Monday, June 17, 2024
NewsOne vehicle in five is sent to the scrap yard; rising repair...

One vehicle in five is sent to the scrap yard; rising repair costs are to blame

  • Age of cars has risen to record high 12,5 year.

  • A lot of cars are scrapped because of these rising repair costs.


 

The automobile as we know it is becoming increasingly complex. On-board technology is no longer limited to a single pair of airbags to ensure safety. These days, safety and driver assistance systems are democratized, which means that lane-keeping assist and intelligent cruise control are just two of an endless host of innovations that increase the level of safety on board a vehicle.

There is, however, a downside to this injection of technology into vehicles: the cost of repairs following an accident. According to Bloomberg, more than one in five vehicles is declared a total loss due to exorbitant repair costs.

A wrecked vehicle is very often sent to the scrap yard because the repair costs exceed the value of the car immediately before the accident, minus the expected salvage proceeds.

However, there’s another important factor to consider: the age of the cars. The North American fleet is aging, not least because motorists are keeping their vehicles longer, due to several factors. According to S&P Global, the average age of cars in the USA reached a record 12.5 year last year.

Very recent models also fall prey to these insurers’ decisions, not least because their level of equipment installed around the vehicle is very high. When these sophisticated devices must be replaced, costs rise drastically.

One theory as to why the number of accidents is not really falling is that drivers are relying a little too heavily on these safety devices.

Copart Inc, interviewed by Bloomberg, goes even further, predicting a proportion more than the 21% (of vehicles being written off) recorded in the first quarter of 2024 in the USA. Indeed, the company, which specializes in the recycling and resale of undamaged and damaged vehicles, believes this proportion could rise to 30%.

As for the proportion of EVs being written off, it’s not very high yet, but with all the arsenal installed in these electric vehicles and their ever-increasing popularity, 100% electric vehicles could also often find their way to the local scrap yard.

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