Auto Care ON AIR
"Auto Care ON AIR" is a candid podcast dedicated to exploring the most relevant topics within the auto care industry. Each episode features insightful discussions with leading experts and prominent industry figures. Our content is thoughtfully divided into four distinct shows to cover four different categories of topics, ensuring collective professional growth and a comprehensive understanding of the auto care industry.
The Driver's Seat: Navigating Business and the Journey of Leadership
To understand organizations, you need to understand their operators. Join Behzad Rassuli, as he sits down for in-depth, one-on-one conversations with leaders that are shaping the future. This show is a "must listen" for how top executives navigate growth, success, and setbacks that come with the terrain of business.
Carpool Conversations: Collaborative Reflections on the Road to Success
Hosted by Jacki Lutz, this series invites a vibrant and strategic mix of guests to debate and discuss the power skills that define success today. Each episode is an entertaining, multi-voice view of a professional development topic and a platform for our members to learn about our industry's most promising professionals.
Indicators: Discussing Data that Drives Business
This show explores data relevant to the automotive aftermarket. Join Mike Chung as he engages with thought leaders in identifying data that will help you monitor and forecast industry performance. Whether global economic data, industry indicators, or new data sources, listen in as we push the envelope in identifying and shaping the metrics that matter.
Traction Control: Reacting with Precision to the Road Ahead
Every single day, events happen, technologies are introduced, and the base assumptions to our best laid plans can change. Join Stacey Miller for a show focused on recent news from the global to the local level and what it may mean for auto care industry businesses. Get hot takes on current events, stay in the know with timely discussions and hear from guests on the frontlines of these developments.
Auto Care ON AIR
Consumer Confidence Drives the Automotive Aftermarket
The resilience of the automotive aftermarket might seem puzzling during economic uncertainty, but as our conversation with Olivia Droney-Newton reveals, this industry thrives even when consumers tighten their belts. Why? Because cars must function regardless of economic conditions.
Consumer confidence has fluctuated dramatically, yet vehicle maintenance remains essential. When faced with repair decisions, consumers may shop around or choose "good" over "best" options, but they rarely forego critical repairs entirely. As Droney-Newton explains, "If your car needs brakes, you're probably not going to put that off for too long." This fundamental necessity creates a buffer against economic downturns that few other industries enjoy.
Vehicle demographics tell a compelling story. With average vehicle age reaching record highs and more cars than ever exceeding the 12-year mark, repair opportunities abound. These aging vehicles enter periods of major component failures just as record-high new car prices ($50,000 average) and monthly payments ($800) make replacement options unaffordable for many. Additionally, vehicle miles traveled has surpassed pre-pandemic levels, accelerating wear and increasing maintenance needs.
The relationship between service providers and customers emerges as a key industry strength. Independent repair shops are deeply woven into their communities, serving as trusted advisors who help prioritize repairs when budgets are tight. This trust-based approach, combined with the industry's ability to offer tiered product options, provides consumers the flexibility they need during uncertain times.
Supply chain challenges and tariff uncertainties create planning difficulties, but the aftermarket's innovative spirit and adaptability continue to shine. Whether navigating emerging technologies like EVs or developing alternatives to disrupted supply chains, the industry consistently finds ways to serve customers' evolving needs.
Want to understand what drives consumer repair decisions and how your business can thrive despite economic headwinds? Subscribe to Auto Care ON AIR for insights that will help you navigate today's complex automotive landscape.
To learn more about the Auto Care Association visit autocare.org.
To learn more about our show and suggest future topics and guests, visit autocare.org/podcast
Welcome to AutoCare OnAir, a candid podcast for a curious industry. I'm Mike Chung, senior Director of Market Intelligence at the AutoCare Association, and this is Indicators, where we identify and explore data that will help you monitor and forecast industry performance. This includes global economic data, industry indicators and new data that will help you monitor and forecast industry performance. This includes global economic data, industry indicators and new data sources. Hello and welcome to another edition of the Indicators podcast, part of the AutoCare OnAir podcast series. I'm Mike Chung, senior Director of Market Intelligence at AutoCare Association, and I'm really delighted to have Olivia Droney-Newton join me. She's at NA Williams. She is Vice President of Consumer Insights and Category Management, olivia welcome.
