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Soaring repair costs yield 'the disposable car'

By MICHELLE HIGGINS
The Associated Press
7/22/04 8:53 AM

The Wall Street Journal

It's getting easier to total a car.

An unintended side effect of the increasingly sophisticated design of cars is that they are often too expensive to fix after even relatively minor collisions.

Most standard auto policies won't pay to fix a car if the repairs cost more than its cash value. But the cost of repairs is soaring as vehicles come equipped with expensive features like Xenon headlamps that can cost $3,000 a pair, sophisticated backup video cameras on their tailgates, and multiple air bags (the 2004 Mercedez-Benz M Class SUV has eight of them). This year, 16 percent of vehicles involved in collisions are being declared a total loss, compared with 7 percent in 1995, according to Charlie Baker, publisher of Collision Repair Industry Insight, a trade magazine. While that's partly because cars last longer today, advanced safety features are a major factor as well.

Deploy three or four air bags, for instance, and it will automatically cost thousands of dollars to replace them, on top of any body work or other damage. Then there are backup cameras and parking sensors, which warn drivers if they're getting too close to another car when parallel parking. These devices are designed to prevent accidents -- but they are also often in vulnerable places like the front or rear bumper.

Demand for more fuel-efficient vehicles also plays a role in rising repair costs. Lighter metals like boron steel and aluminum are increasingly showing up as structural components, but unlike regular steel, they cannot easily be bent back into shape after a crash. Instead these components often get replaced, boosting repair costs. Some of the new materials also require different tools and even work areas, raising the cost of fixing such cars as the Jaguar XJ, the Audi A8 and the BMW 5 series, which have aluminum components.

"We're moving closer and closer to the disposable vehicle," says Dan Bailey, chief operating officer of Carstar, a collision-repair chain based in Overland Park, Kan. In May, for instance, a 2002 Saturn sedan arrived at one of his shops in Maineville, Ohio, after a low-speed crash in which the car was driven off the road. The exterior looked fine, but the bump set off the air bags, damaging the dashboard, steering wheel, cruise control and even the sunroof. What would have been a $5,000 suspension repair was pushed up to $9,200, and the car was totaled.

Exacerbating the issue: In recent years, cars have been losing their value at a quickening pace after they drive off dealers' lots. (That's chiefly a result of increased discounting on new vehicles.) During the past three years, wholesale used-car prices have fallen an average 6.5 percent a year, according to Automotive Lease Guide. The faster a car depreciates, the lower its insured value -- making it easier to total in a relatively minor accident.

Cars totaled this way usually end up being sold either to companies that disassemble them for spare parts or that specialize in rebuilding them and selling them into the used-car market. (For a fee, Carfax.com can determine, using the vehicle's identification number, whether a used car was previously totaled.)

Other factors are also contributing to rising repair costs. Manufacturers are increasingly creating body parts in assembled units rather than smaller individual parts, which helps streamline the manufacturing process, but can also add dollars to the repair bill. If one of the smaller parts needs to be fixed after an accident, the entire preassembled unit may have to be ordered just to get the small piece that needs to be replaced.

Of course, the best way to save money on repairs is to stay out of wrecks altogether, which pricey features like backup cameras and parking sensors are designed to do. But partly because add-ons like these are so easily damaged, the average cost of repairing a car is now rising faster than the rate of inflation. Repair costs jumped 12 percent from 1999 to 2001 (the most recent year for which there are complete data), according to the Insurance Institute for Highway Safety. More recent data, while incomplete, are showing a further 9 percent jump, to $3,681 per claim, by 2003.

Just because you have several high-tech features on your car doesn't mean it will automatically be totaled in an accident. Since many of these pricey parts are found on expensive luxury cars, breaking one or two isn't going to make much a dent in its overall value.

However, such features are increasingly showing up on a wider variety of vehicles. In 2001, rear parking sensors were available on 35 car models, according to auto-industry researcher Edmunds.com. This year the feature, which costs from $150 to $500, is available on 82 models.

Air bags are proliferating as well. New cars are currently required only to have two frontal air bags, but in May federal regulators proposed new tests that are expected to require auto makers to equip all of their vehicles with head-protecting side air bags.

Cars that depreciate more slowly are somewhat insulated from being prematurely totaled by a minor accident. According to Edmunds.com, one 2004 model in the $20,000 to $45,000 price range that is expected to hold its value the best during the next five years is the Honda S2000 roadster. It's estimated to lose roughly 47 percent of its value by 2009. By contrast, the Ford Freestar minivan is expected to rank among the poorest, losing about 74 percent of its value. Cars with fewer rebates when new tend to hold their value better over time, according to Bob Kurilko of Edmunds.

