Reassessing Spare Parts Costs in Russia’s Auto Insurance Landscape

The Russian Association of Automobile Insurers has issued new reference books detailing the cost of spare parts. These guides are used by all insurers in Russia to determine compensation amounts under compulsory motor third party liability insurance after accidents.

According to the documents, the average price of spare parts rose by just 1.4 percent compared with the rates in effect on June 19, 2023, the prior revision date. The total cost of spare parts in the guides showed a smaller increase of 0.9 percent in the same period.

Last summer, insurers reported occasional price decreases for certain items. According to RSA head Evgeny Ufimtsev, this allowed the union to cut spare parts costs in the guides by 2.5 percent since June for the most popular vehicles. Brands in Russia noted in particular Hyundai, Kia and Toyota.

real situation

The most noticeable price adjustment in recent years occurred in March 2023, when values rose 19.5 percent from March 2022. Independent service station representatives, however, argue that RSA price lists do not reflect the real market conditions.

Tatyana Ovchinnikova, director of the Fit Service car service network, told socialbites.ca that prices for auto parts in Russia rose by 30 to 100 percent depending on location from January 2022 to March 2023. She stressed that almost all products became more expensive since the crisis began.

The Russian Association of Automotive Services reported to socialbites.ca that the overall increase in spare parts prices since early 2023, based on about 300 manufacturers of original and non original parts, is around 14 percent.

Between January and September 2023, wholesale prices rose by an average of 12 to 14 percent. There was a notable jump when the dollar climbed above 100 rubles, noted Ilya Plisov, a member of the Automobile Services Association board.

Fit Service, a company that imports automobile components to Russia, expects another 15 percent rise in spare parts prices by the end of 2023, according to its leadership.

Reason for price difference

The Insurance Association, which updated the guides by 1.4 percent in September, anticipates another adjustment but warns that by year end the cost of individual spare parts in the guides could increase by 10 to 20 percent.

The RSA explains that market research and index updates follow the methodology approved by the Bank of Russia. New indices are typically published for the parts most frequently used in car restoration. The association notes that prices in the guides reflect both original and non original parts, which can create discrepancies with actual market prices.

The Central Bank has indicated that guide prices may be revised at least every three months. When asked about the difference between real market prices and RSA lists, regulators explained that price dynamics vary across manufacturers, causing directory data to diverge from seller price tags.

At the same time, the Central Bank does not directly supervise insurance company calculations. Consumer rights advocates have carried out oversight since 2022, with the Borrowers’ Rights Fund drawing attention to various banking initiatives, exposure of fraud schemes, and advocacy for consumers.

Vitaly Knyaginichev, head of retail trading at Ingosstrakh, explained that RSA reference books show prices that are already late because data were collected roughly a quarter before publication. He predicts that the December edition will reflect the ruble’s recent movement.

Experts note that comparing current guide prices with long term price movements since early 2022 is not appropriate. Pavel Yakovlev, a senior product manager for auto insurance at RESO-Garantiya, explained that earlier growth was driven by shortages. As supplies stabilize and more spare parts channels appear, prices in the guides are now more reflective of actual conditions. Some parts may still be cheaper elsewhere but longer delivery times can apply. The guides aim to show average market prices.

Repairs under compulsory car insurance remain challenging for profitability

Alexander Garankov, development director of the Fit Service network, told socialbites.ca that referrals for repairs under compulsory motor liability insurance are not profitable for most independent stations. The largest network works with insurers to offset losses in other areas, but losses persist in OSAGO related repairs.

In August 2023 compared with January, the largest price increases occurred for spare parts ordered for delivery, including major assemblies such as steering racks, engines, transmission components, certain body parts and optics.

Experts added that price growth for European and American brands tends to be more noticeable. While prices for many Korean and Japanese car parts fell, prices for similar components used in BMW and other European brands rose by 15 to 20 percent.

Insurers pursue higher margins

Anton Shaparin, vice president of the National Automobile Association, argues that RSA guidelines are used by insurers to minimize payouts under compulsory motor insurance. He claims the guide is a mechanism to suppress payments by relying on conservative figures and cheap replacements when specific parts are unavailable.

According to Shaparin, if a precise spare part is not listed, insurers may estimate compensation using inexpensive Chinese analogues. They are also reportedly seeking payments based on prices of used parts from dismantling yards, which can be even cheaper. The December update to the RSA guides is unlikely to reverse this trend.

Shaparin calls for a complete revision of these directories and the payment framework, arguing that the current numbers make real repairs under OSAGO unaffordable. Sergei Radko of the Freedom of Choice automobile movement adds that payments under compulsory traffic insurance are rarely enough to repair a car, and garages are reluctant to accept repairs at those rates. The market today remains in an unusual state with a volatile exchange rate and ongoing parts delivery challenges.