Repair costs see sharp rise
CarGarantie issues latest claims spread evaluation
The evaluation of the in-force business statistics conducted by the warranty and customer loyalty specialist CG Car-Garantie Versicherungs-AG has revealed that the average repair costs for damaged vehicles have risen once again. After costs had remained stable last year, the analysis of the most recent data has shown that costs have increased significantly. The study evaluated 750,349 expired used vehicle warranties and 229,898 expired new vehicle warranties with a duration of 12, 24 and 36 months. The warranties in question covered every brand and make of vehicle. All told, CarGarantie manages over 2.1 million warranty contracts and works with more than 23,000 specialist vehicle dealers.
Repairs are becoming more expensive
2017 saw a sharp increase in average repair costs, which jumped from 502 to 514 euros per claim.
This can be attributed to the increase in the technical complexity of modern-day vehicles. New vehicles use increasingly sophisticated assistance systems that significantly aid day-to-day driving. This, in turn, however, comes at a greater cost in terms of the amount of work needed in order to repair defects. As increasingly modern systems are gradually incorporated into used vehicles over time and their components frequently require expensive repairs, the costs in both these areas are reaching new heights.
Among used vehicles, the engine continues to be the biggest cost contributor, which is once again especially high at 24.2 % (last year: 22.9%). As in the previous year, the fuel system (turbo-charger included) as well as the transmission rank 2nd and 3rd respectively, with both recording slightly lower claims amounts (fuel system: down 0.4 % to 17.7 %; transmission: down 0.2 % to 11.7 %). Electrical and climate control systems remained in 4th and 5th place respectively.
The engine also proved to be a significantly higher contributor to the overall costs in new vehicles compared to last year. Whilst the highest-ranking component, the fuel system, remained virtually unchanged at 20.3 % (2016: 20.2 %), engine failure now occupies the 2nd spot and accounts for 18.9% of all repairs – a jump of 3.1 %. Ranking 3rd, transmissions fell slightly by 1.4 % to 12.3 %.
Few changes in claims frequency
The high engine damage costs are particularly noticeable in terms of claims frequency. Among used vehicles, fuel systems at 19.7% (2016: 19.6%) and electrical systems at 17.3% (2016: 17.7%) continue to rank 1st and 2nd respectively. At 11.2% (2016: 10.9%), engine failures only rank 3rd. These statistics show that just over one in every ten claims is attributable to engine damage – though these account for close to a quarter of all ensuing costs.
In terms of claims frequency among new vehicles, the top two places are little different from last year: As in the previous year, fuel systems remain the primary issue (+0.7% to 22.3%), followed by electrical systems (+0.6% to 18.1%). 2017 saw comfort electrics rise to 3rd place, however (+1.1% to 8.8%), whilst cooling systems fell by 2.6% to 8.7%.
Used vehicles: early damage occurrence
In terms of total mileage, used vehicle claims are occurring earlier than last year: the share of claims on vehicles with up to 15,000 km are on the rise in every area, with 33.2% (2016: 31.7%) accounting for claims during the first 5,000 km. All told, the statistics for claims during the first 25,000 km have remained unchanged due to the decline recorded in the categories up to 20,000 and up to 25,000 km.
Among new vehicles, there has been little movement compared to last year: here, 3.3% of all claims occur during the first 25,000 km (2016: 31.7%).
With regard to the time when these incidents arise, claims are being reported earlier among both used and new vehicles: 83.3% of used vehicles (2016: 81.7%) and 54.9% of new vehicles (2016: 48.9%) required warranty work during the first year of the warranty coming into effect. On the whole, the claims reported therefore related to both overall mileage and vehicle age.
Axel Berger, CarGarantie Chairman:
“The sharp increase in average repair costs is a clear reflection of the fact that the technology incorporated into modern-day vehicles is becoming ever-more complex, requiring increasingly extensive maintenance. And, in all this, the highest-ranking issues among used vehicles remain the fuel system, transmission and engine, with the latter accounting for virtually a quarter of all repair costs.
In light of these facts, taking out warranty cover is more advisable than ever. On the one hand, it protects dealers and vehicle owners from unexpected costs, but, these days, a warranty is something that is also expected to accompany the vehicle to highlight its particular quality and underscore the owner’s trust in the vehicle on offer. Dealers offering such a warranty would be meeting customer expectations and raising their levels of satisfaction without themselves having to bear any cost risk.
CarGarantie is specialised in exactly these types of warranty and customer loyalty solutions and helps its contract partners get precisely the programme going that works for them.”