Auto repair bills are spiking, showing an 8.5% increase in August compared to the same month a year ago — and a 2.4% surge compared to July.
Those figures come from the latest Consumer Price Index, released Sept. 11 by the U.S. Bureau of Labor Statistics, which showed the motor vehicle maintenance and repair category’s increase far outpaced the overall rate of 2.9% year-over-year.
Broken down further, the biggest increase among subcategories was motor vehicle repair — up 15% year-over-year and 5% since July — while the body work subcategory showed a 0.9% increase since July; no 12-month data was provided.
Vehicle prices also increased — new vehicles rose 0.7% year-over-year, while used vehicles surged 6%. Auto insurance increased 4.7% year-over-year.
The rise in the cost of repairs can be attributed to several factors, one analyst told CNN: tariffs on parts, particularly aftermarket parts; the rising average age of the U.S. car parc; more complex newer vehicles; and the tech shortage driving up wages.
“There’s quite a few factors,” said Skyler Chadwick of Cox Automotive.
Collision repair shop owners told Autobody News they have noticed more issues related to parts delivery times and a push for aftermarket over OEM parts.
Shaun Arroyo, general manager of Aurora Collision Center in Stockton, CA, said he hasn’t seen any price increases on parts from Japanese OEMs like Honda and Toyota, and his shop hasn’t repaired enough German vehicles to make a determination.
However, “I will say there are delays and availability and delivery issues,” Arroyo said in an email.
Nikki Anderson, co-owner of D&B Auto Body in Sauk Rapids, MN, said her shop mostly does repairs paid for by customers’ insurance carriers, “so the price gets passed along. I don’t believe we have been affected in a way that increases our expenses regarding parts.”
Anderson said her shop has seen a “significant rise” in short pays from insurance carriers not willing to foot the bill for a complete repair, “which I would assume is stemming from higher prices all around.”
Insurers are also more frequently writing for “opt OE” or “OE discount” parts, Anderson said, which are another name for aftermarket parts. In Minnesota, collision repair customers have the right to demand OEM parts no matter the age of vehicle, so shops have to be sure what kind of parts are being used.
Anderson said paint and materials expenses, which increase every year, combined with insurers pulling back on reimbursement rates, is making it harder for shops like hers to compete with large volume national MSOs.
“We are currently billing the differences to the customer for labor and materials to keep our doors open,” Anderson said. Many customers are willing to spend the additional money, she added, “because they know and trust that we are putting their best interest in front of anything else in terms of quality and safety.”
Anderson noted shops that operate under DRP contracts with an insurance company likely do not have that option.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.