Vehicle repair costs are rising, according to a survey, but that doesn't make customers more likely to buy vehicle service contracts or extended warranties.
The survey, conducted by Harris Poll for Ally Financial, asked 2,012 U.S. adults in May how much they paid for vehicle repairs. Young adults are disproportionately impacted in the service bay, the survey found, as consumers age 18 to 34 paid nearly $700 more than those age 55 and older for vehicle maintenance and repairs.
Meanwhile, just 21 percent of customers bought a vehicle service contract in the past five years, the survey said.
The cost of service repairs in the past five years by age group:
- 18-34 spent $2,334
- 35-44 spent $1,978
- 45-54 spent $2,135
- 55 and older spent $1,654
Driving up the cost of repairs are the complexity of components and rising labor rates, and technology in new cars and light trucks, says Mark Manzo, president of insurance at Ally. Dealers are investing more to train and educate service technicians, and the industrywide shortage of technicians means consumers and insurance companies alike are feeling the pinch of competitive pricing.
"There's a shortage right now of skilled mechanics in the dealerships. It's supply and demand," Manzo said. "Dealers are competing against each other to get the best mechanics."
Younger vehicle buyers tend to buy older cars because those vehicles are more affordable. But those cars also are more likely to be outside of manufacturer warranties.
Though there's still progress to be made, Manzo says an uptick in training and information available online has aided F&I offices in selling service contracts.
"Dealers have done a much better job disclosing service contracts," Manzo said. "They're a lot more transparent. Today, more consumers are choosing F&I products based on their needs."