Australian east coast floods to compound new car delays, price hikes

Recent devastating floods across Australia's east coast could have a dramatic knock-on effect on the new car industry, which is already struggling with supply issues.

With thousands of residents in flood affected areas of Queensland and New South Wales still displaced, the Insurance Council of Australia has told WhichCar more than 20,000 vehicle claims have been made in the wake of the floods, with those figures only expected to grow in the coming weeks.

Insurers have received 22,509 motor vehicle claims related to the SE Queensland and NSW floods – of those, 11,633 are in NSW and 10,876 in Queensland.

One Queensland resident told WhichCar she had made an insurance claim on the day her vehicle – a Mini Hatch John Cooper Works – was caught up in the floods, and was told by her insurer it would be assessed within three to five business days.

Despite chasing up the insurer every 48 hours, she has still not yet been contacted for the car to be assessed over a fortnight after lodging the claim.

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"Buying that car was a dream of mine since I was 12 and it's made life a lot harder without it," she said.

"I went through a lot of trouble and angst to get the one I wanted, in all it was a two-year process and to finally get it was something I could be proud of.

"Having the dream car which I'd worked so hard for taken away is disappointing, and I feel nothing could replace it."

She also said losing the car was having an impact on day-to-day living, often having to borrow her partner's car and rely on family help her get to work.

"Usually the drive to and from work is around 45 minutes to an hour so losing my car has made it a lot harder to get there every day," she said.

"We're down to one car between two people right now and it just doesn't make sense to buy second-hand because of the condition of the market right now."

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Photo via Defence Images

The wait to get her car assessed will only compound the potential delays she faces while trying to source a new vehicle should it be paid out, with a number of dealers claiming wait times of six to 12 months for vehicles to arrive.

Having visited a number of dealerships since her car was effectively written off, she faced the same answer at every location – wait times of anywhere between six months to one year with no demonstrators to offer.

"The impacts of the extreme weather event across Queensland and New South Wales are still coming into focus, with an army of insurance assessors now on-the-ground helping with claims where it is safe to do so," said a spokesperson for the Insurance Council of Australia.

"We expect to be able to provide a breakdown in the weeks following the disaster clean-up, when vehicle-owners can speak with their insurer and assess the damage."

Queensland-based insurer RACQ said it had received in excess of 2300 motor vehicle claims as of March 16, with more than 90 per cent of those claims eventuating in write-offs.

"RACQ has received 2344 motor vehicle claims and 10,145 for home insurance relating to the recent weather event in southern Queensland and northern NSW – the majority are from Brisbane’s inner city and northern suburbs," said RACQ claims manager, Trent Sayers.

"More than 90 per cent of claims are being deemed write-offs.

"So far, RACQ has paid out more than $10 million in insurance claims relating to this event, with motor vehicle claims accounting for almost 80 per cent."

Sayers warned about future vehicle buyers purchasing cars which had been caught up in the floods, encouraging thorough checks to prevent complications in the long run.

"We wouldn’t recommend buying a flood-impacted vehicle simply because there is a potential risk of ongoing issues. Private sales are high risk and unregulated, and as such, you must be extra vigilant with your checks," he added.

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Doug Wyllie from the Federal Chamber of Automotive Industries reiterated the RACQ's message about being conscious of potentially dodgy used cars, while also saying the floods could have a major impact on the industry.

"With supply chains cut in terms of both road and rail access, there may be some delays in getting cars to dealers,” Wyllie told RACQ.

“We are also aware that some dealerships have been flooded.

“Rest assured our brands will be working proactively with dealers to ensure that, where cars have been ordered and damaged in the floods, supplies are essentially shored up.

“We're quite mindful as well that we are still very much in the response phase and that as that recovery piece unfolds, we'll have better visibility as to just how the car industry has been impacted. We do know that multiple dealerships have been inundated and there could very well be some issues with people trying to sell flood-damaged second-hand cars.

“We've seen unscrupulous people around natural disasters in the past who try to make a buck out of damaged products, but that's the unfortunate risk you face when purchasing a second-hand car and none of our members or dealers will be doing that."

The influx of write-offs is set to put extra strain on the new car industry which is already struggling with stock delays across almost every brand, as semiconductor shortages, COVID-19 outbreaks and the Russian invasion of Ukraine account for a slide in vehicle deliveries.

Last month, there were 26,360 new vehicles delivered to customers in New South Wales and 18,962 to Queensland buyers, or just over double the number of cars which have already been written off – although that is expected to increase in the coming weeks.

On average, most models in Australia face wait times of anywhere between two to six months if customers buy to their own specs rather than off the showroom floor, however Toyota's popular RAV4 is one of the worst hit, with a projected delivery time of 241 days pushing it out to the longest delay of the top 20 models locally.

While the delays could mean buyers choose to opt for used cars over new vehicles to replace their write-offs, it could also lead to a temporary boom in new car registrations for the rest of the year.

A precedent for this has been set by the Australian Capital Territory which had its best-ever year for vehicle sales in 2020 off the back of a hail storm in January of that year, writing off roughly five per cent of the territory's vehicles and leading to a 22.6 per cent rise in new vehicle sales.

From February 26 to 28, Brisbane received 677 millimetres of rainfall to set new local records, causing flooding in a large number of suburbs, especially those within the City region near the Brisbane River.

The rain also impacted the Northern Rivers region of New South Wales as well as the state's capital of Sydney, both of which experienced flooding which claimed the lives of local residents and caused an estimated $2.1 billion worth of damage.