Welcome back to the latest episode of “The Future of Automotive” on CBT News, where we put recent automotive and mobility news into the context of the broader themes impacting the industry.
I’m Steve Greenfield from Automotive Ventures, and I’m glad that you could join us this week.
One of the big stories coming out of COVID was how much faster auto vehicle repair costs and insurance premiums grew faster than core inflation.
In fact, the costs of car repairs and insurance have soared 27% and 53%, respectively, during the past three years, far outpacing overall inflation, according to data from the U.S. Department of Labor.
While recent inflation has been caused by factors such as supply chain shortages of parts and labor challenges with employing skilled technicians, now we face the additional challenge of tariffs on imported aftermarket parts.
Due to tariffs, the prices of parts that are commonly damaged in collisions, such as hoods, fenders, and lights, stand to rise further starting about three months from now.
In the short term, this dynamic may actually drive more service and repair business to dealerships, as consumers try to get ahead of parts shortages and expected price increases.
But then there’s the impact on vehicle insurance.
As both new and used car prices inflate due to tariffs, while at the same time the cost associated with fixing them increases, insurance companies will have no choice but to increase monthly premiums as well.
Finally, we may be setting ourselves up for a future where more consumers are underwater, or owe more on their car than the vehicle’s current value.
According to AAA, vehicle depreciation is the biggest cost of owning a new car.
AAA’s latest tally of new-car drivers’ annual costs puts depreciation at an average of $4,680 per year, which is more than the combination of vehicle insurance (at $1,715 per year) and gasoline (at $2,235 per year).
Just as we saw during COVID, when 72% of new vehicles were selling for above MSRP, if tariffs create a dynamic where new-car buyers pay higher prices over the remainder of this year, they run the risk that their cars will depreciate more quickly than usual.
Any way you look at it, we’re in for a wild ride here in the short term, and the average consumer is going to have to react to affordability issues around not only inflated new and used car prices, but also cost of ownership issues like vehicle insurance, maintenance, and repairs.
So, with that, let’s transition to Our Companies to Watch.
Every week, we highlight interesting companies in the automotive technology space to keep an eye on. If you read my weekly Intel Report, we showcase a company to watch, and we take the opportunity here on this segment each week to share that company with you.
Today, our new company to watch is ScaleVoice.
As technology advances in artificial intelligence accelerates, dealers need to explore tools that make their operations more efficient.
ScaleVoice provides dealers with automated SMS, Email, and Web Chat follow-ups.
ScaleVoice provides AI agents for Automotive: AI BDC and outbound sales calls, inbound service calls with a human-like voice—seamlessly updating your Xtime, VinSolutions, or any CRM and DMS.
Use ScaleVoice to engage AI agents that deliver to your customers SMS reminders and engage in real, dynamic conversations with customers via SMS, email, or web chat.
If you’d like to learn more about ScaleVoice you can check them out at www.ScaleVoice.com
So that’s it for this week’s Future of Automotive segment.
If you’re an AutoTech entrepreneur working on a solution that helps car dealerships, we want to hear from you. We are actively investing out of our DealerFund.
Don’t forget to check out my first book, “The Future of Automotive Retail,” and my brand-new book, “The Future of Mobility”, both of which are now available on Amazon.com.
Thanks (as always) for your ongoing support and for tuning into CBT News for this week’s Future of Automotive segment. We’ll see you next week!
