Unveiling the Rising Cost of Motor Vehicle Repairs: Drivers and Opportunities

Date14th June 2023

The cost of motor vehicle repairs has surged in recent years, presenting challenges for stakeholders in the industry. A partnership between AAMC and Finity analysed over 80,000 motor accident repairs to identify the key drivers behind this cost inflation.

Technology Advancements: A Driving Force for Cost Inflation

One of the major factors contributing to the rising repair costs is the rapid advancement in technology and equipment levels of modern motor vehicles. Advanced Driver Assistance Systems (ADAS) and other safety systems have become integral components of vehicles, increasing the susceptibility of various parts to damage during accidents. When these components, such as sensors supporting adaptive cruise control or collision avoidance systems, are damaged, they often require replacement rather than repair. Additionally, the latest generation of vehicles necessitates ADAS computer systems recalibration, further adding to the complexity and cost of repairs.

Inflation Disparities by Vehicle Model and Type

Repair cost inflation varies significantly depending on the specific vehicle model and type. Certain popular vehicles, including Toyota Landcruiser, Toyota HiLux, Holden Colorado, Mazda CX-5, and Toyota RAV4, have shown higher rates of repair cost inflation compared to others. The design and construction of 4WDs, SUVs, and light commercials make them more prone to chassis suspension and mechanical damage, leading to increased repair costs. Moreover, the need to replace expensive accessories like alloy bull bars and sidesteps further contributes to the overall cost.

Part Cost Inflation

The analysis reveals that most components replaced in accident repairs have experienced price increases. Some components, particularly those commonly damaged in collisions, such as headlamps, bonnets, and windscreens, have seen significant price movements. Technological advancements in headlamp design, including dusk-sensing capabilities and anti-dazzle technology, have driven up the cost of headlamp replacement. Windscreens have evolved beyond being mere glass to being integrated with safety and driver aid systems, necessitating ADAS recalibration after replacement.

Mitigating Inflation: Opportunities for Insurers

The rising cost of motor vehicle repairs poses challenges for stakeholders. Insurers can mitigate the effects of rapid advancements by partnering with repairers investing in the latest methods, technologies, and equipment. Integrating new sublet specialists offering onsite recalibration of ADAS systems reduces transportation and dealership expenses. Engaging adequately equipped and experienced repairers for specific vehicle types and damage severity minimizes unnecessary part replacements.

By actively managing repair networks and staying informed, insurers can navigate the evolving landscape of motor vehicle repairs and effectively mitigate rising costs.

The data in this article is sourced from AAMC, unless otherwise indicated.

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