One way to protect yourself from high repair costs is to find out how much you will pay in collision insurance before you purchase a vehicle. Comprehensive and collision insurance premiums are calculated by looking at vehicle loss history -- that is, how often the vehicle is stolen and how much it costs to repair or replace it after an accident.

Allstate.com provides information on which vehicles' premiums are lower than average, middle of the road, or higher than average. You can compare vehicles by "physical damage ratings" (the expected collision repair cost) by clicking on "Auto Make & Model" under "Resources & Tools" on the home page.

The Insurance Institute for Highway Safety offers "injury, collision and theft losses" by make and model for 2000-2002 cars on its Web site, iihs.org. The institute's bumper tests, which determine how much costly damage occurs in minor fender-benders, also offer guidance. Each year the institute picks a group of popular passenger cars to undergo a series of four bumper tests at five miles per hour.

In the most-recent test, six midsize sedans fared poorly, with each averaging more than $500 in repairs after crashes at five miles per hour. The 2004 Chevrolet Malibu and the 2004 Acura TSX earned the group's lowest rating, averaging more than $950 in damage. Honda Motor Co.'s Acura TSX had the costliest accident, sustaining $1,559 in damage when it crashed into a pole. Mitsubishi Motors Corp.'s 2004 Galant fared best, averaging $525 in repairs in each of four tests. Auto makers stress that the tests aren't related to vehicle safety.

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Pricey Repairs



Replacement prices for a sampling of safety features:



-- 2004 Lexus RX330 backup camera: $4,087



-- Side airbags: from $400 to $2,000 depending on the vehicle



-- 2004 Cadillac Escalade mirror with turn indicator: $997



Sources: Insurance Institute for Highway Safety; Carstar

 

Great post and very interesting article, it really touched on many facets of the auto industry, insurance, and repair costs. However, it left out the most important thing that many of these safety features save lives and limit injuries when the accidents aren't just low-speed collisions. I've read too many scary stories on this site of members or there significant others in serious accidents. The fact that they all walk away and recover is worth the extra costs of airbags, high tensile steel, vsc, etc. Similarly it limits medical costs per accident.

The writer should have also considered that many people don't want a car back after serious accident because in many cases the cars isn't the same again.

 

Agreed, but I think the focus of much of the article was on minor accidents, not serious ones. Cars should not sustain super expensive repairs for minor accidents, which is why the IIHS does bumper tests in the first place. Over $1000 for a minor bumper accident is not something that we should just accept. It is possible for auto manufacturers to make more robust (to low speed collisions) bumper systems which result in lower insurance premiums down the line. I'd rather pay slightly more for a car with a good bumper than dribble my money away in collision insurance premiums over 5 years. At least I will know I will be getting a better car.

 

About three weeks ago I was rear ended in my '04TL while at a stop light. When I got out to inspect the damage I was plesently surprised that it wasn't as bad as the impact felt. The total cost to put a new bumper cover on my car was $658.84. Since I told my insurance company what happend so that they could deal with the insurance company of the guy that hit me they were impressed the repair cost was that low. Even to insurance company that paid was more then happy to write out the check for the low amout.

I can't speak for any TSX owner but the rear bumper of a TL is a fairly strong one.

 

In the most-recent test, six midsize sedans fared poorly, with each averaging more than $500 in repairs after crashes at five miles per hour. The 2004 Chevrolet Malibu and the 2004 Acura TSX earned the group's lowest rating, averaging more than $950 in damage. Honda Motor Co.'s Acura TSX had the costliest accident, sustaining $1,559 in damage when it crashed into a pole. Mitsubishi Motors Corp.'s 2004 Galant fared best, averaging $525 in repairs in each of four tests. Auto makers stress that the tests aren't related to vehicle safety.

 

Moral of the story - don't use the bumpers on the TSX to aid in parking.

 

, or drive safer.

 

 

Note to self: Avoid crashing into stationary poles.

 

repost

https://acurazine.com/forums/showthread.php?t=12592

 

note to self, avoid crashing into ANYTHING stationary....
thats gotta suck,
"yeah i totalled my new car....whatd u hit, oh another car....what did the driver say, i dont know they werent in the car...."

 

Both threads merged.

 

Good news for someone with 2 S2000s in the family, bad news for someone who pays for these by selling TSXs.....

 

$1,000 to repair the Escalades mirror with indicator lights?

 

yeah, it is quite expensive to repair our bumpers. 900 for the first rear end incident and 2300 for the second incident. remember, even if you get a little love tap from another car, and there is no visable damage, you still should take your car to a body shop to check out the inside damage.

 

The thing is avoid hitting anything, but how about other drivers, they might hit you....thats what I am always afraid of.