Mitchell shares tariff- and industry-related trends effecting repair costs, 2026 predictions

With the effects of tariffs mounting on raw materials, trickling down to inflate replacement parts costs, and insurance rates drastically increased, Mitchell International has provided new trends insights and predictions for the rest of the year.

Ryan Mandell, Mitchell International’s strategy and market intelligence vice president, noted in an episode of the company’s podcast and in conversation with Repairer Driven News, that parts inflation ramped up last year and continues to drive up repair costs. Now, however, it’s beginning to flatten while customer pay amid rising insurance costs is at an all-time high.

For example, Mandell said, looking at bumper covers, there was a 3.2% inflation rate in 2024, and then in 2025, that jumped to about 6.7%.

Parts price increases depend on the raw materials they’re made from, such as polyethylene plastic manufacturing in China, affecting bumper covers, he said. Bumper cover inflation grew the fastest above any other part type.

“Even if a bumper cover is made in Birmingham, Alabama, if the raw material comes from China, it’s still subject to tariffs,” Mandell said.

“It’s easier [for OEMs] to just start to gradually increase prices on parts because the competitive dynamic is totally different. If you looked at 2025, the trend at the beginning of the year was fairly linear, but then around June, the slope started to increase. I think that’s directly related to tariffs. And I think we’ll expect to see more of that in 2026 because I think what the automakers are going to start to do is apply that across their entire global portfolio, not just in the U.S.”

The Iran conflict will also likely affect parts prices because of sourcing petroleum there for plastic resin, he added.

As a result of rising raw material costs and increasing parts costs, Mandell predicts total loss frequency will also increase.

“I think you will see an increase in market values for used vehicles because the OEMs are going to have to increase the price of new vehicles,” he said. “That necessarily trickles down to the used vehicle market, and so that will offset some of those total loss frequency increases a little bit. But what we hear from a lot of our insurance clients is that salvage values are just at an all-time high.

“Part of that is because the tariffs create a certain demand for that product, but there’s a lot of exporter activity as well, and a lot of these cars are going overseas, so they’re getting really good returns on their salvage. That changes the dynamic around your breakeven analysis when, if you’re getting 20% more on your salvage return than you used to, you don’t need to write as high an estimate. Couple robust salvage returns with higher cost of repair, and that’s going to lead to, in my opinion, higher total loss frequency as well.”

Another interesting trend Mandell has monitored is changes in the repair percentage — the percentage of parts that are repaired versus replaced.

Over the last decade, that figure has gradually declined, especially for certain part types, such as bumper covers, because the addition of technology that in many cases prohibits repair due to the location of sensors behind them, he said.

“However, over the last two years, we’ve seen that trend start to reverse,” Mandell said. “2024 saw a little bit of a flattening of that trend. There was a slight increase in the United States, about a quarter point… Now in 2025, we actually saw the United States increase by almost a full percentage point in terms of the percentage of parts being repaired.”

The addition of in-vehicle safety technology and less lightweighting also continues, which is a factor in repair cost increases, he added. In 2022, 10% of estimates included calibrations. Now, it’s over 40%, he said.

“We’re only going to see more focus on technological management of the vehicles being repaired,” Mandell said. “Because if you look at the average age of vehicles in the collision repair industry right now, it’s roughly 2019 model year vehicles. That’s really kind of the beginning of this ADAS explosion. In my mind, we’re really only scratching the surface.”

And as technologies mature, Mandell predicts that newer model vehicles will come out with even more advanced levels of autonomy.

“It’s going to get to the point where I think it’s very compulsory that you have to do some kind of calibration on a vehicle when it’s involved in an accident in one way or another,” he said. “Right now, the average cost of calibrations is roughly about $600, so you’re talking about more than 10% of the cost of the estimate when those calibrations are present. It’s a significant driver of cost.”

When asked about insurance shopping trends, Mandell coined it as “a wild time.”

“We have not seen this type of disruption in terms of consumer behavior around their insurance policies, at least in my lifetime,” he said. “And it really was driven by this rapid growth of the cost of insurance. Premium growth, we saw in some cases, carriers raising their premiums by 40-plus percent.

“When that happens, you make different decisions about your policy. You’re going to remove coverages sometimes, or you’re going to raise your deductibles, all of which leads to an environment where you’re not as likely to file a claim. Now, that is starting to turn a little bit. As these premium increases have matured, we’re seeing a plateau.”

He noted that insurance companies are seeking to insulate themselves against tariff-related cost increases on parts. Meanwhile, parts inventory levels are more robust today than at any time in the last six years, he said.

Consumers are shopping around for insurance more to find better prices for what they need, and are more hesitant to file claims, reducing overall claim volumes.

“When you look at labor versus parts, labor on average is somewhere around the 60% ballpark in terms of profit percentage compared to 30-50% for parts, depending on whether it’s aftermarket, OEM, or recycled,” Mandell said.

Higher utilization of aftermarket, recycled, and remanufactured parts, a 1.5% increase, due to OEM parts increases, has been how some shops are improving their bottom lines, especially some of the large consolidators, he added. Aftermarket inventory levels are normalized, back to pre-COVID levels, allowing for more consistent sourcing, according to Mandell. The recycled parts supply chain is also more consistent now.

“Not only from a pure bottom-line gross dollar standpoint, but also from a margin standpoint,” Mandell said.

As insurance shopping increases, so does competition within the industry, eventually leading more policyholders to switch carriers, most likely peaking in the next year to 18 months, Mandell added.

Images

Featured image credit: Gabriele Maltinti/iStock