In my capacity as the owner of an import car dealership, I am often amazed at the levels some wholesalers will go to in order to cover up damages to vehicles. As any reputable reseller will tell you, finding the best vehicles is not only a matter of knowing what to physically look for, it's also a matter of knowing how to spot title and ownership oddities. Lately, I have noticed many wholesalers in possession of autos that were originally sold in the Louisiana and Mississippi areas. For some reason, these vehicles had their titles transferred to wholesalers from states far away. While this isn't completely uncommon, it does raise a red flag when you consider the recent natural disasters that have occurred on the Gulf Coast.
Dealerships need to be aware of the opportunity for unscrupulous parties to effectively "launder" the titles of these vehicles. As a result of Hurricane Katrina, many vehicles were likely paid for via insurance claims against flood damage. These vehicles are finding their way back into the market. While there is nothing inherently wrong with re-selling a designated flood damaged vehicle, there is something entirely wrong with reselling a flood damaged vehicle under the guise of it not having been damaged.
Being in the industry, I have heard both sides of the argument. Many wholesalers will tell you that flood damaged vehicles are often appropriated by insurance companies as "totalled", when in fact they may have never been submerged in water at all. My answer to that is to say that any business which values its customers and strives to maintain integrity and honesty would never sell a product they are unsure of. In other words, I'm not willing to take a chance with my business and reputation at stake, nor am I willing to gamble with someone else's money. That's exactly what selling a flood damaged automobile is: gambling with your customers money. Flood damaged vehicles can have corroded electrical systems that are primed for failure, unseen rust damage, and a variety of other problems that can surface at a later time.
My advice to dealerships is to use every resource at their disposal to find out the history of the cars they are purchasing and avoid flood damaged vehicles, unless you plan to sell them as such.
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