Car Repair Costs Are Up 20%. Here’s How to Make Sure You Can Afford Them

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The latest Bureau of Labor Statistics data shows car repair costs have ballooned 19.8% over the past year. Here’s how you can plan for vehicle repairs. 

The cost of buying a car has skyrocketed over the past few years, with the average transaction price for a new vehicle climbing to $48,808, up nearly 27% from June 2020 to June 2023, according to Kelley Blue Book.

But it’s not just the sticker price that’s ticked higher; the latest Bureau of Labor Statistics data shows that repair costs have soared 19.8% over the last year alone.

While inflation is partly to blame, it’s not the whole story. Let’s take a quick look at some of the factors driving higher vehicle repair costs and what steps you can take to afford them when they inevitably pop up.

Car repair costs are far outpacing inflation

Thanks to elevated inflation, nearly everything costs more than it did just a few years ago. And while some of the latest data shows that inflation is cooling, the rising cost of vehicle repairs has outpaced inflation.

So why are repair costs rising so quickly? One reason is that people are holding onto their vehicles longer. The average age of a vehicle on the road in 2022 was 12.2 years, up from just over 11 years in 2012, according to S&P Global Mobility. Older vehicles typically need more expensive repairs to keep them running.

Another reason repair costs are rising is because the number of vehicle crashes spiked during the pandemic. The latest data from the National Highway Traffic Safety Administration (NHTSA) shows that crashes increased from 5.2 million in 2020 to 6.1 million in 2021. The 2022 crash data isn’t available yet, but the latest NHTSA vehicle traffic fatality data shows only a marginal decrease between 2021 and 2022, indicating that crashes remain elevated.

When more crashes occur, there are fewer automotive replacement parts to go around, which drives up the cost of repairs. More crashes have caused car insurance prices to spike as well.

If all that weren’t enough, car repair costs have also ticked higher thanks to a shortage of mechanics. According to the National Automobile Dealers Association, the automotive technician industry needs to replace about 76,000 workers every year, but only about 39,000 new service techs graduate from training programs each year.

A few tips to help you afford car repair costs

Just as you might shop around for an auto loan when buying a car, you may also want to consider shopping around when getting your car repaired. Dealerships often charge more than the average repair shop, according to J.D. Power, and finding a local mechanic can be a good way to save on repairs.

Another money-saving option to look into is changing your auto insurance policy. While insurance won’t cover the routine maintenance of your vehicle, finding the right policy that covers major repairs after an accident may be what you need. It’s a delicate balance between having too much coverage or not enough, so look at what your policy covers and compare it to others to see if you have the right coverage for the best price.

And finally, the best thing you can do to help yourself amid rising vehicle repair costs is to build up your emergency fund. According to personal finance expert Suze Orman, 67% of Americans couldn’t cover an unexpected $400 expense, meaning many people would have a hard time covering a major auto repair.

If building up an emergency fund seems overwhelming, just start small. Aim to save $100 at first. You can set up small, automatic deposits into a high-yield savings account until you achieve that goal. And once you have it, push your goal to $500 or $1,000.

The important thing to remember is that you have something in your savings account to help offset a car repair or other emergency expense.

All of the above factors contributing to high car repair costs won’t likely go away soon. Spending a little time evaluating how you’ll pay for an expensive repair will help keep your personal finances on track during a time when nearly everything costs more than it used to.

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