Internal Combustion Engine (ICE) Vehicles Still Dominate

As of Q3 2024, the U.S. car parc remains dominated by ICE vehicles, which account for nearly 95% of all vehicles on the road. This includes a mix of passenger cars, trucks, SUVs, and other light-duty vehicles. (Figure 1)

Consumers Buying Larger Vehicles

Within the light duty segment, data shows that SUVs and crossover utility vehicles (CUVs) now represent over 50% of the car parc for model years 2020 and newer – up from ~35% in 2014 - while traditional passenger cars have declined to less than 20% in recent model years​. (Figure 4)

EV Growth Rate Slows

Data suggests that EV adoption has experienced significant acceleration, reaching approximately 4.2 million vehicles on the road in 2024 (hybrids account for ~9.6 million vehicles). While the volume of new EVs grew to over 1.3 million units in 2024, the rate of growth continues to moderate at +7.3%.

The year-over-year change in new EVs sold was almost +90% in 2021, +66% in 2022, and +50% in 2023. This trend indicates that while EV adoption continues to expand, the pace of growth is leveling off after the initial surge. (Figure 5)

Car Parc Continue to Age

The average age of vehicles on the road in 2024 has grown from 11.4 years in 2014 to an estimated 12.7 years in 2024 and is projected to reach 13 years by 2026. (Figure 7)

Several shifts in consumer behavior and economic conditions are impacting the vehicle age on roadways today:

• Longer Vehicle Ownership: Consumers are holding onto their vehicles longer due to improved vehicle durability, increased repair options, and economic uncertainty.
• Shifts in Buying Preferences: Many buyers are delaying new vehicle purchases or opting for used vehicles due to high prices and financing costs.
• Longer Loan Terms: SUVs and crossovers now dominate new vehicle sales, often leading to higher costs that further extend ownership cycles, as the average new vehicle loan term is almost 69 months.
• Rising Vehicle Costs: The average price of a new vehicle has surged, making it more expensive for consumers to upgrade. The average new vehicle price has increased by $11,000 over the past 5 years.
• Higher Interest Rates: Auto loan rates have increased, making financing a new vehicle less affordable.  The average APR for a new vehicle loan is up to 7.2% and 11.3% for used vehicles in February (Edmunds).
• Supply Chain Disruptions: Production slowdowns and parts shortages have limited new vehicle availability, driving up both new and used car prices.
• Inflation and Cost of Living Pressures: With rising expenses in housing, food, premiums, and other essentials, many consumers are prioritizing maintenance over replacement, or they’re simply not maintaining their vehicles at all.

The shift in consumer preferences and product offerings by manufacturers is evident in the increasing availability of larger vehicles, such as SUVs and CUVs, which now account for over 50% of the car parc for model years 2020 and newer, while the share of traditional passenger cars has declined to less than 20%​.

The U.S. EV market has also seen a clear shift in consumer preferences and vehicle type production over time. Initially, older EVs (model years >11) were predominantly passenger cars, reflecting the early market focus on compact, efficient vehicles. However, in more recent years (model years 0-5), the EV landscape has diversified significantly, with CUVs, SUVs, and pickup trucks making up a larger share of new EV models. (Figure 9)

EVs and Hybrids Increasing TCOR and Cycle Times

As the fleet continues to age, more vehicles on the road are past their initial warranty period, leading to higher maintenance and repair demands. EVs and hybrids are generally more expensive to repair, partly because of vehicle complexity and the need for specialized parts and expertise.

Over the past five years, labor rates for EV repairs have been consistently higher than for ICE vehicles, with EV labor rates approximately 30% higher as of 2024​​. The average cost of EVs was $830 more per repair than hybrids and over $1,030 more than ICE vehicles in 2024.

While EV labor costs are higher, their total parts costs were $175 lower than hybrids but still $290 higher than ICE vehicles. Hybrids, on the other hand, averaged nearly $470 more in parts costs compared to ICE vehicles, and required $200+ more in labor costs than ICE vehicles. (Figure 11)

More Parts Needed, But Fewer Parts Available

The number of parts replaced during repairs reflects the differences in complexity. EVs averaged 22 parts per repair, hybrids averaged 18.5 parts, and ICE vehicles had 15.9 parts replaced on average. This underscores the intricate nature of both EV and hybrid technologies compared to traditional ICE vehicles, influencing both repair time and costs. (Figure 13)

ADAS Driving Up Diagnostics Frequency and Cost

Another key factor impacting repair complexity is the proliferation of ADAS. The Highway Loss Data Institute estimates that by 2028, six ADAS systems will be present in half or more registered vehicles.

Approximately 76% of registered vehicles will be equipped with rear cameras, 51% with front automatic emergency braking, and over 50% with lane departure and/or blind spot monitoring capabilities. Even less prevalent ADAS technologies like adaptive cruise control with lane centering and curve-adaptive headlights will come standard in 21% and 14% of registered vehicles, respectively. (Figure 14)

While it may improve vehicle safety in the long-term, ADAS-equipped vehicles also require more frequent calibration and diagnostic procedures, which continue to drive up repair costs. In analyzing data of ICE, Hybrid, and EV vehicles serviced by shops in Direct Repair Programs (DRPs) and aged 3 years or newer – several unique diagnostic trends have emerged:

