What happens if new cars are hailed on in dealer's lot?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
Topic Author
Browser
Posts: 4857
Joined: Wed Sep 05, 2012 4:54 pm

What happens if new cars are hailed on in dealer's lot?

Post by Browser »

This time of year there seems to be hailstorms everywhere in the midwest region where I live. I worry about leaving a new car parked outside. Then it occurred to me: what happens to all the new cars if they are hailed on in dealer lots? Do they just repair and sell them as new, or do they have to sell them as damaged vehicles or wholesale them off somewhere? If I buy a new car, how do I know it hasn't been hailed on and repaired?

And for that matter, how do they handle new cars that have incurred other damage such as in transit or dents and dings while on the lot?
We don't know where we are, or where we're going -- but we're making good time.
User avatar
Dtort
Posts: 45
Joined: Tue Jun 24, 2014 7:17 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by Dtort »

If the damage is slight, I've known dealers to just have a special sale of them. One of our better used cars was what the dealer sold as a "Dimpled Darling".
But i don't know what they do if the damage is severe, like smashed windshields.
randomguy
Posts: 9208
Joined: Wed Sep 17, 2014 9:00 am

Re: What happens if new cars are hailed on in dealer's lot?

Post by randomguy »

Dtort wrote:If the damage is slight, I've known dealers to just have a special sale of them. One of our better used cars was what the dealer sold as a "Dimpled Darling".
But i don't know what they do if the damage is severe, like smashed windshields.
They fix them and sell them as repaired. I don't know if they are officially considered new or used cars. This happened in an area I lived where basically every roof in town got replaced and any car that was outside looked like a golf ball. There were hail specials for the next 18 months.
MathWizard
Posts: 4637
Joined: Tue Jul 26, 2011 1:35 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by MathWizard »

They collect the insurance money, and sell them in a hail damage sale.
nodenuff2
Posts: 380
Joined: Tue Mar 06, 2012 4:08 pm
Location: Deep South

Re: What happens if new cars are hailed on in dealer's lot?

Post by nodenuff2 »

This event is a gold mine for new car dealers. Insurance co. pays big money they discount the cars to about wholesale and make out like bandits.
2014 No. 42 2015 No.342 2016 No. 6 2017 238 2018 no. 175 2019 no. 144 6 year average 157.83. Proves I am just an average investor.What do I know? "Good bless America land that I love..."
drawpoker
Posts: 2809
Joined: Mon May 19, 2014 6:33 pm
Location: Delmarva

Re: What happens if new cars are hailed on in dealer's lot?

Post by drawpoker »

Great news.

As if we didn't have enough posts in the other recent thread on why new car dealers are generally held in such low esteem and are usually regarded as scoundrels and unabashed all-around unscrupulous business people. Yikes.

If what you say is true (?) that's a good reason for bringing back the old custom of the insurance company, when settling a claim for either collision or comprehensive, making the check payable to two parties - the insured and the body shop who has been chosen to do the repair work. Nobody gets the money until it is endorsed by both parties.

Wouldn't that put an end to this "gold mine" the dealerships are reaping?
tibbitts
Posts: 12779
Joined: Tue Feb 27, 2007 6:50 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by tibbitts »

drawpoker wrote:Great news.

As if we didn't have enough posts in the other recent thread on why new car dealers are generally held in such low esteem and are usually regarded as scoundrels and unabashed all-around unscrupulous business people. Yikes.

If what you say is true (?) that's a good reason for bringing back the old custom of the insurance company, when settling a claim for either collision or comprehensive, making the check payable to two parties - the insured and the body shop who has been chosen to do the repair work. Nobody gets the money until it is endorsed by both parties.

Wouldn't that put an end to this "gold mine" the dealerships are reaping?
Huh? How would that be applicable in this situation? ...not even considering the fact that the "insured" and "body shop chosen to do the repair work" may be the same entity.

Why is this any more of a goldmine than if you have an old roof that gets hailed on and is insured for full replacement value? Of course you pay a hefty premium for that coverage, and may see your rates increase substantially if you area experiences damaging storms, so in the long run it might not be quite the goldmine it initially seems to be.
drawpoker
Posts: 2809
Joined: Mon May 19, 2014 6:33 pm
Location: Delmarva

Re: What happens if new cars are hailed on in dealer's lot?

Post by drawpoker »

tibbitts wrote:.....Huh? How would that be applicable in this situation? ...not even considering the fact that the "insured" and "body shop chosen to do the repair work" may be the same entity.
I must be missing something.

In my area (mid-Atlantic) the new car dealerships have service departments who do repair (mechanical) work and warranty/recall work.

None to my knowledge does any type of body work related to either collision damage, weather incidents, or any other type of physical type damage work.

So I do not understand your reasoning that the insured and the body shop could be the same entity.

:?:
tibbitts
Posts: 12779
Joined: Tue Feb 27, 2007 6:50 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by tibbitts »

drawpoker wrote:
tibbitts wrote:.....Huh? How would that be applicable in this situation? ...not even considering the fact that the "insured" and "body shop chosen to do the repair work" may be the same entity.
I must be missing something.

In my area (mid-Atlantic) the new car dealerships have service departments who do repair (mechanical) work and warranty/recall work.

None to my knowledge does any type of body work related to either collision damage, weather incidents, or any other type of physical type damage work.

So I do not understand your reasoning that the insured and the body shop could be the same entity.

:?:
In the automobile dealership business, it's often not obvious who owns what, but I've had my cars repaired by dealer-owned/operated body shops in the northeast, mid-atlantic, and south-central US.

