Rising auto repair costs are making it more costly for drivers to own a vehicle.
The use of advanced technology, new materials, and methods in cars, combined with a shortage of skilled labor and parts, is driving up repair costs, CNBC reported on February 12.
Repair costs have outpaced inflation, with auto maintenance and repair costs increasing by an annual rate of 4.1 percent since November 2013, exceeding the 2.8 percent annual increase in the overall consumer price index.
The pandemic has significantly accelerated the rise in repair costs. According to auto insurance software maker Mitchell, while repair costs previously increased by about 3.5 to 5 percent annually, the rate jumped to approximately 10 percent in 2022 and has remained elevated.
The significant increase in car computerization over the last decade has not only elevated parts and repair costs but also labor costs, exacerbated by a shortage of automotive professionals.
Before the pandemic in 2019, the average labor cost was under $50 per hour. However, by the end of last year, it neared $60, with the majority of this increase happening in the last two years, reports Mitchell.
The rise in eco-friendly vehicles has also contributed to higher repair costs. The addition of batteries has increased vehicle weight, and the use of lightweight materials such as aluminum to boost fuel efficiency has led to more severe damage in crashes.
The Insurance Institute for Highway Safety’s Highway Loss Data Institute (HLDI) reports that cars in 2022 are 33% heavier and twice as powerful as in 1985. “Consequently, the cost of insurance claims from collisions is rising,” stated Matt Moore, HLDI’s senior vice president.
According to the AAA, bumper repairs involving sensors cost an additional $1,500 to $2,000 compared to those without sensors. High-tech parts are costlier and more time-consuming to repair.
Joseph Lee, owner of JS Auto, which has body repair centers in Irvine and Garden Grove, said, “I have a 2022 Toyota Mirai, a hydrogen fuel cell car, was involved in a rear-end collision and is being repaired, but it hasn’t been finished for three months. The three hydrogen tanks need to be replaced so that welding work can be done, but only some Toyota dealers can replace them due to safety issues, so we loaded up the car, went to the dealer, paid $9,000 to have them replaced just to bring the car back to work.”
Skyrocketing parts prices due to pandemic supply chain disruptions contribute to rising repair costs, with original manufacturer parts up 10 percent in 2022 and replacement parts up 17 percent.
On the other hand, industry experts say that the spike in repair costs is because the automotive market is currently going through an unprecedented upheaval, such as the transition from internal combustion engines to electric vehicles and from analog to digital, although they don’t expect the trend to be as steep in the future.
BY NAKI PARK, HOONSIK WOO [park.naki@koreadaily.com]
