Flood-damaged autos driving into used-car market, consumer group warns

Thousands of cars and trucks have been damaged by major floods this year and that makes it even more important for today's used-car buyers to scrutinize potential purchases, consumer advocacy groups warn. 

Anyone kicking the tires on a used car for sale should scan the vehicle inside and out for flood damage, the U.S. Public Interest Research Group said Thursday. If there's a car you're seriously considering, sniff around the interior for the smell of mold, look for moisture build up in the headlights and even have the vehicle inspected by a professional before making a deal, the group said. 

It's imperative that you examine the car yourself and not just trust the seller because "some people might not be honest about it," Jacob van Cleef, a consumer watchdog associate at U.S. PIRG, told CBS MoneyWatch. 

Are more used cars with flood damage being sold this year? U.S. PIRG said it doesn't have data to confirm that. Still, the organization is warning consumers that several trends suggest yes. 

First is the global semiconductor shortage that is forcing Ford, GM and other automakers to roll out fewer new cars, which is pushing more shoppers into the used-car market. 

Second is a rise in floods across the country. Many cities that historically have not experienced major flooding, like Philadelphia and metro Detroit, found themselves under water at some point this year. More flooded communities means more damaged vehicles for sellers to try and profit off of, van Cleef said. 

Major floods this year in Louisiana and California caused more than $1 billion in damage each. And Hurricane Ida caused between $16 billion and $24 billion in flood losses, real estate data provider CoreLogic estimates. Within that scope of damage, Carfax estimates more than 210,000 vehicles were damaged by Ida floodwaters. 

The 'pig in lipstick'

Michelle Ganaden of Los Angeles said she paid $23,000 for a car earlier this year, but immediately returned it after she saw rust and electrical damage.

Ganaden was buying a 2017 Infiniti QX50 from online auto marketplace Vroom in July. Ganaden said she completed the purchase paperwork then noticed that the car had started its life in Houston and somehow made its way to Sacramento, California. The car being originally from Texas made Ganaden nervous, she said. 

"Even before the vehicle arrived, I said in my gut, I'm going to check if this is a flood vehicle," she said.

After Vroom delivered the car to her home, Ganaden began looking it over. She said she found rust under the car, around the covering of the spare tire and other places. Some areas inside the car looked new and dry, but after seeing the rust, Ganaden said she felt like she was being sold "a pig in lipstick." 

"Within not even an hour of us exploring the car, I said 'this is a flood-damaged car,'" she explained, adding that Vroom refunded her money.

Millions of used cars sold

Ganaden was fortunate. Last month, the National Insurance Crime Bureau also warned customers about flood-damaged cars and how those vehicles often end up back on the market. 

"Dishonest dealers and other individuals can buy flooded vehicles, dry and clean them and sell them to unsuspecting buyers as used vehicles," the Illinois nonprofit said in a statement. "Many of these vehicles come on the market after natural disasters."

The NICB and U.S. PIRG gave other tips for identifying a flood-damaged car, like running a check on the vehicle identification number (VIN) using VIN-check tools such as made available by the NICB and Carfax. 

Other tips include what to look for when inspecting a used car in person:

• Lift the rugs and look for sand or water stains.
• Look for rusted metal on screws and other mechanical connections.
• Test drive the car and feel how it accelerates and brakes.

Used cars are a popular option for customers looking for a vehicle that's inexpensive, yet reliable. There were about 41 million used cars sold in the U.S. in 2019, according to the latest available data from the U.S. Department of Transportation. That figure includes cars sold at a dealership and from private sellers.