Unwary dealers get Katrina cars

The Center for Auto Safety is the nation’s premier independent, member driven, non-profit consumer advocacy organization dedicated to improving vehicle safety, quality, and fuel economy on behalf of all drivers, passengers, and pedestrians.

Arlena Sawyers
Automotive News
December 18, 2006

Up to 13,500 vehicles with titles branded as damaged by Hurricane Katrina have been moved to other states and now have clean titles.

Those vehicles were among 200,000 cars and trucks that were damaged when Katrina soaked New Orleans and other parts of Louisiana, Alabama and Mississippi in 2005. At the time, those vehicles had their titles branded as flood- or storm-damaged.

Approximately 20,000 to 30,000 damaged vehicles were moved to other states, according to a recently released survey by Experian Automotive. Forty-five percent of those vehicles were given new titles that do not indicate their flood damage, and that percentage may grow.

"As more vehicles move, more will get retitled over time," says Dave Nemtuda, director of AutoCheck solutions for Experian, a Chicago supplier of vehicle history data. "There is the propensity for that number to grow."

Those numbers send a worrisome signal to consumer watchdogs who fear that dealers and consumers may unwittingly purchase used vehicles damaged by Hurricane Katrina. They contend that a vehicle’s title should indicate whether it has been salvaged.

Titles washed away
17 states do not record the "salvaged vehicle" title designations for out-of-state cars and trucks.1Arizona7Maine13North Dakota2Arkansas8Michigan14Ohio3California9Mississippi15Rhode Island4Illinois10Missouri16Texas5Indiana11New Jersey17Vermont6Kentucky12New York  Note: Minnesota does not carry forward "salvaged vehicle" designations for cars and trucks that are more than 5 years old.Source: National Automobile Dealers Association

A title brand refers to words on a vehicle’s title issued by a state motor vehicle department that note its condition. Vehicles damaged by Hurricane Katrina may carry one of several brands such as "Scrapped," "Junk," "Water Damage," "Salvage" or "Storm Damage-Katrina."

Flood-damaged vehicles generally are worth only half as much as used cars and trucks in good condition. Uscrupulous rebuilders sometimes repair salvaged vehicles, then obtain clean titles by moving them out of state.

They choose states that do not transfer the "salvage" designation from the titles of out-of-state vehicles. In some states, the rebuilders can obtain clean titles for rebuilt vehicles that pass an inspection.

To estimate the scope of this trend, Experian identified 200,000 vehicles in ZIP codes affected by Hurricane Katrina with titles indicating they were damaged in the storm. Then it traced those vehicles that were moved out of state and calculated the number that were given clean titles.

‘A no-brainer’

In July, Sen. Trent Lott, R-Miss., introduced legislation to require insurance companies to help maintain a national database that identifies all vehicles the insurers have written off as a total loss. The information would be available to vehicle buyers.

The National Automobile Dealers Association endorsed the legislation. Congress took no action.

On Dec. 7, Lott said he will reintroduce the legislation with the new Congress.

The legislation is "truly a no-brainer for consumer protection," says Dale Willey, the incoming NADA chairman and owner of Dale Willey Automotive in Lawrence, Kan.

He says: "I’m disappointed that Congress hasn’t embraced it."