What is it called when a mechanic tells someone their vehicle is "too expensive to repair" then the customer dumps it and then the mechanic uses it as a daily driver 1 month later?

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deception

Conflict of interest or unethical behaviour?

A mechanic who doesn't doesn't value his time accurately. Many, if not most vehicles are often too expensive to repair now so I doubt he is a liar. But I could be defending the automotive world because it's a tough place to be.

His time is "free" to him. Don't forget many mechanics don't set the time of the repair. It's book time, the mfg tells the minimum time a repari should take. Doing a job right for a customer is also far more expensive then the duct tape and zip ties approach a tech might do on their own vehicle.

Lets say there was an automatic transmission slip.

I would tell the customer a proper job to repair (guarantee it will work as intended when it leaves) it would cost say $3500.

I could do the same repair with the pile of spare clutches I have in my garage from past builds for $0 in parts and my labor cost. I didn't replace any seals, bearings, bushings, clean the valve bores, replace the TC, check and fix tolerances. Doesn't matter if it breaks down again in a week, because 1. I know I can fix it again, 2. its probably going to cost me $0.00 to do so.

If youre car was only worth $3500 in running condition, then well it's literally not worth the proper repair. I can't sell the half ass repair because I can't guarantee you won't be back here just as soon as your tires hit the road.

A sucker

If you pay a service company to fix something it costs 3 to 4 times more than fixing it yourself.

Or phrased differently ...

You can fix something yourself for 25% to 33% of what you would pay a service company to fix it.