Their share may increase to 30%
Insurance companies estimate that today 21% of vehicles damaged as a result of collisions cannot be repaired, as reported by IT Home with reference to Bloomberg. This is five times more than in 1980. The share of such cars is forecast to rise to 30% as cars become more complex.
ADAS (Advanced Driving Assistance Systems), which are supposed to help drivers avoid accidents, are one of the main reasons for the increase in the number of cars that are not repairable. Insurance companies consider the technology and equipment in them too expensive, and repairs — not worth the cost.
Replacing the numerous sensors and cameras required for ADAS systems, such as automatic emergency braking and lane-keeping assist, and calibrating those systems to function properly, can add thousands of dollars to repair costs, according to a study of insurance companies cited by Bloomberg. Added to this is the increase in prices for general repairs due to rising labor and material costs.
Although the maintenance cost of electric vehicles is high, their recycling rate is still lower than that of gasoline vehicles. However, this trend may change as electric vehicles depreciate faster.
Against this backdrop, salvage car auction companies like Copart are winning. Bloomberg notes that Copart's share price is up 23% over the past year and has risen 1,110% over the past decade. If Copart's forecast that vehicle scrappage rates will rise from 21% to 30% comes true, their business will become even more prosperous.