Auto Physical Damage

New Vehicles: Technology Impact on Collision Repair Costs

June 1, 2018
6 MIN READ

Ryan Mandell

Director of Claims Performance, Auto Physical Damage

Vehicle manufacturers have always been innovators, constantly experimenting with new technology and new ways to keep us safe in the event of an accident. Recent advances, using sophisticated collision avoidance systems which have quickly become commonplace in new vehicles can help us avoid accidents altogether. While these same components also have an impact on OEM collision repair procedures and costs. While Original Equipment Manufacturers (OEMs) have been experimenting with collision avoidance systems since the late 1950s, significant advances did not occur until the mid-1990s when Hughes Research Labs produced the first commercially viable systems. This led to the technology appearing in earnest between 2004–2012 as OEMs introduced the technology into their higher-end luxury models during product re-designs and refreshes. Modern collision avoidance systems consist of radar, laser (LIDAR), and camera-based systems. These systems provide not only collision avoidance capabilities by automatically applying the brakes, they also provide adaptive cruise control and park assist capabilities. Specific components for these systems include park assist sensors, front impact sensors, vehicle radar/speed sensing systems, surround cameras, laser systems (LIDAR) and more. As avoidance systems become more prolific and components more readily available, they are increasingly being added not only to luxury cars, but also to many of the latest mass-market vehicles, across multiple price points and styles. This means that collision avoidance systems, and the parts and labor needed to repair them, are present throughout the entire repair industry.

"Modern collision avoidance systems consist of radar, laser (LIDAR), and camera-based systems."

Modern collision avoidance systems consist of radar, laser (LIDAR), and camera-based systems. These systems provide not only collision avoidance capabilities by automatically applying the brakes, they also provide adaptive cruise control and park assist capabilities. Specific components for these systems include park assist sensors, front impact sensors, vehicle radar/speed sensing systems, surround cameras, laser systems (LIDAR) and more. As avoidance systems become more prolific and components more readily available, they are increasingly being added not only to luxury cars, but also to many of the latest mass-market vehicles, across multiple price points and styles. This means that collision avoidance systems, and the parts and labor needed to repair them, are present throughout the entire repair industry.

"Modern collision avoidance systems consist of radar, laser (LIDAR), and camera-based systems."

collision avoidance, park assist and adaptive cruise control components In reviewing the average cost for several common collision avoidance components, these highly sophisticated gadgets are by no means an inexpensive replacement if damaged. Unfortunately, these components are most commonly found in the areas most prone to collision impacts—the front and rear bumper areas of vehicles. Within Mitchell’s Industry Trends Report, “Growth in Special Materials and Its Impact on Estimating” from Winter, 2017 it was shown that there is an average increase in vehicle repair costs of approximately $458 for vehicles with specialty materials vs. those without. In this article, we’ll examine how collision avoidance, park assist, and adaptive cruise control systems affects the cost of repair for vehicles outfitted with these systems­—virtually all new vehicles.

Analysis Approach:

An absolute approach was taken to try to answer the question of the impact that collision avoidance, park assist, and adaptive cruise control systems have on vehicle repair costs. As the collision data on recently refreshed or redesigned vehicles is still maturing, especially for 2017 and 2018 models, the analysis approach taken was to compare recently redesigned vehicles and directly compare the repair costs to their prior generation vehicle. This would yield an accurate apple-to-apple comparison on the potential repair costs.

Vehicle Selection:

The criteria for the vehicle selection were:

  • Major redesign of the vehicles or significantly refreshed vehicles. A prior generation of the vehicle, substantially similar in size and purpose, must exist.
  • Brand new models that did not have a prior generation equivalent were not considered.
  • The average/typical configuration was selected; high-end or special editions (i.e., Mercedes AMG line) and exotic cars are not included.

For model years 2016 and 2017, there are approximately 30 vehicles that were introduced to the market that met the above selection criteria. Higher selling vehicles, with a cross section from sub-compact vehicles to luxury sports utility vehicles were selected to see the impact of technology advances on claims severity across several different types of vehicles.

For model years 2016 and 2017, there are approximately 30 vehicles introduced to the market that met the selection criteria.

Parts Selection:

Vehicle collisions and repairs are typically to the front or rear-end of vehicles, where much of the new technology is applied, so the focus of the analysis is on those parts of the vehicles only. All parts and net labor for the following areas are included:

  • Front-end: All bumper, grill and lamps.
  • Rear-end: All bumper and lamps.

If a sensor is available as either standard or an option for a specific vehicle, it is included. These selection criteria applied to both the new redesigned model year and the prior generation, if the parts were available. Lastly, only OEM parts were used in the analysis.

Labor Rates:

Labor rates between $55 for body repair and up to $95 for mechanical repair were used for all vehicles. These rates may be on the low side of industry averages, but highlight the impact of parts and parts prices versus the impact of labor rates.

Not Included:

While many of the following operations may be required for a proper repair or may be impacted in a front-end or rear-end collision, these operations are excluded from the analysis:

  • Any pre- and post-repair scanning, reprograming, or retargeting of the systems and sensors.
  • Repairs related to airbags (SRS), front inner structures, radiators, condensers, the rear body related were not considered, albeit these vehicle systems would undoubtable have been impacted by moderate collision.

Results:

Table 1 highlights the total parts and labor costs to replace all the major parts for the front- and rear-end of the current model year vehicle compared to the prior generation. The data shows that although not every newly redesigned vehicle experienced an increase in claims severity, most do. The primary cost drivers are the increased use of sensors, radar systems (especially on the luxury vehicles), and headlamps on the redesigned vehicles. For example, in the redesigned 2017 Chevrolet Cruise, although the new model year did not include more sensors, the cost of the headlamps increased by over $300 each, attributing to most of the cost increase from the prior generation.

Conclusion:

Adoption of advanced technologies on newly redesigned vehicles is having a pronounced impact on their repair costs. Adding parking assist sensors, wave radar systems, front-end and rear-end cameras, as well as more elaborate front lamp systems is adding, on a simple average, 23% to the repair cost compared to the prior generation. While actuarial departments may traditionally use other factors to price insurance policies for new redesigned vehicles, with the advent of new substrates and advanced technology now being introduced rapidly into the latest designs, underwriting may want to consider this additional potential repair cost information in determining how to more accurately price policies for the latest generation of vehicles.