Companies that repair damaged vehicles say they are bearing the brunt of cheap car insurance.
State Insurance has given rising repair costs as a major reason for lifting car premiums by between 10% and 15% on average.
However, Collision Repair Association general manager Neil Pritchard says insurance companies have been ruthlessly driving down the cost of repairs and premiums are now unsustainably cheap by international standards.
He says several repairers did not reopen after Christmas because they could not afford to stay in business.
Mr Pritchard says an increase in insurance premiums could go some way toward dealing with problems cited by both repairers and companies that supply used parts.
One of those companies, Mount Commercial Wreckers in Mount Maunganui, says the cost of many used Japanese parts have been cut by 40% by State Insurance's compulsory tendering website system.
Other wreckers say they are competing strongly with each other in the tender process and that is driving many businesses to the wall.
Auto Parts Industry Association spokesperson Geoff Matthews says State Insurance's market dominance means parts suppliers have no real choice but to use their systems.