Speaker 2:Thanks, thanks for having me, mike.
Speaker 1:Likewise Thanks for making the time to join us today. You and I had a really great discussion at our Connect conference. For those of you who are not familiar with that, that's one of AutoCare's premier conferences. We had that out in the Phoenix area earlier this spring. And, olivia, why don't you tell us a little bit about NA Williams and what you do for them?
Speaker 2:NA Williams has been serving their clients for over 90 years. They are a rep agency and solution provider. We also have an arm that I help to run that really supports on the data side. So we do a lot of different things but we are very entrenched in the automotive aftermarket. We're very proud of our history as a company and the Williams family has done an amazing job supporting different initiatives. They're big supporters of right to repair University of the Aftermarket. So we have a lot of different folks in the industry that are everywhere and I'm excited to be here today talking a little bit more about what we do on data.
Speaker 1:Terrific, and I know that we have some listeners who are not necessarily in the aftermarket. So when you say manufacturers, representative and your clients, what I'm hearing is you're purchasing parts from parts manufacturers. You're providing those to your clients, who may be shops, they could be warehousers, they could be distributors as well as retail operations. Am I anywhere near correct on that?
Speaker 2:yes, absolutely so. We work primarily with manufacturers across all kinds of segments and we represent them on the sales side to their customers, so that that means a lot of things obviously in our industry, though you're absolutely right, on the traditional side we work with the WDs. On more of the retail side, we work with auto retail and beyond we have business on the hardware side and a couple other places. So we, you know our folks are really big on kind of maintaining their relationships at those accounts, and that's one of the reasons why folks come to us to help them, you know, grow their business.
Speaker 1:Gotcha, Thanks for that overview and before I go into our first question, I mentioned your role as leading consumer insights category management. Tell me a little bit about your job and, if it's at all helpful and maybe I'm just saying this also because I didn't lead with this I always tell people that my job is to really bring data, insights and trends to our members, to the industry, and I would imagine in your role it's not that dissimilar.
Speaker 2:No, absolutely. As I mentioned, you know, annie Williams has a long history. We have some incredibly talented people out there working, you know, with different manufacturers. One of the things that me and my team help to provide is really sales support. You know metrics as well as general industry information, so we want to know what's going on. We want to know what's going on. We want to help our customers and our partners make data-driven decisions and help bring from clarity to what can sometimes be overwhelming, just given the general volume of data that's available.
Speaker 1:Sure, and it's a great segue into the current market environment that we are in.
Speaker 1:And for those listening, we are late spring, almost summer 2025. And if you've been paying attention to the news, a lot has happened. And what I think will be interesting is because my first topic is really consumer environment and sentiment. Olivia, for you, consumer is not just the end consumer, like, say, me or somebody who's driving a vehicle, but to your corporate consumers and then kind of like the B2B2C, if you will. Is that fair to say in terms of what you're looking at?
Speaker 2:Absolutely. I mean, the aftermarket is so diverse in terms of the different categories that roll up under what we do. So you're absolutely right. I mean we work with. You know, in the aftermarket generally we have products that are fully consumer facing, you know, super DIY friendly, and then we have a lot kind of in the back room and then on the tool and equipment side that are much more of a B2B type scenario, and so, at the end of the day, though, those consumers how they're feeling and what they're willing to spend to maintain, and whether that's on their own or using one of our incredible professionals still has an impact. So we need to make sure our consumers are healthy, and one of the things, at least for our industry, that tends to be a positive and helps us through, you know, times of economic uncertainty is that most people really need their cars to work.
Speaker 1:Definitely so. Let's start with that individual consumer angle then, before we get into the business sentiment, if you will. But for, say, consumer sentiment, I know consumer confidence. I think you and I talked about it as being at record lows recently. Is that your recollection?
Speaker 2:Yes. So back in March we had a monster dip in sentiment, similar to what that particular metric showed closer to early days of the pandemic. Metric showed closer to early days of the pandemic. Amazingly, in the last month, with some of the pause on tariff activity and some of the other changes, it's more or less back to par. So consumers, I think, were frightened by some of the uncertainty Seems like now you may be revisiting that. But overall it was nice to see that metric kind of bounce back.
