Automotive expert Mike Caudill provides insight on electric vehicles and used cars on ‘The Bottom Line.’
Millions of vehicle owners are falling behind on routine maintenance, with many experts attributing this to the rising cost of repairs.
More than 30 million cars that are on the road are behind on both oil changes and tire rotations, according to recent data from Carfax. The company noted that neglecting such repairs is not only dangerous, but costly.
For instance, Carfax noted that low or dirty oil can cause engine failure, which could lead to expensive repairs. Additionally, skipping tire rotations can cause uneven wear, which would reduce traction and increase the risk of flats or blowouts.
“Well-maintained vehicles last longer, cost owners less over time, and are worth more when it’s time to sell them,” said Paul Nadjarian, general manager of Carfax Car Care.
Commuters sit in traffic on southbound Interstate 5 during the afternoon commute on March 12, 2024, in San Diego, California. (Kevin Carter/Getty Images / Getty Images)
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In addition to oil changes and tire rotations, owners are delaying non-critical repairs like air filter and cabin filter replacement and even electronic repairs, according to Celebrity Motor Cars owner Tom Maoli.
“I think all of this is due to a four-year inflation period along with high interest rates which have caused a spike in food prices, insurance costs, housing costs… all of which have hit the consumer in the pocketbook and evaporated any free cash the consumer may have,” Maoli, whose dealerships are based out of New Jersey, told FOX Business.
Used cars for sale are displayed on the sales lot at K & L Auto Expert on May 6, 2022, in Richmond, California. (Photo by Justin Sullivan/Getty Images / Getty Images)
Many people are driving cars they purchased during the pandemic, when inventory was scarce and car prices were inflated by 20%, pushing their monthly payments to “unsustainable levels,” Maoli said, noting a recent rise in car loan defaults. In September, the Federal Reserve reported that auto loan delinquency rates “rose substantially,” surpassing pre-pandemic levels by the end of 2023. The Fed suggested that one potential reason behind this increase in delinquencies, particularly for originated auto loans, is higher monthly payments.
The average required monthly payments increased about $40 to $470 from January 2017 to January 2020. But from January 2020 to January 2023, the average required monthly payments jumped notably to about $600.
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“You can only stretch a rubber band so far until it breaks. I think that’s where the consumer is at this time,” Maoli said.
Rohrman Automotive Group CEO Ryan Rohrman told FOX Business that the massive deficit in the used car market is another factor worsening the situation.
Customer demand for cars should be higher, but due to issues such as COVID-19 and vehicle part delays, “people are holding onto their cars longer,” Rohrman said.
As cars age, they require more repairs, which become more costly, he said. The average age of a car on the road has risen to 12.5 years, up from 9.5 to 10 years before the pandemic, according to Rohrman.
In addition to oil changes and tire rotations, owners are delaying non-critical repairs like air filter and cabin filter replacement and even electronic repairs, according to Celebrity Motor Cars owner Tom Maoli. (Kyle Grillot/Bloomberg via Getty Images / Getty Images)
Jared Levy, chief markets strategist of Peak American Investment Advisors, said that there is “a growing trend of ‘deferred maintenance’ when it comes to American auto owners as budgets and free time are growing increasingly tighter.”
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However, he said it’s important to factor in that there are a number of people who are taking it upon themselves to perform routine maintenance on their vehicles. They also might take them to smaller shops that don’t report data to Carfax.
