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

[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?

[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]

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]

They collect the insurance money, and sell them in a hail damage sale.

[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.

[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]

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]

.....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]

.....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]

.....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]

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]

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]

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]

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]

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.

[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?

[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