Report: Tariffs, Repair Costs, Economic Strain Driving Auto Claims Trends
Tariffs, economic uncertainty and changing consumer behavior is driving costs and changes in the auto claims and repair industries, according to a new report.
CCC Intelligent Solutions Inc. published its latest Crash Course Q3 2025 Report, which called out supply chain disruptions and inflationary pressures that, together with the growing intricacies of modern vehicles, are creating a supply chain reaction that is forcing strategy changes for original equipment manufacturers, suppliers, insurers and repairers.
“For decades, the automotive industry operated on a model of increasing globalization and just-in-time efficiency – a model built for speed, scale, and predictability – but the post-pandemic world has upended that foundation,” the report states. “Instead of a return to stability, our data shows the industry is grappling with a convergence of three powerful economic headwinds reshaping the industry in real time: tariffs, inflation, and weak consumer confidence. Combined, they have created a new era of uncertainty for the industry.”
The report is based on information gathered from 300 million claims-related operations, millions of bodily injury and personal injury protections or medical payments and casualty claims managed by CCC customers.
The report shows repair costs continued to rise 3.8% yearly, with an added 1.4% in the first half of 2025.
Labor rates and shortages, rising part prices and complex vehicle diagnostics are among the underlying reasons why repair costs have been driven up.
Add to that trend rising tariffs, such as the 25% tariffs on imported vehicles, 50% tariffs on steel and aluminum, and new requirements that require 85% of vehicle content to be sourced from the U.S. to qualify for exemption, which have caused global reassessment of industry wide staple manufacturing and sourcing strategies, the report’s authors note.
The Center for Automative Research estimates a total cost impact of $107.7 billion across all automakers in the U.S. are due to tariffs and the accommodation of them.
Consumer financial strain also portends changes in the insurance industry, as consumers increasingly seek to higher deductibles to lower their premium payments. This is causing a drop in small auto insurance claims severity. CCC data revealed the most common deductible of $500 fell by 6 percentage points since 2021, while $1,000 deductibles rose nearly 5 points, with $2,000 and $2,500 deductibles also increasing, the report shows.
Other economic trends impacting consumers include record levels of auto loan debt, postponing large purchases and repossessions, downgrading insurance and selecting higher deductibles are evidence of consumers facing economic pressure.
Average third-party bodily injury payouts reached $28,700 per injured party in the first quarter of 2025. That has been increasing rouhgly 7% every year. First-party personal injury protection outcomes also rose 10% more than last year, according to the report.
Radiology, surgery and evaluation and management procedures cause a continued increase in billing inflation, the report shows.
The report also found that repairs with numerous adjustments or alterations averaged over 17 days from when the vehicle was first brought in to when it leaves compared with 13 days for repairs with no adjustments or alterations. The average days for vehicles with one alteration was 15.5. The reort attributes the rise to calibrations becoming more complex, demanding more time to repair, and the need for expensive tools and costly diagnostic equipment.
Nearly 87% of direct repair program appraisals included a scan in the first quarter of the year—32.2% of those included a calibration, up nearly 10% from last year’s 23.9%.