Accident Vehicle Scrap Rate Soars Due to Rising Repair Costs

TapTechNews June 3rd news, it is reported that due to the skyrocketing cost of repairing accident vehicles, currently insurance companies are deeming 21% of collision-damaged vehicles as totaled. Compared to 1980, this proportion has increased by five times. Some experts predict that as cars become more complex, this number may soar to an astonishing 30%.

Surprisingly, those ADAS systems (Advanced Driver Assistance Systems) that are designed to help drivers avoid accidents have now become the accomplice of the increasing scrap rate of accident vehicles. Because the technology included in these systems is too expensive, insurance companies often consider it not worthwhile to repair them.

A report cited by Bloomberg said that replacing a large number of sensors and cameras required by ADAS systems such as automatic emergency braking and lane-keeping assistance, and calibrating these systems to make them work properly, will increase the repair cost by thousands of dollars. Coupled with the general increase in repair prices due to the rising labor and material costs, the situation is even more severe.

The report points out that although the repair cost of electric vehicles is high, its scrap rate is still lower than that of fuel vehicles. However, as the depreciation rate of electric vehicles accelerates, this trend may change.

TapTechNews noticed that the winners of the rising scrap rate of accident vehicles are accident car auction companies like Copart. Bloomberg pointed out that Copart's stock price has soared 23% in the past year and skyrocketed 1110% in the past ten years. If Copart's prediction that the proportion of totaled cars will increase from 21% to 30% comes true, their business will be even more prosperous, at least until automakers finally develop more powerful ADAS and connected car systems that can significantly reduce the accident rate.