Will car repairs in the future financially cripple you?

Economics and the Future of Car Repair

Economic theory says that as the supply of Priuses becomes more abundant (like the 2008 model shown in a Tokyo showroom), the costs associated with repairing its uncommon transmission should decrease.
Economic theory says that as the supply of Priuses becomes more abundant (like the 2008 model shown in a Tokyo showroom), the costs associated with repairing its uncommon transmission should decrease.
Yoshikazu Tsuno/AFP/Getty Images

When the Sony Corporation introduced the CDP-101 in 1982, it was the first mass-produced compact disc (CD) player available to the general public. It was a big, bulky component that accepted one CD at a time, but it represented the cutting edge of home audio. The price of this new technology reflected that uncommon status; each sold for about $700 [source: Nathan]. By 2008, you could purchase a Sony CD player that includes a five-disc changer for about $150 [source: Sony Style].

You'll notice that with Sony's CD players something strange happened. As the technology grew more desirable (for example, a CD player that could hold one disc versus models that can hold five), the price decreased rather than increased. This seems a bit counterintuitive, but it's actually based on a basic economic principle: supply and demand. When the supply of a product exceeds demands for it, the product's cost generally goes down. And when demand is greater than the supply, manufacturers and suppliers can raise the price. It gets a little more complicated when several manufacturers start making different versions of the same product. This leads to competition.

But competition also fosters affordability. With more suppliers of a similar product come more options for a consumer. One way to get a consumer to choose one item over another is to offer a lower price. This holds as true for high-tech automobiles as it does for CD players.

Think about it: Hybrid cars are currently more expensive to fix than cars that run on a conventional engine. That's because hybrids are less abundant than regular autos -- demand currently exceeds supply. In 2007, hybrid car sales accounted for just 2.2 percent of all car sales in the United States. While that seems small, the total sales in 2007 represented an increase of 38 percent over the total number sold in 2006. And 51 percent of all those hybrid car sales were Toyota Priuses [source: Associated Press].

So, sticking with our Prius example, if demand for the Prius continues, Toyota could be expected to produce more of the cars. With more people driving the cars, the customer base will expand. More customers needing repairs will attract more mechanics that specialize in fixing Toyota's hybrids. More mechanics trained in the specialized repairs will make the specialization less unique and more affordable.

The same holds true if Prius' most expensive component to repair -- the continuously variable transmission (CVT) -- is adopted by other car manufacturers. The system will be in plentiful supply, so the availability of parts will increase, which should cause the price to decrease. And this doesn't just apply to hybrid cars. It also applies to those Xenon headlights with built-in windshield wipers. Once they trickle down from the world of luxury automobiles to become a standard feature on mass-produced vehicles, the cost to repair and replace them will decrease, too.

In other words, as the future of automotive technology becomes the present, what's expensive now will decrease in price as the technology becomes less high-tech and more standardized. So while repairs for early adopters of futuristic cars may be a blow to budgets now, in the future, they should be a little easier to swallow.

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