Speaker 1:Definitely. I feel like it's been a yo-yo of sorts, right? You know, when you wake up in the morning and look at your news, or if you get alerts on a mobile device, it's just like one hit after the other. Some things come into play, some things go out of play. So it's been a volatile environment, to be sure.
Speaker 2:Yeah.
Speaker 1:Yeah, and I think you mentioned Terrace. We'll revisit that throughout our session here. But when I think of consumer confidence, I think we're all looking at the University of Michigan. Are there other data points that you're looking at from a consumer confidence standpoint?
Speaker 2:We usually. I usually look at the confidence or the conference board. Thank you, they do.
Speaker 1:There's alliteration there somewhere.
Speaker 2:Yes, so we, you know we track that. They always ask a couple additional questions in their surveys which can be interesting just to understand you know how folks are feeling or what they're maybe reacting to, more impacted by, you know, consumer confidence dips. And then there are categories where you know if your car needs brakes.
Speaker 1:You're probably not going to put that off for too long. So you just took the words right out of my mouth because, like you said, there are some categories that are going to be much more harder to ignore, if you will, so brakes being one of them. What are other categories that are perhaps less susceptible to a confidence, a dip in confidence?
Speaker 2:Yeah, well, going into the summer heat, you know, depending on everyone's heat tolerances and where you live, you know AC is one of those.
Speaker 2:People can sometimes wait for a little bit. But you know, july and August can can be tough for folks. But again, you don't need necessarily your AC system to run to run your car. So there's some that are more around passenger comfort. But you know, at the end of the day, if your engine something's going on with your engine, your suspension, um, things that really affect drivability, then I think you start to see some other decisions being made around. Okay, I need to prioritize this, either financially in a household, or we need to hurry up because this car's not working. That really can-.
Speaker 1:Yeah, if it's an emergency repair, certainly those tend to get done, and I would imagine there's a couple of other options that a consumer could have. One is to delay the maintenance. So if it's a non-essential repair, perhaps delay that a little bit, shop around, perhaps even think about, oh, is it time to switch vehicles? And then, kind of in the good, better, best model of things, perhaps go from best to better, better to good. Are you seeing consumers doing that, or does that resonate as well?
Speaker 2:Yeah, we hear so at NA Williams. We have a team at Datalink that does a lot of surveys, especially around our professional customers, and we do hear you know that customers are leading those conversations. So it's not necessarily that they're not willing to do the repairs. But if there is a financial concern they may ask is there another product option that may get more financially viable?
Speaker 1:And I think we've seen that in the tire space too, where tier one, two, three, four tires, there's been increases in sales of, say, the tier three and tier four, along with an increase in those in the quality of those products too. So I think there's that dynamic that can certainly happen as well.
Speaker 2:And that's one of the great things about the aftermarket there's, you know, we bring choice to those consumers truly, and that's again one of those reasons why, generally as an industry, we tend to do somewhat well or at least perform at par during, you know, these times of question marks and you know one of the things that's that has helped us, at least over the last couple of years, has been the price of new vehicles. So you know, when you talk about those alternatives, what are they? Even if a repair seems costly, purchasing a new vehicle has been even more untenable for certain households. So you know there's no choice in the matter. If you need your vehicle to run, they need to figure out how to, you know, fix it versus trade it in.
Speaker 1:Right, you bring up a great point. I remember new average price of new vehicle transactions were nearly $50,000 throughout the past year, year and a half. Am I remembering that correctly, olivia?
Speaker 2:Yes, which seems very high. You know, it's generally just a big number for a lot of households that are maybe not expecting that kind of expense. And of course the challenges are being impacting consumers, not just on, you know, potential auto financing, but just general credit. Is the APR rates, the general lending rates, are much, much higher than they have been. So if you're buying a $50,000 vehicle, you're probably paying quite a bit more in interest than you would have five, 10 years ago.
Speaker 1:Certainly, and I remember also a similar stat of maybe it was $700, $800 average monthly payment and that's a significant monthly expense no-transcript.
Speaker 2:And it's been increasing month after month, essentially since the end of that savings period from the pandemic.
Speaker 1:Sure when you had stimulus and other things helping.
