition of a automobile from a personal occasion, specialists suggest paying to have it professionally inspected. Drury known as such an inspection, which might detect water harm, “a should.” Forgoing one means a purchaser needs to be ready to get their arms soiled attempting to copy the method.
“If you’re going to do it your self, you … [should] see if there may be rust, humorous smells or dust in locations it should not be,” Drury mentioned. “Are there water traces within the carpet? That goes for seat cushions, too. If something electrical appears off — and every part else seems to be OK — you would have points there.”
Ultimately, with used automobile sellers, Drury mentioned, there is a hope that they’ll function ethically.
“There are sellers who focus on salvage-title autos, and hopefully they’ve a listing of issues they’ve carried out to convey it as much as driving standing,” he mentioned.
Nonetheless, Drury mentioned customers must take warning when contemplating the acquisition of any used automobile that has been registered in a metropolis or state the place there was flooding. This, he mentioned, makes these autos “suspect.”
That, after all, now consists of Los Angeles — and California.
Employees author Russ Mitchell contributed to this report.
This story initially appeared in Los Angeles Occasions.