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07 September, 2017

Harvey Smooths Speed Bump for Used Vehicles

The Takeaway:

Hurricane Harvey is estimated to have damaged 300,000 (Cox Automotive) to  [1 million]( (Black Book) vehicles. Cox Automotive Chief Economist Jonathan Smoke expects that tighter vehicle supply and increased demand will lift used vehicle prices for two to three months. He expects adjusted used vehicle prices to remain “strong” for the remainder of 2017. JDP and BB indices have been relatively flat since February and Manheim’s Index has increased, which may indicate that used vehicle prices may be more stable in 2H17 versus our expectations. Now it is likely that used car prices will be flat for the next several months due to the vehicle damage caused by Hurricane Harvey. If Hurricane Irma makes landfall in Florida or the eastern seaboard, more vehicles are likely to be damaged and that will add further price support to used vehicle pricing in the coming months, which could result in the JDP and BB indices being up for 2017. Improving used vehicle prices would benefit Ally Financial (ALLY), Credit Acceptance Corp (CACC), Santander Consumer (SC), and Capital One Financial (COF). For more information on used car pricing trends, please see our August 17, July 18, June 16, June 1, May 26, and May 17 reports._