Speaker 2:Yeah, I had more cash. It's exceeded a trillion dollars, which is a lot of money, obviously, and and again, one of those key differentiators is the fact that it's at a very high APR, on average about 24%, which you know. That starts to eat away at potential other discretionary spending if you're, you know, buying, having to buy things on a credit card and maybe not pay it off. So, again, those kinds of things to me signal whether or not an average household may be feeling more financial stress. But again, you know, we see other metrics, like around the Memorial Day weekend. That said, you know, more people than ever going to be getting in their cars to go on vacation. So it's nice that we're. Also, our industry sees additional wear and tear on vehicles because consumers rely on their cars not just, you know, for commuting or shuttling around their kids, but also now it's become a mode of transportation for vacations.
Speaker 1:You know that's a great point and I remember us talking about that. What is the proclivity for consumers to travel on Memorial Day weekend? Will they fly, will they travel? And I think the sentiment was that even though it may not be inexpensive to travel, it's worth it. Ultimately, people want to spend time recreating, visiting families, just getting away a little bit, and I know airfares in the past year have been a bit on the higher side but, yeah, it has been encouraging to see the customer being willing to travel. So, yeah, great points. You mentioned something earlier about when you talk with the service providers, what they're hearing from the consumers. So that was in the example, excuse me, of the good, better, best or delaying things and getting recommendations and how it's consumer driven. What else have you heard from the service providers in terms of what they're observing for consumer confidence and how they're buying things? Are you hearing other anecdotes?
Speaker 2:Yeah, I mean what's amazing about most of our service providers on the independent side? They're fully part of the communities. So I was talking to a friend who's a shop owner earlier in the week and saying her customers are still coming in, they still need their maintenance, they still need to get things done, but they'll also call her sometimes to ask if she has like restaurant recommendations or where can they take their kids. So you know, I think part of that relationship side of the business is what helps. You know our service providers really understand their consumers in a way that you know, one step removed, we don't get to see on our side of the fence, but you know, I think they know when something's struggling and they can recommend.
Speaker 2:You know this is what I would do. That is essential versus you know this can wait. So I think our service providers are really in tune to their consumers, thankfully. And the good ones certainly, you know this can wait. So I think our service providers are really in tune to their consumers and the good ones certainly, you know, know when somebody might be struggling and you know thinking about, oh how am I going to do this? They're there to kind of help walk them through what's really needed.
Speaker 1:Yeah, certainly having a trusted advisor, if you will, whether at a repair shop or in other aspects of our life, really goes a long way and just amplifying the consumer experience just for retaining a customer long term makes a lot of sense and also just from a humanistic standpoint to provide some solace as well as just reliability from that relational standpoint Can't go wrong.
Speaker 2:One of our other shop owner friends from Women in Auto Care said you know, I get to help people on what is usually their worst day. You know, if you think about our end consumers generally, when you have a problem with your car it's, it's really not your your best day as a consumer. Sure, yeah, you're not there, it's stressful?
Speaker 1:yeah, it's stressful. Yeah, there's a lot of unknown, a lot of uncertainty and, um, potentially very high costs as well. And I think similarly, I remember some uh repair service providers say, hey, we don't just take care of your car, we take care of you, right? So kind of along that same line, you mentioned something interesting in terms of how the aftermarket being resilient and our performance being on par. I'll just put this plug in here we are. By the time our listeners are hearing this, we will have released the fact book for this year. So this is the 2026 edition, published in June of 2025, covers data through 2024. And while I can't reveal the number yet, I can say that the aftermarket did basically perform in line with expectations. Expectations, and that's heartening news, certainly, because between inflation, relatively high interest rates, increased costs of parts, labor, new vehicles, it's been a challenging environment, certainly, but does it surprise you to hear that the aftermarket as a whole has performed in line with expectations? Olivia?
Speaker 2:No, I mean again, I think our industry is resilient, but I also think it comes from a place of innovation. I mean the fact that we here came from a need that needed to be solved, and I think that the folks in our industry are really good at understanding. Okay, what's changing, what's coming. How do we make sure we're well positioned to support the consumer as they're going through those changes? So, whether it's an economic boom or an economic downturn, I think our industry is so diverse and the folks in it are so smart and thinking through. How can we ensure these consumers have what they need for the future as well?
