US auto repair costs reach record highs: Not just because of taxes.
Auto repair costs in the U.S. are up 5% in a month, 15% annually. A 25% tax on parts, aging vehicles, a shortage of technicians, and ADAS (Advanced Driver-Assisted Services) are driving up consumers' bills.
According to the U.S. Bureau of Labor Statistics (BLS), average auto repair costs increased by 5% in just one month, from July to August – the sharpest increase ever recorded. Compared to the same period last year, repair bills are 15% higher and show no signs of slowing down. This new cost picture reflects the combined impact of tax policies, fleet structure, technical workforce, and the technological complexity of newer cars.
25% tax and dependence on imported components.
Earlier this year, the U.S. imposed a 25% tariff on imported automotive components. While automakers are trying to absorb some of the cost to keep new car prices stable, service centers don't have the same leeway. The majority of replacement parts still come from outside the U.S., so consumers directly bear the tax difference when replacing sensors, modules, or electronic control units.
Skyler Chadwick, Director of Product Consulting at Cox Automotive, commented: “Taxes are part of the problem, but we’re also seeing older vehicles, a shortage of skilled technicians, and vehicles becoming increasingly complex to repair.”
The fleet is aging, and overhaul costs are increasing.
The average age of cars on the road in the U.S. is 12.8 years, up from 12.6 years the previous year. As car age increases, the list of expensive overhaul items – such as transmissions, suspensions, or engine overhauls – grows thicker, driving up overall maintenance and repair costs.
Due to a shortage of technicians, labor costs account for a large portion of the bill.
Labor costs now account for approximately 60% of total repair expenses. A shortage of technicians – a problem repeatedly mentioned by Ford CEO Jim Farley – has driven wages in the industry up by about 7% over the past year (according to the U.S. Department of Labor). Rising labor costs, coupled with extended repair times, are causing customers' final bills to increase rapidly.
ADAS and electrochemistry: more complex, longer repairs.
Advanced driver assistance systems (ADAS) and electro-mechanical systems in newer vehicles require specialized equipment, precise calibration procedures, and more hours of work. Even minor collisions can necessitate the replacement or recalibration of sensors, cameras, and radar, increasing both parts and labor costs.
High car prices and high loan interest rates are causing consumers to choose repairs over replacements.
According to Edmunds, the average price of a new car in August was approximately $48,400. Used car prices increased 26% compared to 2019; for low-mileage vehicles (less than 3 years old), the increase could be as high as 40%. Adding to this high loan interest rates, 20% of new car buyers are paying more than $1,000 per month, and over 30% of used car buyers are paying at least $600 per month. In this context, many consumers are choosing to extend the lifespan of their vehicles and focus on repairs rather than buying new ones.
Patrick Anderson, President of Anderson Economic Group, commented: “When new cars become too expensive, consumers will invest more time and money in repairing their old cars.” However, with rapidly rising repair bills, the “savings” compared to buying a new car are no longer as significant as before.
Key figures
| Target | Value |
|---|---|
| Monthly increase in repair costs (7–8) | +5% |
| An increase compared to the same period last year. | +15% |
| Import tax on components | 25% |
| Average age of the vehicles currently in circulation | 12.8 years (from 12.6 years) |
| The proportion of labor costs in the invoice. | ≈60% |
| Technician salary increase (1 year) | ≈7% |
| Average new car price (Edmunds, 8) | $48,400 |
| Used car prices compared to 2019. | +26% (for cars with low mileage, it can be +40%) |
| New car buyers pay more than $1,000 per month. | ≈20% |
| Used car buyers pay ≥600 USD/month | >30% |
Prospects
With import tariffs on components still in effect, the vehicle fleet continues to age, the workforce hasn't kept pace, and vehicle technology is becoming increasingly complex, making the pressure of repair costs in the US likely to persist. Users may need to carefully consider whether to continue major repairs or replace their vehicle, given that both options are more expensive than before.
