Cars are not worth repairing. It is estimated that one in every five vehicles seen by an insurance adjuster is one It costs too much money to repair And return to drivable condition. Have Lots of factors to consider hereBut with high-tech lighting and sensors in every car these days, the growing use of exotic materials, and airbags more expensive than ever, it’s not hard to see how much that would cost. where to go. This recent report from Bloomberg
How to disrupt the modern car market It’s great for CopartBut not good for consumers.
From Bloomberg:
More than one-fifth of vehicles are now declared debt-free by insurance companies after examining claims; industry participants say the figure is near a record and about five times higher than in 1980. The total car share could rise further as falling used car prices cause the ratio leaning toward salvage instead of repair. Auction companies that resell wrecks on behalf of insurance companies will benefit from this trend, while car buyers trying to finance their vehicles but being stingy on insurance will encounter unpleasant financial shocks.
Many Americans are kicking around the streets Older cars than everlike New car prices increase, people are taking advantage of the increased durability developed over the past few decades. The average age of a car on the road today is 12.5 years. Those old cars often lose high value and are not worth repairing in the event of an accident.
However, those cars weren’t just scrapped. Add words Bloomberg:
This may sound wasteful, but today shipwrecks are not just broken up for scrap and parts – buyers from emerging markets export, recover and then return the entire vehicle. convenient for roads; they can do so profitably because of lower labor costs abroad, which increases the car’s potential value at auction.
For most of us, especially those who regularly drive in cars more than a decade old, a non-injury collision is largely just an inconvenience. A call to the insurance company disappointed us as soon as the car was written off. Then we can focus on buying something to replace it and move on. But the recent car price boom has more Americans. Drivers are swamped with their car loans more than ever, and a complete collapse could be a financial disaster for these overleveraged people. Based on Bloomberg“Drivers who pay top dollar for a new car during the pandemic are especially vulnerable.”
With all these cars being written off and insurers having to pay for costly repairs, insurance costs have increased significantly in recent years. In 2023, auto insurance costs increased by 24%, contributing a large part to the inflation we saw last year. Cars are more expensive, insurance is more expensive, boy, which is definitely a good thing when we’ve built our entire society around cars.
Be careful with the forks. And in the meantime, Read the whole thing at Bloomberg.