Speaker 1:And agile too. Right, I think, the COVID-19 pandemic. There were a few wrinkles in the supply chain then and it's probably a good training grounds, if you will, for being able to weather storms that we're going through now with tariff trade policy lots of different things going on there. Certainly, um, when you're doing kind of your pulse of the uh business environment, do you is anything remarkable in terms of optimism, uncertainty, negativism, in, in your, in your clientele?
Speaker 2:no, I mean generally speaking. You know we will ask. You know, what are you going to invest in potentially to new technologies? What's what's coming for your facility? It was interesting this last survey we did. Most of them didn't know, again, holding off until some of the larger macroeconomic uncertainty was settled.
Speaker 2:But the truth of the matter is, you know, we hear from our businesses that you know they're going to continue to take care of their customers and they're going to continue to invest in the tools and equipment they need to do that and the training and the people. And you know that's all part of the aftermarket ecosystem that helps kind of drive the machine and it helps us. Also, you know that people are using their cars. So when we look, you know, vehicle miles traveled they're up. You know in office, commuting times are up, people are starting to spend more time on the roads for that reason, in addition to, you know, travel and leisure. So car usage generally is the biggest indicator we have as an aftermarket, along with gas price, and gas price, as you mentioned, has been pretty reasonable. You know, comparatively, be reasonable, you know comparatively. And those factors allow consumers to hopefully, you know, use their vehicles in a way that puts mileage on them, that then eventually will put them into the windows for maintenance and repairs.
Speaker 1:Yeah, you bring up a couple of. I really appreciate the commentary and a couple of things ran through my head as I was hearing you talk. One of them was the repair shops, the investment in equipment and technology, and I know that is not an easy thing to manage, if you will, because we did a survey of repair shops recently and one of the challenges is you know, I bought this equipment, it works great, but what's the shelf life? How long can this last? Because the technologies, the state of the art, just keeps increasing at a faster rate. Are you hearing that as well?
Speaker 2:Absolutely, and we're also hearing that it's becoming much more specific. So there may be certain makes that have very specific software that's required to die, or a pair of vehicle. So it's not necessarily that the information is not there. It's just quite costly for a shop to then say I service all makes, all models and best in all the things you really need to do to do that.
Speaker 1:Right, yeah, it's. It's not a clear crystal ball, certainly no-transcript, and I see you're nodding your head. Am I remembering that correctly?
Speaker 2:pandemic vnt, and I see you're nodding your head. Am I remembering that correctly? Yeah, as of the end of this past year, actually, we've exceeded the pandemic right average.
Speaker 1:Yeah, and goes right to your point of that just drives demand no pun intended, of course for the aftermarket and then not to give it away. But vehicle age right. I mean I think most people the the vegas odds would be pretty much in favor of an increasing vehicle age right, and I can tell you that it did increase. So we'll see. I'm sure you'll see that in the fact book as well, as all of our other listeners will will observe that in our fact book as well. But yeah, you've got via vmt, um, you've got average age, and I think you and I talked a little bit about uh vehicles in operation. Right, I want to say, before the pandemic, what was it? 16 million light vehicles, that was kind of like your typical mark. Sometimes it's been up to 18, but for a few years it was well below 16. I want to say even 14 one year. But I think we're kind of getting back to that 16 million threshold if I'm not mistaken. But that's certainly something I'd imagine you're watching as well.
Speaker 2:Yeah, absolutely. I mean, when you look at what's happened on the new vehicle market, there were lingering supply challenges, you know that also did not help anyone on the pricing side. What we've seen now is supply sort of catch up and we've started to see the OE side become a little bit more aggressive around, you know, incentives, selling, how you know making those numbers again, which is part of our whole ecosystem. We need new vehicles, kind of entering the car park so that when they're ready to be repaired in the aftermarket there's a healthy number of them. So it's all part of the whole cycle, but it's nice to see that that's happening. That said, I mean you know in our at our connect conversation we heard that you know, scrappage was at an all time low. So we're having new vehicles added at a rate that's close to pre pandemic, if not existing, and we're also not necessarily getting rid of vehicles at the same pace because of all the other things we've talked about High prices Right, definitely, of the things we've talked about, high prices, right Definitely.
