The supply crunch writing off cars early and jacking up insurance premiums — You have reached your maximum number of saved items.
Easily repairable cars are increasingly being written off after minor accidents due to delays in sourcing replacement parts from vehicle manufacturers, Australia’s peak mechanics body says, as insurers concede that the barriers to repair are inflating premiums for all motorists.
Frustration at carmakers has flared up since average repair times blew out from 38.57 days in 2019 to 61.25 days in 2024, according to data from the Insurance Council of Australia (ICA). It’s been identified as a key contributor to rising motor insurance premiums, which the corporate regulator found have risen about 50 per cent in six years.
Stubborn delays for replacement parts have persisted since Australia’s car manufacturing sector shuttered last decade, exacerbated by the proliferation of new brands now imported into the country and more electric componentry and sensors that make modern repairs more complex.
Electric vehicle uptake has also complicated the repairs ecosystem, with traditional mechanics needing to undergo electrical training to de-power and repower batteries before and after working on such cars.
Insurer policy changes over the past decade, including an industry-wide shift to allow repairs using refurbished parts not sourced from the original manufacturer, have helped to reduce delays for some tasks, but shortages remain a key problem for mechanics and insurers.
Difficulty sourcing parts from manufacturers who are keen to steer customers to their in-house branded dealerships for repairs has become so severe that independent mechanics sourcing parts as simple as replacement panels can exceed four months, said Motor Trades Association of Australia (MTAA) executive director Bruce Billson.
As a result, where policyholders are entitled to a replacement vehicle while waiting for a repair, insurers must weigh up the cost of a rental car for that period, and whether it is cheaper than writing off the customer’s vehicle at its agreed value.
“We are aware of insurance companies writing off vehicles because of an inability to access parts in a timely way,” said Billson, a minister for small business under the former Abbott government.
“For some vehicles, you’re waiting 22 weeks for a part, and you might get a car written off because it’s uneconomic to repair,” he said. “The cost of the rental car becomes a critical part of whether your insurance will write it off.”
As a result, relatively new cars that should have years left on the road are being sold at auction, in some cases to be dismantled for their increasingly lucrative spare parts, Billson said.
“You may have clipped your bumper from running over your kid’s bike, but if your comprehensive policy includes a rental car hire while you wait for a repair, you may just find your car gets written off instead,” he said.
Since 2022, carmakers have been required to share diagnostic and repair data with independent mechanics, known as the “right to repair”. Billson said that while these were well intentioned, there should also be a “right to timely access to parts for repairs”.
The result of otherwise repairable cars being written off prematurely is unnecessarily adding to insurers’ costs, and inflating the size of the pool of money they need to raise from customers’ premiums across the board to be in a position to fulfil policyholders’ claims.
An insurance council spokeswoman echoed the MTAA’s concerns and said that “delays in the supply of parts are a real and growing problem”.