1. Overall, DRPs include a scan on almost 90% of vehicles 3 years or newer.​ EVs have a lower scan percentage relative to other fuel types. Hybrids included a slightly higher scan rate than industry. (Figure 15)
2. Hybrid estimates include calibrations almost 10 percentage points higher than industry and over 7 points higher than EVs. This points to the complexity of technology integrated into hybrid vehicles. (Figure 15)
3. The industry average fees for scans are slightly higher for both EVs and even higher for hybrids. (Figure 16)
4. Calibrations by fuel type expose even further differences between EVs, hybrids, and ICE vehicles. While the average calibration per claim with diagnostic operation was almost $550 in Q4 2024, hybrid vehicles averaged almost $80 more than industry and ICE vehicles, meanwhile, EVs were over $130 less than the industry average and over $210 less than hybrids. (Figure 16)

Vehicle Parts Availability

The availability of vehicle parts has become a key factor in determining repairability, especially for alternative fuel vehicles. When a hybrid or EV crashes, the challenge often isn't just repairing the damage, it’s finding the right parts to complete the job. Lack of parts availability can render a repairable vehicle a total loss, leaving the consumer frustrated with insurers facing higher claim payouts. This illustrates how dependent the future car parc is on supply chain dynamics.

For underwriters, the scarcity of parts for certain models may prompt a reconsideration of how they approach insuring these vehicles. Some may opt not to insure hard-to-repair cars, or at the very least, adjust premiums to reflect the additional risk.

Meanwhile, repair shops face the complexity of accessing these parts. For instance, modern cars often require breaking clips and other auto components to access a single part, forcing repairers to replace more than what's visibly damaged. This complexity reflects a broader theme in the industry: the more advanced a vehicle, the more intricate its repair needs.

Diagnostics & Repair for Emerging Segments

As the car parc has shifted to include more elaborate, technology-infused vehicles, the frequency and sophistication of scans and calibrations has grown significantly, adding layers of complexity to what used to be straightforward repairs.

For example, something as simple as calibrating a vehicle's ADAS system may require removing upholstery or disassembling interior parts. It's a process that drives up the cost of repairs, which in turn affects both consumers and insurers.

Total Cost of Repair

The cost of repairs has more than doubled over the last decade, and many states have responded by increasing minimum liability limits, but as vehicle values rise, so do repair costs, creating a feedback loop where the expense of insuring a vehicle climbs alongside the costs to fix it.

For insurers, the cost to repair vehicles is a growing concern. As premium rates increase to cover these and other expenses, insurers and repairers must work together to find ways to mitigate these rising costs. Repairing advanced vehicles requires expertise and access to specialized parts. And when parts are unavailable or repairs are too expensive, vehicles can become disposable, leaving the industry and consumers in a precarious position. The challenge of what to do with totaled electric vehicles when parts are scarce is particularly pressing.

Customer Dissatisfaction

When the cost to repair a vehicle exceeds the cost to purchase it, consumers face difficult decisions, often resulting in the vehicle being classified as a total loss. This reality is especially painful for consumers who are told their drivable and repairable vehicle is now considered totaled, simply because the repair costs outstrip the value of the car. For consumers who own older vehicles outright, if their vehicle is still drivable but costs more to fix than it’s worth, the emotional and financial toll is significant. (Figure 17)

Looking ahead, the U.S. car parc is expected to continue evolving. The penetration of EVs and hybrids will likely increase, driven by advancements in battery technology, government incentives, and consumer demand for environmentally friendly vehicles. By 2028, it is projected that EVs and hybrids could represent as much as 15% of the car parc​.

In terms of ownership models, the rise of subscription services and shared mobility options will continue to reshape how consumers interact with vehicles. While personal ownership will remain dominant, younger generations may increasingly opt for flexible alternatives, particularly as EVs become more integrated into these models, particularly in urban and suburban settings.

The evolving U.S. car parc presents both challenges and opportunities. The increasing complexity of vehicles is reshaping repair processes and claims management. At the same time, economic factors such as rising vehicle costs and interest rates are influencing consumer behavior, leading to an aging fleet and shifts in ownership models.

The future of the U.S. car parc will continue to transform, driven by electrification, technological innovation, and economic forces. By staying ahead of these trends, industry stakeholders can position themselves for long-term success.

Paid Claim Trends

Paid claim frequency for 1st party coverages (collision and liability) continue to trend down slowly. Underlying drivers of frequency – paid count and exposure units – both continue to decline despite growing size of overall car parc. Liability paid frequency remains very stable.

Through November 2024, miles driven was +0.9% relative to both 2023 and 2019. Miles driven will be one to monitor in 2025, as many large corporations are bringing associates back into the office. (Figure 1)

Total Cost of Repair Trends

The average total cost of repair (TCOR) seems likely to finish 2024 between +3 to +4% year-over-year.  This would be the lowest increase since 2017.

Increases in repair costs have been mitigated by the increase in total losses and age mix.  However, there are a variety of underlying factors which continue to put upward pressure of repair costs, including labor rates and diagnostics. (Figure 8)

Shop Productivity Trends

Method of inspection trends reflect a continued reliance upon direct repair programs to complete appraisals on behalf of insurance carriers. Carriers continue to evolve their mix of inspection solutions to meet the needs of their clients and long-term staffing and operations objectives. An increased total loss propensity adds additional pressure in getting vehicles to the right place – a shop or salvage yard – the first time. (Figure 15)

Third Party Trends

Bodily injury claim frequency has been increasing despite property damage and PIP claim frequency decreasing over the last 2 years. (Figure 1)

First Party Trends

PIP claim paid outcome per injured party has increased 4% since Q3 2023. (Figure 12)