In this paper, we presented a continuous‐time Markov process‐based model for evaluating time‐dependent reliability indices of multi‐state degraded systems, particularly for some automotive subsystems and components subject to minimal repairs and negative repair effects. The minimal repair policy, which restores the system back to an “as bad as old” functioning state just before failure, is widely used for automotive systems repair because of its low cost of maintenance. The current study distinguishes with others that the negative repair effects, such as unpredictable human error during repair work and negative effects caused by propagated failures, are considered in the model. The negative repair effects may transfer the system to a degraded operational state that is worse than before due to an imperfect repair. Additionally, a special condition that a system under repair may be directly transferred to a complete failure state is also considered. Using the continuous‐time Markov process approach, we obtained the general solutions to the time‐dependent probabilities of each system state. Moreover, we also provided the expressions for several reliability measures include availability, unavailability, reliability, mean life time, and mean time to first failure. An illustrative numerical example of reliability assessment of an electric car battery system is provided. Finally, we use the proposed multi‐state system model to model a vehicle sub‐frame fatigue degradation process. The proposed model can be applied for many practical systems, especially for the systems that are designed with finite service life.