The real reason for the increase in vehicle repair costs | Taza Khabre

Key findings

  • The increase in the cost of repairs is the result of many factors: from 2022 to 2023, prices increased by 10%.
  • Sophisticated electronics and advanced automotive technology have led to higher prices for parts and the need for specialist technicians.
  • Supply chain issues, including global chip shortages and geopolitical conflicts, have caused parts prices to skyrocket.


It would not be an understatement to say that the post-pandemic economy has hit us all hard. With the rapid rise in the inflation rate and the resulting increase in interest rates, the prices of some products and services have risen through the roof.

Rising gas prices were the first big hit to the wallets of vehicle owners, and now the effects of the post-pandemic economy, job market and vehicle emissions requirements are hitting the average motorist harder than ever. In fact, from November 2013 to November 2023, new and used car repair costs increased by 49.8% compared to the relative inflation rate growth of 31.7% over the same period, according to the US Bureau of Labor Statistics.

Of course, you can bypass or prevent some of these expensive repairs by doing regular DIY maintenance at home. However, some automotive technologies are becoming so advanced that they make repairs almost impossible for home mechanics. CNBC Shifting gears delved deeply into what exactly is causing prices to rise and whether there is light at the end of the tunnel.

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More advanced car technology costs more

Increased vehicle repair costs Key details

  • The cost of repairs is increasing due to many factors, the average repair bill increased by 10% from 2022 to 2023
  • The increase in complex electronics means that parts are more expensive and specialists are needed to replace and recalibrate the relevant systems.
  • A global shortage of chips and a shrinking pool of skilled workers have exacerbated these problems
  • Automakers, especially in the EV segment, are using new molding techniques to reduce the number of body panels on their cars.
  • This, along with more expensive materials, means that larger panels need to be replaced after a crash, increasing costs
  • Supply chain issues are causing parts prices to skyrocket, and geopolitical conflicts are adding to an already strained shipping industry that is still recovering from the COVID-19 pandemic

As automakers continue to innovate in safety, emissions, and quality-of-life technologies, the cost of repairing or replacing certain parts is also rising. The introduction of systems such as lane departure assist, AEB intersection scanning and car-to-car communication, to name just a few, has resulted in a significant reduction in the potential for accidents.

However, as automakers continue to compete to equip their vehicles with the most sophisticated systems, the cost of manufacturing, research and development increases, which is passed on to the consumer. In addition, if one of these systems fails, it can be difficult to determine the cause of the failure.

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While your vehicle’s dashboard or infotainment system will likely indicate a system failure, a diagnostic tool is usually required to find the exact point of failure (DTC). Most car owners won’t have access to a diagnostic tool, and it costs more than $150 on average to take their car in for a checkup, according to Mitchell. It also raises the pressing issue of the “right to repair.”

While around 30 states have enacted “right to repair” legislation. in recent years, some automakers, such as Chrysler and Dodge, have continued to subvert these laws by introducing so-called secure vehicle gateway protocol. This means that even if you have a diagnostic tool to read DTCs, you need a special permit (usually as a licensed mechanic or dealership mechanic) to clear the codes and recalibrate any systems. A scan costs $150, and a recalibration averages about $500, Mitchell said.

Increased vehicle weight, causing higher collision costs

Overview of the increase in average annual value

Average repair cost growth (2022-present)

10%

Growth of the average labor rate (2019-present)

20+%

Growth in the average cost of spare parts (2021-2022)

17%

Average OEM Parts Cost Growth (2022-2023)

14-15%

Average 40ft Container Shipping Cost Increase (2020-2021)

900%

(figures courtesy of Mitchell via CNBC)

Adding all these systems also requires additional costs beyond just hardware and software. Cars now weigh much more than in previous years according to the Road Loss Data Institutevehicle weight increased by an average of about 33% between 1985 and 2022.

Average power has increased by about 100% over the same period, with some experts concluding that the greater amount of energy involved in a crash results in more damage and higher vehicle repair costs.

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Another thing to consider is the more complex materials and manufacturing methods that automakers are starting to implement. Although car manufacturers have been using aluminum body panels instead of steel for years, the need to compensate for the ever-increasing weight of the car has meant that it has become more common than ever. Aluminum also dissipates energy better in a crash than steel. However, steel panels tend to bend and in some cases can be reshaped, while aluminum panels tend to crack and need to be replaced after an accident.

Additionally, more and more automakers, especially in the EV market, are using mega- and giga-casting techniques to dramatically reduce the number of individual panels needed on a car. This means that if the vehicle is involved in an accident, a much larger and more expensive body panel will have to be replaced.

Supply chain issues are still a problem

Port Oakland, California
via CNBC (YT)

Unfortunately, the effects of the global COVID-19 pandemic are still causing supply chain problems, mainly in northern China. The average cost of shipping a 40-foot container rose from $1,200 in March 2020 to $12,000 in September 2021, Mitchell said. As a result, OEM and aftermarket parts prices have increased by 17% and 12-15%, respectively, from 2021.

The previous geopolitical landscape has also had a significant impact in recent years: a 2024 study found that the Russian-Ukrainian conflict had led to an increase in WTI (USA) and Brent (EU) oil prices. by 52.33% and 56.33%, respectively.

The ongoing conflict in the Middle East is also affecting shipping and supply chains, as well as the Red Sea (responsible for 12% of world tradeaccording to the BBC) involved in the conflict between the Yemeni Houthis and US and UK military forces.

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Labor costs are rising due to the lack of technical personnel

Spoon mechanic on the engine in the workshop
YouTube @ Larry Chen

Another consequence of the COVID-19 pandemic is the reduction of qualified auto technicians in the industry. According to Reuters, US car trips fell 13.2% in 2020 compared to 2019, and therefore the auto repair industry saw significantly lower demand.

Speaking to NBC, David Goldsmith, owner of Urban Classics Auto Repair, says the lack of work has led many experienced technicians to either retire during the pandemic or leave the industry altogether to find a more reliable source of income.

Thus, there is currently a serious shortage of experienced technicians in the industry. Increased competition in stores for skilled technicians, along with rising inflation, has meant that wage rates continue to rise, which is passed on to the consumer. New types of vehicles, such as electric vehicles, also lead to more complex repairs, where battery packs can take more than five hours to remove.

According to Michel, Electric cars costs an average of 35% more than a car with an engine. However, this is mainly due to the fact that the majority of EVs belong to the luxury segment, and this number drops to 2% when looking at both internal combustion and electric vehicles. Unfortunately, the average cost to repair a vehicle in 2023 is $4,721, and according to Mitchell, it looks set to increase in 2024.

Sources: YouTube @ CNBC, US Department of Labor, Mitchell, whitehouse.gov, iihs.orgnature.com, Reuters, BBC, sonnax.com, Forbes

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