Walk outside one morning and all you may find left of your car is smashed window glass. Insurers say that one consequence of President Trump's proposed tariff on imported automobiles and automotive parts, in addition to, could be an upsurge in vehicle thefts -- and hikes in auto insurance premiums.
The reason: if car parts become harder and costlier to obtain, then thieves, chop shops and black marketeers will steal more automobiles. Auto thefts have already risen nearly 12 percent over the last three years, with the biggest jump -- 6.6 percent -- occurring in 2016 alone. And once thieves take hold of your Toyota Camry or Honda Accord, their blow-torches and crowbars will go to work.
"The cost of parts is a factor in the recent increase in thefts," says spokesperson Roger Morris of the National Insurance Crime Bureau (NICB). "If something increases the cost or affects supply and demand, then it's likely that thieves will take advantage."
And that "something" could be the proposed 25 percent tariff on imported car-repair parts, according to the almost universally held opinion of property-casualty insurers. Last week's joint statement to the U.S. Department of Commerce by the American Insurance Association, the National Association of Mutual Insurance Companies and the Property-Casualty Insurance Association of America pointed out that 60 percent of the automotive parts used in this country are imported, including both domestic and international models.
During the meeting with European Commission President Jean-Claude Juncker, President Trump backed off his threat to impose a 25 percent tariff on European cars and parts, after which the. But Mr. Trump's threat to levy that tariff on China and other nations remains in place and no formal agreement having been reached in Europe.
If the tariff is imposed, the increase in the price of auto repairs could cost the driving public $3.4 billion in additional personal auto premiums alone, said the insurers' group. And that doesn't take into account the rising cost of insuring against car theft, which is included in separate "comprehensive" coverage for most autos. Insurers don't offer a public breakout of that cost, but one recent study estimated that auto thefts themselves cost $6 billion a year.
"The parts on today's cars and trucks are often worth more than an intact vehicle and may be easier to move and sell," said NICB Chief Operating Officer Jim Schweitzer. "That's why we see so many thefts of key items such as wheels, tires and tailgates. There's always a market for them." And that is the reason why most stolen cars end up on the chopping block.
Car repairs usually start with an accident and there seem to be more of them all the time as more people drive more miles. Some 6 million accidents are reported to police each year, according the latest data from the National Highway Traffic Safety Administration (NHTSA). Even "bumper benders" that don't make police blotters are going to get costlier.
An average of 9.5 parts are replaced in a typical car repair, said insurers. While plastic parts are becoming more common, most repairs still require multiple metal parts, of which 85 percent come from Canada, China, Mexico, South Korea and Taiwan, according to the Center for Automotive Research. But now insurers warn, they could come from your stolen car.
If a tariff on automotive parts gets the green light to become law, American motorists may want to think more about the car they buy – and insure – particularly since auto insurance rates are already rising. Drivers should take a good look at the cars with the highest foreign parts content. For compact cars it's slightly more than 50 percent, with crossovers and compact SUVs at 56 percent. Purchase a luxury compact or standard SUV and the percentage jumps to 84 percent.
Another way to look at it: avoid buying the cars known to be the "most stolen," such as the Japanese Toyota Camry and Nissan Altima and the American GMC Sierra truck. The 2016 Camry was the most stolen model in the NICB's latest Hot Wheels report, with 15 commonly replaced components valued at nearly $11,000, not including labor. The 2016 Altima had 14 standard parts worth more than $14,000, including a single headlamp assembly valued at more than $1,000, while the 2016 Sierra pickup truck included a $1,100 headlamp and a rear bumper worth more than $1,100.