Spiraling cost of car parts could lead to pricey repairs

Personal Lines

Spiraling cost of car parts could lead to pricey repairs

Published: 13 November 2015

The recently released Kinsey Report highlighted the considerable increase in the cost of spare and replacement motor vehicle parts.  The significance of this is the knock-on effect that such price hikes have on the overall cost of vehicle repairs.  

According to Santam, South Africa’s largest short-term insurer, around 70% of motor claims relate to motor vehicle accidents.  According to SAIA (South African Insurance Association), in 2014, the insurance industry collectively spent between R15 billion and R16 billion on the replacement of parts in the repair of accident-related vehicles.  Bringing down the cost of car parts is instrumental for the sustainability of the insurance sector. 

To counter the increasing cost of parts, Santam has introduced a certified aftermarket parts programme to reduce repair costs. The savings are indirectly passed on to our clients.  An aftermarket part refers to any part that is not directly sourced from the vehicle manufacturer. Aftermarket car parts provide a more economical alternative to Original Equipment Manufacturer (OEM) parts. Note that this applies in cases where the vehicles being repaired are no longer under warranty and owners are not obliged to use OEM parts. 

According to Fanus Coetzee, head: adjustment services at Santam, accident-damaged vehicles are often deemed ‘uneconomical to repair’ due to the prohibitive cost of OEM parts prescribed by the motor vehicle industry. 

The Kinsey Report, which reviewed 74 vehicles across nine categories on a price per part comparison pointed to the fact that crash parts were the most costly when it comes to vehicle accident repairs.  

It should be borne in mind that materials used in car construction also play a role. The use of alloy (a mixture of metals) is very popular in vehicles as it is a lower cost material, which lightens the vehicle weight and improves fuel consumption. Typically, cars manufactured today are built using alloy parts.  Cars with aluminium body panels and chassis components are complicated and very expensive to repair. Vehicles with aluminium parts are often considered uneconomical to repair when the repair costs reach 50% of the resale value of the vehicle. However, if you use aftermarket parts to repair a car, the repair becomes more economical and viable to consider. 

“As an insurer our objective is to ensure that we reduce repair costs and save vehicles that will be uneconomical to repair if fitted with OEM parts, by fitting quality certified aftermarket parts onto our insured clients’ vehicles. In the process, we aim to contribute to more competitive insurance premiums for policyholders and create more work for our business partners in the motor body repair industry,” says Coetzee. 

“During the repair process we will not compromise on the quality and safety of parts used.  As evidence of this, and to further support our commitment, Santam provides a lifetime warranty on all body repairs where we have authorised certified aftermarket parts. Santam’s initiative on certified aftermarket parts is endorsed by the South African Insurance Association,” concludes Coetzee.