Mitchell: Tariffs, Technology and Parts Volatility Reshaping Auto Repair Landscape

Auto collision repairers and insurers can look forward to spending the rest of 2026 in a cost environment shaped by tariff exposure, rising technology-related expenses and shifting repair behavior.

A new analysis from Mitchell highlights changes in parts usage, repairability and total loss patterns, offering a look at how these trends are beginning to influence the year ahead.

Ryan Mandell, vice president of strategy and market intelligence for Mitchell, has been tracking how these shifts are reshaping auto repair decisions, cost pressures and shop strategy.

In an interview with Claims Journal, Mandell described how the current environment is changing the way operators think about profitability.

“When you look at this environment that we’re in, it really points to a greater need for operational efficiency and a focus on profitability by the collision industry,” Mandell said. “When you’ve got volumes that have receded, it really puts into focus the need to focus on margin.”

Mitchell’s review of 2025 repair patterns showed that as rising deductibles and different coverage choices lead more consumers to avoid filing smaller losses. Mandell Noted that the average first-party deductible rose about 3.25% in the U.S. last year and nearly 8% in Canada. These increases could make policyholders more likely to pay out of pocket or even skip repairs altogether.

That shift has placed more pressure on shops to optimize each repair, and Mandell said one of the clearest indicators of this adjustment is the renewed emphasis on repairing components rather than replacing them.

“One of the ways that I see that shaping up, at least seeing those early signs of that actually showing up in data, is on repairing more parts,” he said, adding that last year the percentage of parts repaired increased for the first time in a decade.

Repairability in the U.S. rose by roughly 1% in 2025 after a quarter-point increase in 2024, the first gains in a decade. Canada saw nearly a quarter-point increase last year after remaining stagnant in 2024.

Mandell also pointed to the widening gap between labor and parts margins, with trends favoring the latter.

“Repairing parts allows you to do that. You make much higher margin on labor than you do on parts,” he said. “It improves your cash flow too, because you don’t have to cut a check to anybody for that part.”

Mandell emphasized that the repair industry is coming off a long period in which repairability declined due to vehicle construction and safety technology. He said the growing use of aluminum, carbon fiber and mixed‑material designs, along with the growth of radar‑equipped bumper systems, is making modern vehicles significantly harder to repair.

“Over the last decade, the being repaired has gradually been declining. That’s not surprising because we’ve got these cars that are made out of much more advanced materials. Aluminum, carbon fiber, composites. Things that are just not as easy to repair,” he said. “Many times, the fact that a vehicle has wave radar sensors behind a bumper means you can’t fix the bumper because the repair material may potentially impede the functionality of the sensor.”

Mitchell’s findings also pointed to rising severity on newer vehicles. Mandell said repairs on models under three years old cost about 10% more on average than repairs on four to six year-old vehicles. This gap is driven largely by the desity of sensors and safety systems in newer models.

“The idea that there’s going to be smaller repairs for newer vehicles becomes rarer and rarer as time goes by,” he said. “Anytime you have to get into the vehicle, anytime you have to remove parts, anytime you have to replace components, fixed components, anything like that, it means probably having to deal with the technology on the vehicle as well.”

Calibration requirements are now a routine part of estimates, even for minor exterior damage. Mandell said these steps directly affect cycle time.

“As you have to complete more calibrations, as you have to do more with the technology on the vehicle, that’s going to take longer,” Mandell said. “It definitely benefits the shops that can do more of that work in house and not have to rely on subletting it to a third party.”

Mitchell’s review of supply chain exposure noted that tariff changes and production shifts could disrupt parts availability in 2026.

Mandell warned that changes in manufacturing locations could create temporary gaps.

“A potential exists for future disruptions simply because as we see companies shift where things are being manufactured, as you see investments in domestic manufacturing here in the United States, that means that the modes of production change and the geographic centers of production change,” he said. “As that happens, there’s the potential that there’s not overlap in terms of being able to provide those parts.”

He offered an example of how these transitions can affect repair planning. Mandell said that when parts makers move production back to the U.S. in response to tariff pressure, the transition isn’t instantaneous and can slow output while new facilities get settled.

“If you go from manufacturing a part in Mexico City, now it’s being manufactured in Greenville, South Carolina, that doesn’t necessarily mean that when you turn one switch off and turn another one on, that there’s no gap,” he said, adding that there’s always a lag.

Mitchell’s report also noted that strong salvage returns are reshaping total loss outcomes. Mandell said those returns are at which a vehicle becomes uneconomical to repair.

“What we’re still seeing is that salvage returns for the insurance industry are extremely healthy,” he said. “That means that the threshold by which a vehicle can be deemed a total loss is lower.”

He added that vehicles that were previously repairable may now be written off.

“Those vehicles that are kind of borderline, now that’s not the case. Those vehicles are getting written off as a total loss.”

Looking ahead, Mitchell’s guidance for 2026 emphasized the importance of flexibility in sourcing and repair strategy. Mandell said operators are asking practical questions as they plan for potential disruptions.

“Do I have other sources of parts? Do I have other vendors that I can rely on? Can I repair more parts than I have been in the past?” he said. “Those are all ways that I can insulate myself from that disruption.”

Mandell pointed to the challenges ahead.

“The vehicles aren’t getting simpler,” he said. “The expectations from insurers aren’t getting lower and the margin for error is shrinking.”

Ferraro is a Claims Journal intern who is working on a B.A. in journalism from California State Fullerton University. He expects to graduate in May. He is also creative director for CSUF’s Tusk Magazine and is a staff writer at the school newspaper The Daily Titan.

Was this article valuable?