IN future, the effect of repair costs on motor insurance premiums could encourage car buyers to consider the total cost of ownership when buying a new vehicle.
The prediction comes from Mutual & Federal, a short-term insurer that has voiced increasing concern about the rising cost of automotive repairs and the impact this ultimately has on premiums.
Among factors influencing repair costs are the higher number of imports on South African roads, the higher price of many imported parts, greater vehicle sophistication and the higher cost of replacing advanced automotive features.
Keith Kennedy, Executive General Manager Claims at Mutual & Federal, noted: "Repair costs are often affected by the advanced features on the new generation of vehicles. Some imported models are also costly to repair.
"As these issues become more widely appreciated, it is logical to assume that repair costs and insurance premiums will become a factor in purchase decisions.
"The total cost of ownership influences many types of purchase with a high technology content. In future, it may well be a factor in the marketing of hi-tech vehicles."
Kennedy pointed out that years ago, car advertising merely listed the price. In recent years, the monthly repayment has also been featured.
Total cost of ownership statistics might in future be stressed by local car makers as in some cases their parts and repair costs could be a source of competitive advantage.
Studies by underwriters at Mutual & Federal confirm the 'import-effect' on repair costs.
When costing parts for frequently encountered types of vehicle repair, the insurer found that a typical parts basket for a local vehicle in the R110 000 to R140 000 range may cost R28 435 versus R34 653 for an import from this price range. With vehicles in the R141 000 to R170 000 range, the differential was more pronounced R21 062 versus R46 672.
Another frustration for car owners is limited parts availability on some new market entrants. This can delay repair-work.
Keith Kennedy added: "We're close to our clients and their priorities. They expect the best possible repair without delay. They are frustrated by inconvenience and may not realise that some delay is to be expected if the brand is a relative newcomer to South Africa.
"At the time, the cost of repair is often a secondary consideration, but there is growing appreciation that inflation in the repair and refinishing sector ultimately finds its way into premiums."
Design sophistication across an expanded national 'car park' is a key driver of cost escalation. Multiple airbags, advanced on-board computers and sensors bring a new level of complexity to automotive repair.
One luxury vehicle has 48 onboard computers - one per airbag and one for every automated feature.
Modern windscreens include rain sensors and digital data displays.
One recently introduced feature is a bumper-mounted infrared camera that detects an object before it is apparent to the human eye.
It costs over R12 000 and its forward position leaves it prone to damage.
Some low-priced entry-level vehicles contain highly advanced features, creating a mismatch between showroom prices and repair costs.
A single airbag replacement may cost R25 000 to R30 000 - sometimes more than the annual insurance premium on the model concerned.
Keith Kennedy pointed out: "We are concerned that repair cost inflation may prompt more drivers to join the ranks of uninsured motorists. They may then be inclined to look at backyard repair-jobs. This would lead to huge quality and safety problems.
"We assure vehicle owners that Mutual & Federal is doing all it can to create cost-efficient solutions that do not compromise safety and quality."
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