Analysis: The rise in vehicle repair costs

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Over the years, the cost of repairing a vehicle has consistently increased. However, we have seen a far more dramatic increase in recent years, primarily due to supply chain issues.

Statistics reveal that we’re seeing the most significant increase since 1974. The U.S. Bureau of Labor Statistics showed a 15 per cent increase in motor vehicle parts and equipment over a 12-month span ending June 2022.

Bottom line: Consumers are spending more money than ever in the automotive aftermarket.

There are various reasons why there has been a rise in vehicle repair costs. Listed below are the significant reasons why the aftermarket is having to charge a lot more to consumers.

Inflation

Raw materials such as oil, tires and other car parts have seen a significant increase in costs. It’s costing suppliers more to get what they need to produce aftermarket parts.

Naturally, that cost is passed on through the supply chain. This has led to auto care businesses raising their cost of maintenance to keep their business afloat and still provide quality repairs.

COVID-19

The pandemic has affected all industries including the automotive industry. Precautions and illnesses slowed down the supply chain. Manufacturers had fewer employees to keep operations going — or had to pause entirely due to lack of staff. Shipping ports faced these issues regularly.

Additionally, while many service and repair shops stayed open during the pandemic, some had to close their doors, even if it was for a brief period of time. Similar to the travel industry increasing prices to make up for lost revenue when people wouldn’t or couldn’t hop on a plane or stay in a hotel, some shops increased prices.

For collision shops, part shortages and increased costs are resulting in insurers taking longer to settle accident claims.

Customers like the idea of DIY

Inflation is on the rise. Spending power is down. During these times, consumers look for ways to save money. Do they need to go to their local shop to swap out a lightbulb, change their wipers, replace brake pads or do an oil change?

A recent survey showed that  57 per cent of Canadians would perform DIY repairs on their vehicle. It’s a number that could increase as repair costs go up.

A survey revealed that COVID-19 pushed consumers to do more things at home. With much more free time, consumers learned many things through the internet including how to perform various checks and repairs.

This shift could reduce reliance on the aftermarket.

Long wait times

The pandemic has also disrupted the supply chain with the shortage of workers. Shipping times for supplies and tools have been significantly delayed with the lack of containers and ships travelling across the ocean.

With labour shortages in every industry, the time it takes for the supplies to be produced and shipped out has dramatically changed the service of the automotive industry. Aftermarket suppliers have moved office staff into warehouses on a rotation to help with these challenges get product moving. They’re looking at better recruitment strategies like enhanced benefits and bonuses to keep staff long term.

Despite these efforts, there are still significant delays, resulting in longer than desired wait times before vehicles can be returned to the customer.

Advancement in technology

With vehicles becoming more and more advanced every day, technicians are required to learn and develop as new updates come out. Advanced Driver Assistance Systems (ADAS) can be easily damaged and sometimes need trained specialists to do the repair.

This is a specialized skill, requiring specific and expensive equipment. Shop coaches encourage the aftermarket to charge more in these areas as the costs associated with ADAS repairs are different from, for example, an oil change. All of which is further driving the cost of repairing a vehicle up.

There are also various new materials used in cars nowadays. Aluminum, for example, is used to lightweight make cars, making them more fuel efficient — but also makes a car more costly. Even simple repairs such as a windscreen crack have increased in length of time and cost of the repair.

As we come back from the pandemic and return to our usual routines, we can see a positive change over the next couple of months in regard to the delayed shipping times and late production times.

If we continue to see a steady increase in supply chain management then the rising price of vehicle repair may slow down. But increased prices in raw materials leave experts predicting that the cost of repairing a vehicle will not come down anytime soon.

Reshika Pillay is an Australia-based freelance writer with an interest in all things in the automotive industry.