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Car repairs are getting more expensive. Here’s why


Your eyes are not deceiving you: your car repair bill is really getting more expensive.

Several factors are driving up costs: heavier and more complex vehicles, new materials and manufacturing methods, a growing shortage of talented technicians, and pandemic-induced supply shortages.

“Customers are definitely shocked by the stickers,” said David Goldsmith, owner of Urban Classics, a repair shop in New York’s Brooklyn borough.

Repair costs are increasing relative to the overall inflation rate. Motor vehicle maintenance and repair costs increased by 4.1% annually from November 2013 to November 2023, compared to just 2.8% for the overall consumer price index.

The increase has been particularly strong since the pandemic. Before that, repair costs were increasing at an annual rate of about 3.5 to 5 percent, according to Mitchell, which makes software for the collision repair and auto insurance industries. But in 2022, the rate jumped to around 10% and hasn’t fallen since.

The problem is mysterious.

“I think what we can say is true is that the cost of collision insurance claims is increasing,” said Matt Moore, senior vice president of the Highway Loss Data Institute, at the Insurance Institute for Highway Safety. . “After that, it’s hard to say why.”

Vehicles could be more expensive to repair. Accidents could also be more serious.

Cars were 33% heavier in 2022 than in 1985 and about twice as powerful, according to HLDI. At the same time, speeding and road accidents have increased.

Heavier vehicles colliding at higher speeds lead to more serious accidents.

The data could also be skewed. Low-speed crashes, which tend to be less serious and less costly, are occurring less often as safety technology improves.

Cars are also filled with more stuff, so more things can go wrong. Nearly 20% of them are equipped with turbochargers, providing more power and improving efficiency. Two-thirds of them are equipped with all-wheel drive – a huge jump from 10% in the 1980s. All these adjustments add equipment that can break.

Lightweight materials such as aluminum are increasingly popular but can be brittle and require replacement. Cars have fewer parts thanks to new manufacturing methods, but the ones they do have are huge and more expensive to replace.

The changes don’t stop there.

“Your average regular car is now essentially a rolling network of computers,” Goldsmith said.

Car computerization has been growing slowly for decades, but it has changed “drastically” in the past decade, said Ryan Mandell, director of performance consulting at Mitchell.

“You can have the same kind of accident you had 10 years ago,” Mandell said. “But now you have three additional sensors located on the affected part of the vehicle that you potentially need to replace.”

Meanwhile, talent for repairing cars is in short supply. The Covid-19 pandemic has exacerbated a long-standing shortage.

In 2019, the average labor rate for repairs was less than $50 an hour in the United States, according to Mitchell. At the end of 2023, it was close to $60. Most of these increases took place in 2022 and 2023.

As people drove less during the Covid years, demand for repairs dried up. Technicians left the industry in search of other work.

The pandemic has also increased the cost of spare parts. Transportation disruptions contributed to this increase.

In 2022, the cost of parts from automakers increased by 10% and replacement parts by 17%, compared to the usual annual inflation rate of 0% to 4%.

Many in the auto industry believe costs cannot continue to rise at these rates. The industry is undergoing its biggest changes in the last hundred years – from gasoline to electric and from mechanical to digital.

“If cars are going to be affordable, they also need to be affordable to maintain,” said Alan Amici, president and CEO of the Center for Automotive Research. “And they have to be affordable to repair, otherwise we’re going to have fewer vehicle sales. So I think automakers are going to be motivated to reduce those costs.”

Watch the video to learn more.



Note: The content and images used in this article is rewritten and sourced from www.cnbc.com

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