Why Keeping Your Car Fixed is a Great Hedge Against Inflation
Tom Magliozzi, one half of the legendary and long-running public radio program Car Talk, once said: “If money can fix it, it’s not a problem.” But that sentiment was during normal times, well before the post-pandemic supply chain roughed up the used and new car markets. Americans are stunned at the prospect of purchasing another vehicle in the face of unprecedented costs and price increases. As every week passes, your used vehicle looks like a bargain.
So, what’s going on? A recent Fortune article cites low inventory in both the used and new car markets. The problem is driven by a post-pandemic semiconductors (chips) shortage and other parts shortages. Remember, the typical modern car engine can contain up to 25,000 components.
With the modern just-in-time supply chain still playing catch-up and new Covid lockdowns in the Chinese manufacturing sector, dealer inventories can’t catch a break. With fewer new cars, used car prices have been escalating as buyers, in some cases, are paying just as much as new. Used car prices are up almost 17% just in the past year. New car prices, meanwhile, are up 12.6% to an average of about $47,000.
Vehicle Maintenance and Repair are More Important than Ever
With prices speeding away, economists now agree that vehicle purchase costs are a contributing factor to the current 2022 year-to-date 8.6% inflation rate. The good news is that if you are in a position to pay higher sticker prices and interest rates, the trade-in on your used vehicle is at an all-time high – up much as 59% from a year ago.
However, the general agreement is that vehicle buyers are dropping out of the market in the face of higher prices and finance charges as the Federal Reserve raises interest rates to avoid recession. This accounts for why the average age of a car right now is at an all-time high at 12.2 years.
Think of it this way: if the monthly cost of repairing your vehicle is less than a car payment, you’re saving money. Even big-ticket items like a transmission can come in well below the annual cost of acquiring a new vehicle.
What the Experts Say
We reviewed several vehicle expert sites, both nonprofit consumer and trade organizations. These sources had a lot of good advice to help you keep your vehicles running as consumers wait out the current economic storm battering vehicle replacement.
Consumer Reports (CR): CR, a nonprofit, began publishing consumer products and services in 1936. Its annual car buying guide for new and used vehicles is probably its best-known and most popular guide. In an article titled How to Make Your Car Last 200,000 Miles and More, its reviewer shares that the best strategy is to buy a reliable vehicle with a good rating for longevity and cost of ownership value. The example CR gave is for a 2020-21 Toyota RAV 4 in a major metropolitan area.
- 36,000 to 60,000 Miles
Your car is likely to need tires during this time. Your brake pads, and maybe the rotors, could be nearing the end of their service life and should be checked and replaced, if necessary.
Wheel alignment (4 wheels): $297
Brake pads (pair): $607
- 60,000 to 100,000 Miles
Most vehicles are out of warranty at this point. Monitor brakes and tires for wear, and pay closer attention to suspension parts, such as shock absorbers, struts, and bushings. It’s best to replace suspension and brake parts in pairs and be sure to get a four-wheel alignment when you buy new tires or have suspension parts replaced.
Front struts (both): $979
Rear struts (both): $600
Control arms (both): $605
- 100,000 to 150,000 Miles
Major services, such as timing-belt replacement, are typically needed, and you can expect items such as spark plugs, the starter, the alternator, and suspension parts to need replacing. “In theory, if you get that stuff replaced in the 100,000-to-150,000-mile range, the cycle starts again and you should be good for a while,” Ibbotson says.
Water pump assembly: $748
Spark plugs: $215
- 150,000 to 200,000 Miles
This is when your car may need more extensive repairs, such as replacement of leaking engine oil seals, a transmission rebuild or replacement, a new exhaust system, or possibly a head gasket replacement. “The potential for big repairs goes up after 150,000 miles,” Ibbotson says.
Head gasket: $3,957
Transmission replacement: $7,803
Muffler replacement: $725
Car Care Council (CCC): Another nonprofit, CCC, works to educate motorists about the importance of regular vehicle repair through its “Be Car Care Aware” consumer education program. CCC suggests ten basic maintenance steps to keep a vehicle in peak operating condition, including:
- Check the oil, filters and fluids regularly: This includes oil, brake, power steering, coolant and windshield fluids – also the engine, air, transmission, fuel system, and cabin filters.
- Inspect hoses at each oil change and have them replaced when leaking, brittle, cracked, rusted, swollen, or restricted. Typically replace the timing belt between 60,000 and 90,000 miles. Your vehicle will immediately stop operating and the dashboard will light up like a holiday celebration if your timing belt breaks.
- Check the engine brake system every year. Have the brake linings, rotors and drums inspected at each oil change?
- Check that the battery connection is clean, tight and corrosion-free. If it is three years old or more, the battery should be tested and replaced if necessary.
- Inspect the exhaust system. This includes for leaks, damage and broken supports or hangers if there is an unusual noise. Exhaust leaks can be dangerous due to carbon monoxide poisoning and must be corrected without delay.
- Schedule a tune-up. New, properly gapped spark plugs, for example, will help the engine deliver the best balance of power and fuel economy and produce the lowest emissions.
- Check your tire pressure and lights monthly: Not only will your tires be safer, but the proper air pressure will extend the life of your tires to save money.
The site also stresses that your owner’s manual is the best source for detailed maintenance, so give it a read-through.
NARPRO – Is a trade group that links vehicle owners with “competent, honest car repair shops.” Each member shop must commit to 26 standards for quality, integrity and customer satisfaction to join NARPROs registry.
NARPRO advocates for the 30-60-90 rule for vehicle maintenance. As stated on its site:
- Each of the above components falls into one of those mileage categories. Filters fall into the 30,000-mile range. Your battery, brakes, and fluids fall into the 60,000-mile range. And the rest are in the 90,000-mile range.
- However, keep in mind that factors such as weather and driving frequency can affect this guideline. Additionally, parts like tires or wiper blades can wear out at irregular intervals and are not included in the 30-60-90 rule. Always discuss any potential maintenance or concerns you have with your technician at your time of service.
- Another good method of setting up a car maintenance schedule is to follow the seasons. Get your car checked after the winter months in prep for summer. Then, get it checked after summer to prep for winter. This averages to about two inspections a year and can be an excellent place to start if you’re unsure.
Car Talk: If you’re the sort who likes to do your own auto upkeep, Click and Clack the Tappet Brothers have some advice for you. Their wildly popular weekly radio program, in which they would diagnose auto problems from call-in owners with accuracy and humor, ran for 35 years on National Public Radio. The brothers advise three considerations for a vehicle owner in deciding on a do-it-yourself (DIY) vehicle repair project:
- How dangerous is the repair to life and limb if something goes wrong during or after the job?
- The risk that you might cause permanent, unalterable damage to your car.
- The degree of complexity of the repair or the need for special and expensive tools is a consideration.
The brothers suggested that a DIY vehicle owner starts with one of the following projects: air filter, brakes, coolant, drive axle boots, drive belts, oil changes, power-steering fluid, spark plugs, timing belt/camshaft drive belt, tire pressure and rotation and transmission fluid.
The Current Auto Market Will Persist
The best guess is that the current chaos in the auto market will persist through 2022. So, owners will need to be ready to get involved in maintenance for a while. This can often include buying parts and doing the work themselves. With current buyers paying about $1.000 over the sticker price, it makes a lot of economic sense to take vehicle repair seriously.