As we head into 2018, automotive and technology companies continue their race towards vehicle autonomy.
Daily headlines provide accelerated timelines when autonomous vehicles will be available in large numbers, communicating with one another via vehicle-to-vehicle and vehicle-to-infrastructure communication. And yet, there are still over 260 million cars and trucks on the road in the U.S. with an average age of 11-plus years; vehicles last longer than ever before, and scrappage rates remain low.
Subsequently, when we look ahead for 2018, what happened in 2017 can provide a good gauge for what we can expect, but must be blended also with knowledge of how quickly our world is evolving through technologies such as robotics, artificial intelligence, telematics, and evolving automotive electronics, composites and metals.
U.S. vehicle sales for 2017 came in lower than 2016 sales, and most analysts believe sales will continue to flatten in the next several years, but will continue to rise in price. The data in Figure 1 (below) shows the average MSRP and how it has grown over two percent annually over the last five-plus years, according to NADA DATA from 2014-2016. Higher MSRPs have been driven by consumer preference for light trucks and higher content new vehicles, which cost not only more at time of purchase, but also if that vehicle needs repair or is a total loss.
Vehicle repair costs rose again this year, and all signs point to further increases next year. Key to the increase is growth in newer model year vehicle share, where repair costs are higher. For the four quarters ending Q3 2017, vehicle repair costs for non-comprehensive losses were up about 2 percent; with the largest increases occurring among current model year vehicles (up 3.4 percent) and vehicles aged 1-3 years (up 2.4 percent) — see Figure 2 below.
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