New cars are getting too expensive to fix
Last fall, a brand new BMW 3-series car rolled into the Old Dominion Carstar Collision Center in Eugene, Ore. - literally. A teenager was "driving dad's car," says shop owner Patty McConnell, and rolled it over - with little apparent structural damage. The teen walked away, and normally the damage wouldn't have been hard to repair. But the BMW had so many air bags "it looked like a balloon," recalls Ms. McConnell. The new car, worth more than $30,000, was totaled.
Costly air bags, expensive electronics, and lightweight body materials are driving up the cost of fixing new cars. Not only do many more parts have to be replaced rather than repaired, but fewer and fewer body shops can afford the special equipment and training required to do the work."We're moving closer and closer to the disposable car," says Dan Bailey, an executive vice president at Carstar, the largest auto-body repair franchise in the United States.
Repairing a new car a decade ago, for example, cost an average of $2,578 per claim, while in 2003, the cost had ballooned to $3,681, a 43 percent increase that has outpaced inflation, says Kim Hazelbaker, senior vice president and head of loss claims analysis with the Highway Loss Data Institute (HLDI) in Arlington, Va.
Normally it takes a lot of damage to total a brand-new vehicle. Insurance companies calculate the value of a car before the accident and subtract its value as scrap. As long as the result is more than the cost of repair, the car is worth fixing.
But many new cars today cost so much to fix that it's becoming harder to justify repairs. The BMW that hit McConnell's shop had dual front, side, and side- curtain air bags. Federal safety rules do not allow air bags to be reused. So each bag would have had to be replaced with a brand new one. The sensors and pyrotechnics that set them off also required replacement. Add the cost of labor, more than $1,000 for each air bag, and even more for the sensors, and the result is a totaled car.
Before the advent of air bags, only 8 percent of damaged cars were totaled. Today, the figure is nearly 20 percent and rising. "As they continue to put more air bags in these vehicles, the figure is going to continue to escalate," says Mr. Bailey of Carstar. Not only do the number of air bags (two in front have been required since 1996) increase costs, today's new "smart" air bags, with sensors that control whether they deploy and how hard, cost more than older bags. Seat belts, too, have "once-and-done" pretensioners that have to be replaced - even on unoccupied seats - after an accident.
"There are a lot [of electronics in cars] today that weren't there in the past," says Mr. Hazelbaker of HLDI. "And if they're damaged, they are going to have to be bought new. There's only one source, the automaker, so you're going to pay full retail price."
While air bags are the most expensive technology to repair after a crash, other high-tech items are also pushing up repair costs. For example, the world's bestselling vehicle, Ford's F150 pickup, uses a magnesium radiator mount - which gets crunched every time an F150 runs into anything. Magnesium is strong and light, but brittle. Even if it bends without breaking in an accident, a body shop can't bend it back. Like air bags, it has to be replaced at a cost of more than $300.
To meet fuel-economy requirements, automakers are using more lightweight parts. Magnesium, titanium, and carbonized plastic are among the rapidly expanding number of components found under the hood.
And then there's aluminum. At least five cars come with all-aluminum bodies and frames, including the Audi A8, Acura NSX, Honda Insight, Mercedes CL, and the new Jaguar XJ8. So far, few body shops are authorized to fix these cars. For example, only 13 body shops nationwide can do repairs on the XJ8. So if you wreck one in a remote area, insurance companies will factor in the cost of shipping it to an authorized shop.
Body shops that deal with aluminum have to wall off separate work areas and buy tools separate from those used on steel cars. That's because steel shavings can contaminate aluminum.
Because aluminum is difficult to weld, most parts are "bonded" (glued) and riveted together. A riveting tool to replace aluminum parts costs $10,000. Another tool to remove rivets runs $9,000. The total investment in training and tools to run an aluminum-body repair shop can run as much as $200,000.
"If we're going to keep up with changes in the industry in the next three to four years, it's going to take a bigger investment than we have ever seen," says Mr. Bailey. He predicts almost half of today's repair shops won't make that investment.
Even if your car remains accident-free, some of today's high-tech parts can leave you with big repair bills. The celebrated find for car thieves these days is xenon high-intensity-discharge headlights. They can cost up to $3,000 each. That's just for the part, not labor.
Stories of thieves ripping these headlights out of Audis and Nissans - and doing thousands more in body damage - are becoming legion in urban areas. Even when the lights aren't stolen, repairs can be expensive. One body shop that had to remove the lights from a new Audi A8 found they had to be sent back to the manufacturer to be reactivated; otherwise, they wouldn't work.
Now Nissan and other automakers have started using taillights with multiple LEDs rather than a single inexpensive light bulb. The LEDs light faster in a panic stop to give drivers following more warning, but they're also more expensive to replace.
From headlights to taillights, nothing is getting simpler in cars today. As a result, insurers are expecting higher premiums for these premium cars, says HLDI's Hazelbaker.
They've already raised rates on cars with xenon headlights. "Aluminum cars are too new to have reliable figures. And the companies are trying to stay competitive. But it will happen," he says of higher rates for aluminum cars.
To reduce costs, the repair industry is now pushing for measures that would allow body shops to use "preowned" never-used air bags from cars in junkyards. "That will have to come," says Bailey.
Meanwhile, the industry is bracing for more and more technology. "This is something the automakers have to do to meet their fuel economy requirements," says Bailey. "And we're going to have to learn to deal with it."
If today's cars are harder to repair, the skills needed to repair them are also harder to come by.
Technicians - don't dare call them mechanics - often have to complete four years of school: two years of technical school and two more to obtain an associate's degree. After that, a student works as an apprentice for three years before being fully qualified.
Automotive technicians held about 818,000 jobs in 2002, according to the US Bureau of Labor Statistics. That figure is expected to increase by 10 to 20 percent annually.
"There's no shortage of general technicians, but there is a big shortage of qualified people to work on drivability and emissions issues," says Robert Rodriguez of Automotive Service Excellence. The Leesburg, Va., organization certifies repair shops and technicians.
These specialist technicians need advanced reading, problem-solving, and basic electronics skills, he says. "The best people to find are those who have worked in the IT [information technology] industry," he says.
Twenty years ago, repair manuals for certain cars were 100 or so pages long. Now, they hold over 1 million pages and are available only electronically, says John Paul, who handles repair-shop certification for AAA Southern New England.
Schooling at the Universal Technical Institute, a Phoenix-based network with several campuses in the US, costs up to $15,000, depending on proficiency. And technicians have to buy their own tools at a cost of $10,000 or more.
"We have to fight to get people who are bright and motivated," says Mr. Rodriguez. "There is tremendous pressure in society against letting little Johnny go into car repair," he says, adding, "I wouldn't want my kid to become a mechanic."
So recruiters are turning more to women and immigrants. More technical manuals are written in Spanish, says Rodriguez, who remains hopeful that the gap will be filled with time. "There are still a lot of these guys that have gas in their blood and all they want to do is work on cars," he says.