304 North Cardinal St.
Dorchester Center, MA 02124
304 North Cardinal St.
Dorchester Center, MA 02124
Emptier dealer lots, limited options for new-vehicle incentives, and used-car pricing that are competitive with new car prices are some signs of the pandemic-related shortages within the automotive sector. The auto repair and aftermarket industries are also impacted by labor and part shortages, shipment delays, longer wait times, and rising repair costs, which is a less obvious but no less detrimental symptom for consumers wanting to wait out the inventory shortfall.
Right now, delaying a car purchase can make sense, especially for those looking at used cars or those without a car to trade in. But the wait can take a while: Expert predictions state that inventories will eventually improve and lead to a decline in used-car prices, but these changes won’t be apparent until late 2022 or even 2023. Maintaining an older vehicle makes more sense when you’re holding off on buying a new one, but car upkeep and repairs are likely to be more expensive and take longer.
Challenges connected to COVID start a domino effect: Delays in new-car production resulted in a reduced supply that was unable to satisfy consumer demand; as a result, manufacturers soon reduced incentives and average transaction costs rose. Customers flocked to the used car market when they were unable to purchase the new automobile they want or could afford, which led to more inventory shortages and skyrocketing used car prices.
Maintenance on vehicles comes next. Many automobile owners made the decision to keep driving their present vehicle because they were either priced out of the market or were unable to obtain the ideal vehicle owing to the inventory scarcity. According to industry consultancy IHS Markit, the effects of the pandemic and changes in driving habits contributed to the average age of automobiles on the road reaching a record high of 12 years. To keep modern automobiles on the road, this led to an increase in demand for repair and maintenance services.
Repair systems manager at AAA David Bennett noted in an email that “repair facilities, whether dealerships or privately run, have challenged in getting components.” “Many consumers are choosing to keep their vehicles longer due to the shortage of new and used automobiles, and as a result, repair facilities are experiencing an increase in business.”
In order to keep their existing vehicle working, car owners are also willing to pay extra on those repairs. Michael Chung, the director of market intelligence at the Auto Care Association, claims as much. Because secondhand automobiles are so much more expensive, Chung explained in an interview, “the bar for saying, ‘OK, this [repair] is too expensive, I’m going to move cars,’ is rising up from the $1,500-$3,000 range to $5,000-$10,000.”
The demand for auto repair services at Pete’s Garage in Newark, Delaware, is rising, but Pete Rudloff anticipates that the surge in business will pass as soon as the supply of new cars stabilizes:
Rudloff noted in an email that the inventory shortfall “has considerably raised the demand for fixing vehicles due to the cost of new and used auto shooting up very high.” People don’t want to pay the super-premium [price] requested on the few new cars that are languishing on dealer lots, I’m discovering. For repair shops, the chip shortage appears to have been very advantageous. I anticipate that the vehicle repair industry will experience a dramatic change back once the chip supply issue is overcome.
The average vehicle turnaround time has grown by an additional day and a half since the epidemic started, according to an IMR 2021 survey of 500 independent repair shops. 50% of the shops questioned said receiving the parts they require to service vehicles frequently causes interruptions, while 34% said it happens occasionally. The causes of the disruptions ranged from lack of drivers and qualified technicians to distribution and part delivery delays.
Rudloff claims that while the shortage of microchips itself is not the root cause of component shortages, COVID-related manufacturing and shipping issues as well as a lack of labor are causing some repairs to have unpredictable wait times. According to Rudloff, “the parts supply problem doesn’t seem to be a lock-and-step problem with the chip shortage.” We inform our customers that there are exceptional shortages in our industry when they drop off their vehicles, but frequently we won’t be aware of a scarcity until we buy a part or parts.
Owner of ProAuto in Morton Grove, Illinois, Lee Hardegree claims that he has also been adjusting to the new normal of component shortages.
Parts have proved difficult, according to Hardegree’s email. “We get replacement parts from dozens of providers. They have a hit-or-miss inventory. An ordinary brake job on a widely used car might drive a shop owner nuts. “ What do you mean you don’t have any brake parts? You don’t have any Honda Civics in stock, is that right? This kind of dialogue can take place frequently during the day. According to Hardegree, his suppliers attribute the problems to a lack of workers, supply chain problems, and parts that are waiting to be unloaded from containers. Naturally, our suppliers want to sell us parts, but they are out of stock.
While most basic maintenance and repairs at Hardegree’s shop may be finished the same day or the next, there are a few exceptions. The most frequently delayed parts in his shop’s experience have been “tires, batteries, filters, brake pads, and brake rotors. Again, common repairs involve these components. When these parts are out of stock, [we] can typically find a source that can deliver them to us in a few days — not bad, but also not fantastic.” Hardegree stated that the longest wait he had to endure was for a Land Rover new turbo, which took approximately three months.
Bennett continues, “Electronic components are also proving to be problematic.” The most difficult parts to locate are those involving electronics, such as infotainment systems, temperature control systems, onboard computers (such as engine control modules, body control modules, etc.), heated and/or motorized seats.
Similar to Hardegree, Rudloff has experienced a variety of difficult-to-predict parts shortages. “In my experience over the past six months, tire pricing and availability has been fairly unpredictable,” he stated. Oil filters and brake rotors are among the “things that never previously would have been out of supply at our local suppliers,” even though tire shortages appear to be “easing up slightly” for him.
The price of repairs increases along with the demand for vehicle maintenance. Consumer costs for auto parts and equipment have increased 20% since 2021, according to Chung. Consumers spend much more for everything, according to Chung, whether it’s new tires, wiper blades, or oil changes.
The demand for repairs is at an all-time high, and many shops are overburdened, according to Rudloff. Additionally, a lot of shops are operating with less efficiency due to a lack of parts. We are seeing unheard-of COVID-related labour shortages, just like all other industries. The irony is that even though it’s one of the best periods for vehicle repair, many firms are running low on employees since there aren’t any qualified technicians available to hire. Many shops have increased their prices in an effort to stem the flood of requested auto repairs and make up for the lost time while waiting for parts.
According to Hardegree, “Repair charges to the consumer went up significantly since the cost for the replacement parts went up.” “The cost of all of our bulk supplies, including oil, washer solvent, antifreeze, etc., has increased. I recently paid close to $300 for a 30-pound tank of [refrigerant] for air conditioning repairs that cost $95 last summer. By the summer, it is anticipated to reach between $450 and $500. My part costs could increase by 10 cents or by several hundred dollars. Previously, many parts had fixed prices that were available at all times and were always in stock, but now we have to check pricing and availability for each repair order.
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