US auto industry scam: overpriced parts, repairs

The US auto industry overcharges consumers for motor vehicle parts, while pricing vehicles outside the range of most US households. That keeps profit margins high on new vehicles. Sales of new passenger cars and trucks are stagnant, but the industry compensates by selling expensive parts to consumers who keep their vehicles on the road longer. The cost of a new car has risen by about 40% since 1991, while the cost of repair parts has nearly doubled, as the above chart shows. The cost of auto repair, meanwhile, has tripled.

Nearly three-quarters of Americans depend on their cars to get to work, according to Statista.com. For most commuters, public transport isn’t an option. American cities lack the infrastructure to move people to their jobs.

Total revenues of US auto producers were a bit over $1.5 trillion in 2023, including parts sales of $230 billion, according to KPMG. But the profit margin on parts was 32%, the accounting firm reckons, vs. a margin of 24% on new vehicles. By redesigning parts every year or two, the automakers keep them proprietary, scarce and expensive, forcing consumers to pay up for original equipment.

The proliferation of new proprietary parts, in turn, pushes up repair costs, because specialized skills are required to install them. Training of auto mechanics has lagged behind the automakers’ aggressive marketing of proprietary parts.

China’s 150 automakers, by contrast, use standardized parts that are cheap and widely available, keeping repair costs low.

China’s burgeoning EV industry, which offers well-made vehicles at a fraction of the cost of Western manufacturers, puts America in a dilemma. To a considerable extent, the American auto industry is a conspiracy to defraud the public, and