Continued increase in repair costs


Latest CarGarantie analysis for claims distribution

The trend towards higher repair costs continues: After a phase of relative stability, the average repair costs for new and used cars continued to rise significantly in 2018. This is shown by the analysis of the insurance portfolio of the warranty and customer loyalty specialist CG Car-Garantie Versicherungs-AG.
The study analysed 767,262 expired used car warranties and 240,956 expired new car warranties of all brands and models with durations of 12, 24 and 36 months.
In total, CarGarantie manages over 2 million warranty contracts in its portfolio and cooperates with more than 23,000 specialist dealers in 22 countries.


Customer expectations on the rise
The expectations of vehicle buyers have been rising continuously for years. At the same time, they are aware of their warranty rights and have increasingly high standards. Manufacturers respond to these expectations with higher quality and ever new functions: Modern cars are getting better and better and are becoming increasingly versatile.
The downside of this coin is repair costs. After years of continuous but moderate increases in the average damage cost, the last two years have seen significant leaps. Already in 2017 there was a particularly high increase from 502 to 514 euros. 2018 shows that this was no exception: This year, average repair costs rose to 527 euros.

Engine responsible for the most expensive damages

In the used car segment, the cost share of the individual components remained virtually unchanged: As in the previous year, the engine is responsible for most of the costs (2017: 24.2 %, 2018: 23.6 %; Figure 1), followed by the fuel system including turbo charger and the transmission. The fuel system recorded a minor increase from 0.5 % to 18.2 %, the transmission a very slight decline to 11.6 % (2017: 11.7 %).
New cars are in a slightly different order: While last year the fuel system was responsible for most of the costs, this year the engine is also in first place, with growth of 1 % to 21.3 % (Figure 2). The fuel system follows in second place with 21 % (2017: 20.3 %), the electrical system, which was ranked fourth in 2017, follows in third place (-0.6 % to 10.7 %).

Engine ranked 3 and 4 at claims frequency

The share of claims frequency shows hardly any changes compared with the previous year. Although the engine is responsible for most of the costs for both used and new cars, it is only in 3rd place (used cars, Figure 3) with 10.8 % and in 4th place (new cars, Figure 4) with 8.7 %, respectively. As in the previous year, comfort electrics are ranked 3rd for new cars (9.5 %, an increase of 0.7 %).
In second place for used and new cars is the electrical system (used cars: 17.4 %, new cars: 17.8 %) with similar results as in the previous year. Also as in the previous year, the fuel system including turbo charger is in first place with a share of 19.9 % (used cars) and 21.5 % (new cars) respectively. The fuel system is therefore responsible for around one fifth of all damages in both vehicle types.
 
Damages occur slightly later
After last year's increase in early damages, the situation changed slightly in 2018. For used cars, 30.1 % of damages (2017: 33.2 %) occur within the first 5,000 km (Figure 5). Furthermore, more than four fifths of the damages (2018: 83.3 %, 2017: 85.3 %) occur during the first 25,000 km. A similar, minor decrease can be observed for new cars: Around a quarter of the damage (2018: 27 %, 2017: 30.3 %) occurs during the first 25,000 km.
The distribution of damages by days is comparable: During the first year, 80.9 % of used cars (2017: 83.3 %) and 46.7 % of new cars (2017: 54.9 %) have to make warranty claims (Figure 6).

Dr. Marcus Söldner, Chief Executive Officer CarGarantie:

“Recent years have seen a continuation of the trend: The ever more sophisticated technology of vehicles results in rising repair costs. This is particularly evident in the claims frequency, where the electrical system is once again in second place and, together with the comfort electrics, responsible for more than a quarter of all damages.
In this context, warranties are an excellent way for customers to protect themselves against financial losses. For dealers and manufacturers, on the other hand, it is not only a means of protecting themselves against costs, but also a symbol of confidence in their own product and thus a clear signal for the quality of the vehicles — a signal for which CarGarantie, as a customer loyalty and warranty specialist, offers every support.”