Cars involved in relatively minor collisions are more likely to be written off than ever before, warned residual specialist, CAP.
The news will come as a blow to self-insured fleets in particular, although all fleets will feel the effects as a result of higher insurance premiums.
The analysts at CAP attribute the willingness by insurance companies to write off apparently lightly damaged vehicles to the increasingly technological sophistication of modern vehicles, coupled with increasingly rapid depreciation.
Air-bags and air conditioning systems top the list of features that are making even relatively minor collision damage increasingly uneconomical to repair.
“This means insurers are caught in a pincer movement between spiralling repair costs and a rising number of total loss claim settlements,” said CAP operational development manager, Mark Norman, at the recent annual Refinish Industry Survey Conference (RISC).
He said the cost of repairing or replacing technology such as multiple airbags and air/con systems added to the rapidly decreasing value of a used car makes it financially unviable to continue to repair many modern cars.
“Despite their superiority in terms of engineering, performance and overall quality, today’s used cars are worth significantly less in real terms than their equivalent models more than a decade ago," he said.
Mr Norman pointed out that a three-year-old Ford Focus 1.6 LX today is worth exactly the same in cash terms as a three-year-old 1600 LX Escort was 12 years ago.
“Even though all the technological features such as ABS, full electric windows, remote central locking, air conditioning, air-bags and generally superior engineering and quality, make it a far superior car, the used car buyer is paying less in today’s market than for the car it replaced,” he said.
RISC conference director, Quintin Cornforth, added that typical collision repair costs have risen dramatically, thanks to technology such as supplementary restraint system parts and air conditioning components.
Taking a two-year-old Ford Mondeo 1.8 LX as an example he revealed the extent of increased costs to rectify a relatively minor front corner impact, causing some damage to the nearside front chassis rail.
The repair to a 1996 car, without airbags and air conditioning, would cost £3,865 - or 52% of the car’s value.
The same work on a 2006 model car totalled £5,856 - or 88% of the car’s value.