Your eyes aren’t deceiving you—your car repairs are definitely getting more expensive.
Several factors are driving up costs: heavier, more complex vehicles, new materials and manufacturing methods, a growing shortage of skilled technicians and supply shortages caused by the pandemic.
“Customers are definitely going to be shocked by the prices,” said David Goldsmith, owner of Urban Classics, a repair shop in Brooklyn, New York City.
Repair costs are rising relative to overall inflation. From November 2013 to November 2023, motor vehicle maintenance and repair costs will increase by 4.1% annually, By comparison, the overall consumer price index was just 2.8%.
The increase has been particularly steep since the pandemic. Previously, repair costs had been growing at about 3.5% to 5% a year, said Mitchell, who develops software for the collision repair and auto insurance industries. But by 2022, the rate jumped to around 10% and has not declined since.
The question is mysterious.
“I think what we can say 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.”
Vehicle repairs may be more expensive. Collisions can also be more serious.
According to HLDI, by 2022, cars will be 33% heavier and about twice as powerful as they were in 1985. At the same time, speeding and traffic accidents increased.
Heavier vehicles colliding at higher speeds mean more severe crashes.
Data can also be biased. As safety technology improves, low-speed crashes tend to be less severe and less costly, but they occur less frequently.
Cars are also crammed with more stuff, so more things can go wrong. Nearly 20% of engines are equipped with turbochargers to deliver more power and improve efficiency. Two-thirds have all-wheel drive—a huge jump from 10 percent in the 1980s. All of these adjustments increase the potential for damage to the device.
Lightweight materials such as aluminum are increasingly popular, but can be brittle and require replacement. Thanks to new manufacturing methods, cars have fewer parts, but their parts are larger and more expensive to replace.
The changes don’t stop there.
“The average run-of-the-mill car now is basically a rolling computer network,” Goldsmith said.
Ryan Mandell, director of performance consulting at Mitchell, said computerization in cars had been slowly advancing for decades but had changed “dramatically” in the past decade.
“You could have the same accidents you had 10 years ago,” Mandel said. “But now there are three additional sensors on the affected vehicle and you now have to replace them.”
At the same time, car repair talents are scarce. The Covid-19 pandemic has exacerbated long-standing shortages.
Mitchell said that in 2019, the average maintenance labor rate in the United States was less than $50 an hour. At the end of 2023, it will be close to $60. Most of this growth will occur in 2022 and 2023.
As people drive less during the coronavirus pandemic, demand for repairs has dried up. Technicians leave the industry to find other jobs.
The pandemic has also pushed up parts costs. Transportation disruptions contributed to this growth.
In 2022, the cost of parts from automakers will rise by 10% and the cost of aftermarket parts by 17%, compared with typical annual inflation rates of 0% to 4%.
Many in the automotive world believe costs cannot continue to rise at this rate. The industry is undergoing its biggest transformation in the past century – from gasoline to electricity, from mechanical to digital.
“If cars are going to be affordable, they have 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 sell fewer cars. So I think the automakers are going to have an incentive to reduce those costs.”
Watch the video to learn more.