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Inventory Management | Pre-Owned Sales & Marketing Strategies | Sales Management
December 20, 2012

Vehicle History, Inspections Key to Spotting Flood-damaged Vehicles

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Inventory Management | Pre-Owned Sales & Marketing Strategies | Sales Management
December 20, 2012

Vehicle History, Inspections Key to Spotting Flood-damaged Vehicles

As everyone knows, the East Coast, particularly New York and New Jersey, were devastated by Superstorm Sandy in late October. The loss of life, human suffering and property damage were tragic. Fortunately, heroes with the Red Cross, police, firefighters and many other organizations worked tirelessly to get storm-ravaged areas back up and running. It’s always heartwarming to see people pull together for the common good.

One excellent example was our friends at Atlantic Auto Group, a 21-dealership retailing group in Long Island, N.Y. They had a fleet of trucks ready to deliver generators to their stores the next day and were actually making some new car sales the day after the hurricane. Their preparedness and teamwork to get back to normal operations are inspiring.

Unfortunately, there’s often a downside to the human reaction to natural disasters. There will be those who are willing to take advantage of the situation for their own benefit. With the recent storms in the East, that downside could start to impact dealers in the coming months in the form of flood-damaged vehicles that may be passed off as vehicles with clean titles.

The vehicles you saw on television parked in high waters after Hurricane Sandy will likely receive title brands — words or symbols on the official Department of Motor Vehicle title. Oftentimes, branded vehicles, including those damaged by floods, are transported across state lines, the titles registered as clean (a practice commonly referred to as title washing), and sold to unsuspecting dealers and consumers.

Title washing is a frequent occurrence, and dealers need to remain vigilant. In the first six months of 2011, 1.5 million vehicles were branded based on some type of incident. Examples include but are not limited to collisions, fire damage, hail damage, junked vehicles or water damage. Typically, water damage only accounts for 1.2 percent of all branded titles. However, given the severity of Hurricane Sandy, it’s highly likely that the number of water-damaged vehicles will jump significantly.

Of the 1.5 million vehicles with a title brand in the first six months of 2011, 257,245 were retitled in another state as clean. This underscores the importance of getting a vehicle history report on any trade-in vehicle or vehicle purchased at auction. Even if a vehicle title was rebranded as clean in another state, the original branding will still show up on a vehicle history report.

Of course, Atlantic Auto Group is well-prepared for those title-washed vehicles, too.

Atlantic Auto Group regularly pulls vehicle history reports on every used car or truck it purchases at auction or takes in trade. As storm-damaged vehicles begin to cycle through the used-vehicle world, Atlantic Auto Group will be ready by proactively pulling vehicle history reports.

In addition to obtaining a vehicle history report, we also recommend a thorough vehicle inspection before making a purchase. Jerry Roschwalb, the used-vehicle director at Atlantic Auto Group, proactively emailed his team a week prior to the storm to tell everyone to be on the alert for storm-damaged vehicles. Following are some tips for spotting a flood-damaged vehicle.

  • Check under the floorboard carpet for water residue or stain marks from evaporated water not related to air-conditioning pan leaks
  • Look for rust on the inside of the car and under interior carpeting, and visually inspect all interior upholstery and door panels for any evidence of fading
  • Check under the dashboard for dried mud and residue, and note any evidence of mold or a musty odor in the upholstery, carpet or trunk
  • Check for rust on screws in the console or other areas where the water would normally not reach unless submerged
  • Check for mud or grit in alternator crevices, behind wiring harnesses and around the small recesses of starter motors, power steering pumps and relays
  • Complete a detailed inspection of the electrical wiring system, looking for rusted components, water residue or suspicious corrosion
  • Inspect the undercarriage of other components for evidence of rust and flaking metal that would not normally be associated with late-model vehicles

There also are regional differences in vehicles in operation of which dealers should be aware, as these differences are potential indicators of a vehicle having come from the flood. In the northeast, there is a significantly higher concentration of passenger cars than there are in other regions. Of the 9 million vehicles in the counties most significantly impacted by the storm, six model years of Honda Accords are among the 10 most popular make/model/year combinations. The top 10 include:

  1. Honda Accord 2010
  2. Toyota Camry 2007
  3. Honda Accord 2009
  4. Toyota Camry 2011
  5. Honda Accord 2008
  6. Hyundai Sonata 2011
  7. Honda Accord 2007
  8. Honda Accord 2012
  9. Honda CR-V 2011
  10. Honda Accord 2003

Over the next several months, many of the flood-damaged vehicles you see on television today will be circulating throughout the used-vehicle world. Dealers that keep an eye out for the vehicles likely to show up on their lots, utilize vehicle history reports to check for title-washed vehicles and get thorough vehicle inspections can keep title-branded vehicles off their lots — and can make sure the scam artists don’t take advantage of an already terrible situation.

Inventory Management•Pre-Owned Sales & Marketing Strategies•Sales Management

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