Presented by AutoXcel and its Technology VSC
In today's automotive market, vehicle owners and industry professionals are witnessing a significant shift in service claim patterns. As vehicles become more technologically advanced, the nature and frequency of service claims are changing, and costs are on the rise. Let’s explore some of the trends driving this phenomenon.
The Technology Factor
Modern vehicles are essentially computers on wheels. The average new vehicle contains upwards of 100 million lines of code and dozens of electronic control units. While these technologies enhance performance, safety, and convenience, they also introduce new points of failure and new costs:
Infotainment systems have become central to the driving experience but represent one of the fastest-growing service claim categories
Advanced driver assistance systems (ADAS) including cameras, sensors, and radar units are expensive to replace when they fail
Digital dashboards and connected car features add complexity to what were once simple mechanical systems
These high-tech components are not only more expensive to replace than their mechanical predecessors, but they often require specialized diagnostic equipment and technician training, further driving up repair costs.
Repairing vehicles that come with advanced driver-assistance technology or other computerized features can cost up to three times more than the maintenance of vehicles without such technology."
- Greg Brannon, (AAA)
Electric and Hybrid Vehicle Considerations
The transition toward electrification has introduced entirely new categories of service claims:
Battery system failures in electric and hybrid vehicles can result in service claims ranging from $5,000 to $15,000
Electric motor and power inverter issues represent significant service expenses for manufacturers
Charging system components (both onboard and off-vehicle) create new potential failure points
As these technologies mature, we may see an improvement in reliability, but for now, they represent a growing segment of service claims.
Traditional Systems Getting More Complex
Even conventional vehicle systems have become more complex and prone to expensive service claims:
Turbochargers and direct injection systems designed for improved fuel efficiency and performance generate higher service claim rates than naturally aspirated engines
Dual-clutch transmissions and CVTs continue to experience higher-than-average service claim rates
Emissions control systems, particularly in diesel vehicles, represent significant service costs
Software-Related Issues on the Rise
Perhaps the most dramatic increase in service claims involves software:
Software glitches that affect various vehicle systems
Over-the-air update failures requiring dealer intervention
Calibration issues for sensors, cameras, and control modules
Unlike traditional mechanical repairs, software problems can be extremely difficult to diagnose and sometimes require multiple repair attempts, adding to service costs.
The COVID-19 and Supply Chain Impact
The pandemic created a perfect storm for service claims and costs:
Parts shortages led to extended repair times and higher parts prices
Reduced manufacturing capacity during shutdowns affected quality control in some cases
Labor shortages at dealerships and repair facilities drove up labor rates
Shipping delays increased the time vehicles spent awaiting repairs, sometimes leading to additional deterioration
Microchip shortages forced some manufacturers to modify vehicle designs or temporarily remove features, creating potential compatibility issues for repairs
Even as pandemic restrictions have eased, the ripple effects in the global supply chain continue to impact service costs. Additionally, the inflation that followed pandemic-related economic disruptions has increased the costs of raw materials, shipping, and labor across the board.
What Does the Future Hold?
As we navigate this new era of automotive technology, the rising trend in service claims represents both a challenge and an opportunity. Manufacturers who can effectively manage quality and reliability will gain a competitive advantage, while innovative F&I providers who demonstrate creativity in covering these complex systems will thrive. For consumers, being informed about service coverage and maintenance requirements has never been more important.
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AutoXcel delivers innovative vehicle service contracts and ancillary programs that safeguard consumers from the exorbitant costs associated with servicing technologically enabled and electric vehicles.
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