VIN Basics Blog

The auto insurance market in 2024 is not friendly to consumers. Providers, perhaps in an effort to mitigate rising loss ratio, have increased premiums by 26% in the past year, with plans for these costs to remain elevated through 2025. Consequently, consumers have flocked to auto insurance shopping sites and quoting portals to hunt for the provider that will impact their budget the least, with TransUnion noticing a 12% increase in shopping rates year-over-year in 2023.

The question for auto insurance lead generators and comparative raters is, beyond investing heavily in your market outreach (which is not guaranteed to succeed), how do you stand out as an exceptional product in a market that is both in demand and heavily saturated? How do you make your leads more appealing than your competitor’s leads?

No manufacturing process is perfect, an obvious fact that the automotive industry knows too well, with nearly 900  recalls affecting over  34 million cars alone in 2023. No part of a car, truck, or trailer is immune from an error, and that includes the Vehicle Identification Number (VIN). 

Warranty businesses serving the automotive industry are facing many of the same challenges impacting insurance companies, including price inflation for parts in both direct and 3^rd party markets, supply chain roadblocks, and significant increases in claim severity.  These issues are compounded by a pandemic-induced decrease in new car sales, all contributed to the warranty industry experiencing a 2.7% decline in revenue year-over-year per Consumer Affairs. 

The good news for warranty companies is that there appears to be a clear path to rebound. The same Consumer Affairs report finds that consumers are increasingly looking to extend their cars’ usable lifespan and typically cannot afford costly repair bills without coverage. This points to an increased and sustained demand for warranty coverage as the population of vehicles in use ages.  However, to maximize the profitability of these warranty policies, vehicle risk assessment models used to price warranties will need to be updated and future-proofed for the latest technology developments to maintain their accuracy.

DataOne Software’s blog this year has emphasized the impact of increasing vehicle complexity within a wide swath of the automotive industry, and we are not going to be short on topics any time soon. The latest innovation that has captured the investment dollars of the tech sector, “AI” (which in truth is a mislabeling of the technology – it should more appropriately be called a Large Language Model) is now making its way into OEMs’ development plans, and automotive risk assessment professionals will need to closely consider its ramifications to avoid unexpected losses.

The economic conditions of the early 2020s had a unique impact on the automotive industry. Dubbed trimflation by car culture website Autopian, the output in entry-level models was greatly reduced, while high-margin trims became more commonplace and MSRPs were increased across the board. UMass Amherst Professor Isabella Weber noted, “Companies in the automobile sector [amplified] price pressures enabled by a form of temporary monopoly granted by the computer chip shortages. This allowed car producers to focus on expensive models with higher margins and generally raise prices without having to fear a loss in market share.”

Electric Vehicle (EV) charging stations are a novelty right now, but in the United States, they will become both ubiquitous and a necessity in the next decade. The 2030 National Charging Grid Report finds 2.3 million charging ports will be needed to accommodate the 28 million EVs expected to be on the road by 2030, but as of right now, only 160,000 exist nationwide. This will be an enormously expensive venture – grid analytics company Kevala believes that California alone will need $50 billion to accommodate its EV and emissions targets. 

Utility companies will have an unprecedented amount of financial capital, scope of work, and public pressure to adapt their service areas to the EV era. While not applicable to all the challenges inherent in this transition, curated, in-depth, and accurate vehicle data will be essential to develop optimal grid planning strategies. 

Legendary physicist Marie Curie once said “I was taught that the way of progress was neither swift nor easy,” and the United States’ inevitable nationwide shift toward fully electrified vehicles (EVs) is the perfect example of that sentiment. Many states have set ambitious initial zero-emissions targets as early as 2025, which will require radical infrastructure change and an exponential increase in consumer EV adoption.

The Inflation Reduction Act, California’s Advanced Clean Cars standards (which are opted into by an additional 14 states), and other state initiatives are kickstarting that adoption by offering numerous rebates and discounted billing programs for EV owners. These programs will present unprecedented operational challenges for the utility companies tasked with implementing and managing them. These challenges include parsing and processing a massive influx of new data, inconsistencies within that data, and continual shifts in guidelines and regulations that need to be followed as both the government and auto industry landscape evolves.  This article will outline the core benefits of ongoing access to in-depth, 17-digit VIN data in ensuring a sustainable, productive response to the US’ electric vehicle transition.

Inflation has been outpacing wages for many years, which has created significant hardship for workers and forced them to extend the life of key necessities such as their personal vehicles. Kelley Blue Book (KBB) has found that the average vehicle life has now been extended to 12 and a half years, in an effort to avoid adding a new car payment to already strained budgets. Timely, cost-effective, and quality vehicle maintenance is necessary to attain this ambitious lifespan, and customers typically have many local options for servicing and repairs. The parts and services industry has become an enormous market ($137 billion in 2022 from dealerships alone) with intense competition, so how can these businesses generate the customer loyalty and positive experiences needed to thrive with repeat business and word-of-mouth recommendations? 

The automotive industry is running parallel races toward fully electrified and fully autonomous vehicles, and both races have a deceptively close finish line. EVs will become the norm within 10 years due to a combination of government legislation and manufacturer mandates – Progressive estimates that EVs could comprise 40% of car sales by 2030. Vehicle autonomy, meanwhile, remains a top priority for OEMs as well, with the market projected to reach $200 billion by the end of the decade. Mercedes-Benz is already certified for Level 3 autonomy, a standard that encompasses conditional hands-free driving, suggesting that Level 5 (totally automated driving) is a feasible goal for automakers more quickly than initially anticipated.

The technology involved in developing electrified, autonomous vehicles will not be universal; each feature package will have its own unique benefits, drawbacks, and relationship to road conditions and driver capabilities. Consequently, auto insurers cannot treat “ADAS” or “EV” as monolithic or even loosely segmented variables in their risk analysis; all levels of the organization must have a comprehensive understanding of their car’s technology stack to maintain a balanced risk-to-rate ratio. 

VIN Decoding solutions offer multiple levels of information for vehicle inquiries. Pattern-level VIN decoding provides information from the World Manufacturer Identifier (WMI), Vehicle Descriptor Section (VDS), the vehicle’s model year, and production plant. Option-level VIN decoding includes the serial number of the specific vehicle and often presents “as-built data” from the Original Equipment Manufacturer (OEM), such as installed options and packages, as well as the exact exterior and interior colors.