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TheStreet Open House

Claims About Flood-damaged Cars Aren't True

About 14,000 new cars were also damaged by Sandy while they sat on docks in the New York area awaiting shipment to dealers. But most of those vehicles won't end up on sales lots. Automakers will have severely damaged cars crushed because they don't want their brand name hurt by substandard vehicles circulating in the marketplace.

To be sure, flood-damaged cars can be a serious problem. Once a vehicle is dried out, the damage may not be immediately apparent, so the car can often be sold to an unsuspecting buyer.

Beneath the surface, the water can damage computers that control everything from the gas pedal to the entertainment system. Saltwater, like that from Sandy's storm surge, is especially harmful, causing corrosion in electrical and mechanical parts that can pose problems for years.

Companies like Carfax, a Centreville, Va., provider of vehicle-history reports, stand to benefit if more buyers are worried about the risk of purchasing a flooded car. The company charges $39.99 for a single report, although it also contracts with dealers and manufacturers, so many reports cost less. About 170 million reports are viewed each year.

Carfax, a privately held subsidiary of the R.L. Polk & Co. automotive data firm, put out a news release Tuesday speculating that Sandy's toll on cars would exceed the damage left by Katrina.

In an interview, company spokesman Larry Gamache said early indications were that more vehicles could have been damaged in the densely populated Northeast than were damaged by Katrina in 2005 along the more sparsely populated Gulf Coast. He estimated that half of them, more than 300,000, would find their way back onto the market as used cars.

"I think it's partly due to the breadth of the storm and the intensity of the storm and where the storm hit," Gamache said.

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