Having said that, dealers sometimes sub out various types of both mechanical and body work when it saves them money.

But I'm still not understanding the logic. When you receive a settlement for damage, you're not obligated to have the damage repaired.
pshonore
Posts: 7075
Joined: Sun Jun 28, 2009 2:21 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by pshonore »

tibbitts wrote:
drawpoker wrote:
tibbitts wrote:.....Huh? How would that be applicable in this situation? ...not even considering the fact that the "insured" and "body shop chosen to do the repair work" may be the same entity.
I must be missing something.

In my area (mid-Atlantic) the new car dealerships have service departments who do repair (mechanical) work and warranty/recall work.

None to my knowledge does any type of body work related to either collision damage, weather incidents, or any other type of physical type damage work.

So I do not understand your reasoning that the insured and the body shop could be the same entity.

:?:
In the automobile dealership business, it's often not obvious who owns what, but I've had my cars repaired by dealer-owned/operated body shops in the northeast, mid-atlantic, and south-central US.

Having said that, dealers sometimes sub out various types of both mechanical and body work when it saves them money.

But I'm still not understanding the logic. When you receive a settlement for damage, you're not obligated to have the damage repaired.
True, unless someone else has an interest in the property (like the bank who holds your mortgage or car loan) and the check is made out to you and them. Car dealers usually finance their inventory but large commercial claims are often handled differently than a simple consumer loan.
jlawrence01
Posts: 1688
Joined: Mon Feb 25, 2013 1:34 am
Location: Southern AZ

Re: What happens if new cars are hailed on in dealer's lot?

Post by jlawrence01 »

My fleet had several NEW Ram trucks sitting at an AZ dealer that were hot with softball-sized hail.

The insurance coverage paid the cost of removing the hail although we shipped the vehicles to a different repair facility.. We kept the vehicles for the usual four-year term.

No one, including the dealer, is making a huge amount on this. Insurance companies don't pay out more than they have to.
nordlead
Posts: 739
Joined: Thu Sep 12, 2013 9:09 am

Re: What happens if new cars are hailed on in dealer's lot?

Post by nordlead »

jlawrence01 wrote:No one, including the dealer, is making a huge amount on this. Insurance companies don't pay out more than they have to.
Exactly.

The repair shops make out and that is about it (if the cars get repaired that is) as it is more work created by a storm. But they have to do real work. If work was slow it is really good for them.

The dealership breaks even, but gets a cash infusion up front (essentially a partial sale of inventory). The only way they benefit otherwise is if consumers are willing to pay more for the car then what it is worth. In other words, the consumer gets to buy the car for the cost of new - cost of repair - lost value. Some consumers would see that as a benefit, others will buy the discounted car and get the repairs done.
anil686
Posts: 1120
Joined: Thu May 08, 2014 12:33 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by anil686 »

In the DFW area, many dealers have large umbrella style awnings to protect many of the new cars. These structures probably cost quite a bit and thus if the dealers were making a large amount off of the damage, I doubt they would construct these structures. In our area, the cars not protected typically are sold at Hail Sales - and are not marketed as new in my experience...
TradingPlaces
Posts: 1245
Joined: Sun Nov 09, 2014 1:19 pm
Location: 30.286029, -97.530011

Re: What happens if new cars are hailed on in dealer's lot?

Post by TradingPlaces »

drawpoker wrote:Great news.

As if we didn't have enough posts in the other recent thread on why new car dealers are generally held in such low esteem and are usually regarded as scoundrels and unabashed all-around unscrupulous business people. Yikes.

If what you say is true (?) that's a good reason for bringing back the old custom of the insurance company, when settling a claim for either collision or comprehensive, making the check payable to two parties - the insured and the body shop who has been chosen to do the repair work. Nobody gets the money until it is endorsed by both parties.

Wouldn't that put an end to this "gold mine" the dealerships are reaping?
Very strange comments.

Car market value before damage: N.
Car market value after damage: A.

Insurance company must pay N -A (after deductibles and such).

What the insured party does with the money afterwards, it is entirely their own business decision.

Furthermore, if insurance company pays out amount F to fix / repair the car, that might not be enough to compensate the insured for N - A.
killjoy2012
Posts: 1177
Joined: Wed Sep 26, 2012 5:30 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by killjoy2012 »

MathWizard wrote:They collect the insurance money, and sell them in a hail damage sale.
+1 -- from someone that used to work for an automotive wholesale finance & insurance company.
Topic Author
Browser
Posts: 4857
Joined: Wed Sep 05, 2012 4:54 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by Browser »

I just can't believe these dealers are going to sell hail-damaged vehicles at a reduced price if they can spend a few bucks for paintless dent repair and sell them as brand new vehicles, except maybe for the ones that can't be repaired to look like new. Are there any laws that would prevent this? After all, I'm sure they make all kinds of cosmetic repairs to vehicles with some dings and dents sustained in transportation or otherwise and sell them as new. Where do you draw the line?
We don't know where we are, or where we're going -- but we're making good time.
bkweathe
Posts: 232
Joined: Fri Feb 06, 2015 5:02 pm

Re: What happens if new cars are hailed on in dealer's lot?

Post by bkweathe »

Be careful buying a car with hail damage if you intend to finance the purchase. The financing company will probably require you to have comprehensive & collision insurance. The insurance company will probably refuse to issue those coverages if the cost of repairing existing damage exceeds the deductible.

Brad
Post Reply