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Hi-tech cars costing too much to fix

New-age safety comes at a cost as premiums soar, more cars written off

14 Oct 2022

WHEN British comedian Rowan Atkinson’s car hit a tree, and a stop sign, and caught fire in England in 2011, it was a $A1.6 million unfunny moment that spotlighted the soaring costs of vehicle repair – not only for exotic cars like his McLaren, but for cars driven by you and I.


Fixing cars today is becoming a lot like Mr Bean’s alias. Expensive. Now, you don’t have to hit some roadside embellishments and catch alight – a decent rear-ender will set you back (well, your insurer) a lot of money and take the smash repair business, constrained by parts availability and labour shortages, weeks and weeks to complete.


At the end of it, you return to a car in as-new condition and the loss of an insurance excess, unlike Mr Atkinson who sold his car (which he had pranged twice during 15 years of ownership) for $14.1 million and pocketed a profit of $13 million.


The problem of rising part costs has been brewing for decades. Cars are being mandated by legislation to boost safety equipment while buyers of modestly priced cars want all the high-end safety and convenience features. Competition among brands keeps the cars’ sale prices low.


The price of the car is not, unfortunately, equivalent to the sum of the cost of its components.


A headlight for a BMW X1 SUV – which sells from $53,900 plus on-road costs – is about $2200 (which is four per cent of the car’s price in one headlight) while the bonnet badge is $100. But even for a Mazda 3, a headlight is $1700 while the plastic Mazda grille is $2000.


In an increasing number of cases, the cost of repairing relatively minor accidents has led to cars being written off on a combination of the high cost of parts, the complexity of the repair job attributed primarily to sophisticated advanced driver assistance systems (ADAS), the cost and availability of labour and the difficulty in obtaining parts.


The Capital SMART collision repair company said it isn’t yet seeing any significant increase in cars being written off with relatively small repairs but foresees it happening.


Capital SMART’s process improvement manager Justin Sheppard told GoAutoNews that with the increase in use of high-tech systems, including ADAS, will likely bring an increase in write-offs compared with, say, 10 years ago.


The only fact holding any high write-off rate at bay, he said, was the increase in the value of cars.


“The price of second-hand cars is probably a bit artificially inflated at the moment and cars a couple of years old can be sold for close to their new-car price,” he said.


“We're finding that the vehicle values are actually going up, compared to what they were a couple of years ago, and this is certainly having an impact on the cost of repairs.


“In general, we have seen a fairly significant increase in the values of cars and the amount of money that we have to spend on repairing those cars.”


Veteran smash repair businessman, business manager has served the MTA WA body-repair division as chairman and committee member for more than 30 years and ran his successful Perth company for 45 years before retiring this year.


He told GoAuto it was a fact that more cars are being written off.


“The cost of fixing one accident damage is one thing – insurance companies also have to factor in supplementary repairs, the price of the parts, the cost of the car and the length of time it will take to repair it,” he said.


“So, sometimes a car that appears to be serviceable is written off.


“There are also cases where the repairer knows that parts of a particular brand or model are difficult to obtain and doesn’t want to fix the car, combined with the fact it is a difficult job and would take business away from the other jobs piling up.


“The cost of repairing used cars has increased because the supply of components from the original manufacturer has stopped or has certainly slowed down the rate of new cars being completed by the manufacturer.”


Mr Phipps said that added to that, because of new parts shortages “auto dismantlers are paying huge sums for damaged vehicles to supply recycled parts at a premium price.”


“This is also encouraging insurers to write vehicles off, getting large sums for salvage,” he said.


Mr Phipps said the cost of parts is expensive, but it isn’t the only thing boosting the repair prices – getting the part, he said, is becoming the bigger problem.


“It's quite common to have a vehicle sitting in the (smash repair) shop for five or six weeks before we actually start the repair because of parts supply problems,” he said.


“In the case of a simple front-end accident, we look at the car and visually see that it needs a bumper bar and so we'll make an assumption that it needs a couple of clips.


“When we pull it down, we find that the bumper is obviously damaged but there's a bracket behind it or a reinforcement or an absorber, and then the parts are not available in Western Australia.


“So suddenly, then we have a problem where a three-day repair can blow out to 10 days. If you want to get anything from Melbourne, for example a bumper slide, it's going to take five days minimum.”


Meanwhile, Mr Sheppard said it was important to understand the effect of impact damage especially if it appeared very, very minor.


“Once you pull the bumper apart, for example, there's a lot more components these days with all of the technology and items such as special plastic parts and brackets,” he said.


“Then parts such as an adaptive headlight can range from anywhere from $1500 through to $8000 and higher. If you have a headlight with just a small crack in a lens, it has to be replaced – it’s not a serviceable part.”


He said the same applies to components such as radar units for adaptive cruise control.


“If these units get a crack in them, or a scratch on the lens, they need to be replaced and they can run into the thousands of dollars,” he explained.


“On top of that you need quite detailed calibration requirements that adds to the cost and to the logistics of repairing that car.


“Sometimes those cars have to go back to a dealer just to get the calibration done because they have the specific tools that are required to perform that task.”


Mr Phipps said static calibration can cost from about $175 but more complex calibration would run “into the thousands of dollars” depending on what needs to be done.


The car must be taken to a dealer and can add a few more days to the completion of the repair.


“Then there’s the time as well,” he said.


“We have to get the car to the dealer, get the job done and then pick it up. 


“If it’s a new car with ADAS, even something as minor as a broken windscreen can mean repair or replacement to the radar and the cameras and therefore the autonomous emergency braking system.


“Even if there's no damage to that equipment, you still need to have it recalibrated. That goes with any of the technology on the front of the car. 


“Once you pull a car apart, most of the time it will still need to go through that calibration procedure to make sure that that technology is functioning correctly.”


Mr Phipps said that ultimately, for the insurance companies, all this affects the cost of repairs and the cost of doing business. 


“And obviously, the insurance companies are paying more so you would expect that premiums are going to rise for vehicles with technology such as ADAS, but also with reverse cameras, mirrors with monitors, and parking sensors.”


If these weren’t problems enough, compounding the difficulty in getting the part and paying for it is the delay at the workshop in fitting the repair job into the schedule.


Mr Phipps said most repair shops in Perth were booked out until January.


There was also a lack of staff – bodywork repair is one of the automotive industry’s divisions with the weakest apprentice uptake – to do the work and Mr Phipps, who is now involved in consulting to shops to increase productivity, said even shop owners don’t have much time to train these apprentices.


And perhaps the final feather to break the camel’s back is the involvement of insurance companies in the smash repair industry.


“The insurance industry is spending millions and millions of dollars running the repair industry,” said Mr Phipps.


“Instead of spending all that time and money trying to run the repair industry, why not let the smash repair industry run it? We could make a dollar, and they could save a fortune.”


The Insurance Council of Australia was asked to comment on this article.

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