Speaker 1:And when I look at the vehicle age tranches, I know the sweet spot often is four to seven, seven to 11. And I feel like that we're well into that kind of the good times, if you will of we have a very robust sweet spot tranche of vehicles. They continue to age. I wonder how long that'll last, though, because maybe I shouldn't say it that might sound a little bleak, but I feel like we've enjoyed a good run and having new VIO will certainly continue to sustain us, because I'd be worried if there were like no vehicles being sold, right, because then there would be this period where it's like you've either got a brand new car or you've got a 20 year old car. So I think it's pretty healthy where we're at, and I suspect that those that it'll continue for at least a few more years. And when you think of the sweet spot age range, what do you and your colleagues think of it as? Is it like that four to 11, or is it expanding?
Speaker 2:It really depends on the category. But one of the things we always look at in the fact book and we're excited to see in the new fact book is really the percentage of vehicles over 12 years expanding. When you think about again if that's kind of our average benchmark, we're continuing to see that other side of the average continue to grow year after year, year after year, and even those 16 plus vehicles that are on the road and that's again when you start to think about some major failure categories. That's when you start to see a lot of those failures and maybe it's a second owner or a third owner failures and maybe it's a second owner or third owner and that you know these repair cycles really help drive a lot of the business and and certain categories that we see.
Speaker 1:That makes a lot of sense and then, depending on the company you're at, you're certainly looking at specific makes and models and using that to drive investment and kind of marketing decisions. I would think so, yeah, thanks for sharing that.
Speaker 2:You mentioned a little bit more of the member survey. I was hoping just to ask if you had any other pieces you could share. I know you did a larger survey of shops as well.
Speaker 1:Yeah, so the member survey I think you're talking about is our trade and tariff policy survey, is that right, olivia?
Speaker 2:That's right.
Speaker 1:Yeah. So, for the benefit of those listening in, autocare surveyed the membership on trade policy tariffs confidence are you doing business in Canada and Mexico? In China? Sentiment how's it affecting planning?
Speaker 1:And this was done, I want to say, in mid-March to early April, so at that time certainly you could see the pains and consternation throughout the industry. Uncertainty was really the key word. I just am waiting for clarity on what's going to happen and I know for me, being relatively new to the aftermarket, so I've been at AutoCare for five years and I did not grow up in the industry, if you will. So some of the things that were interesting to me to learn about the aftermarket were some of the commentaries, such as the following, where one individual commented on the aftermarket is relatively low volume products at lower prices, particularly in relation to OEs, and thinking back to economics and marginal returns and those types of profitability considerations, it made me really kind of reflect on things that our director of international affairs, angela Chang, has told me, which is you know, it takes time for a company to move its supply chain. You can't just put up a manufacturing facility overnight, and not just all the permitting, and not just all the permitting the construction, but also the employees, the training, having skilled individuals there. So it takes time, as Angela likes to say, for these supply chain elements to be introduced and come online, and so for a company to just move its operations from one country to another is significant.
Speaker 1:Move its operations from one country to another is significant, and hence the uncertainty of our membership to say, yeah, I really need to know what's going on, because these are very significant decisions that I'm making from an operational, strategic standpoint. And coming back to observations that say Angela has shared, is's kind of like the what would you call it Market forces that lead companies and businesses to be where they're at, because of economic and other considerations, and there are reasons why there are operations in China or Mexico and Canada, and because of those certainly the industry has evolved and adapted. And when you really just shake the rug really hard, it certainly makes sense that a lot of our members are are really have been watching very closely what's been happening with tariffs. So I can imagine a company like yours, olivia, where it's like okay, we are interfacing with manufacturers. There are many manufacturers, they have many parts, they have many facilities and they have many customers and everybody's sort of like kind of glued to the news and to the policy developments. Is that kind of fair to say?
Speaker 2:Yeah, absolutely, I mean again, on one hand, fair to say, yeah, absolutely, I mean again, on one hand, we're an essential industry. We sell essential products that keep, you know, families and consumers on the road. On the other hand, you know these businesses are global in a lot of cases and we're a piece of that. So absolutely, there's tons of operational challenges that come with any of those scenario outcomes to know, not necessarily being caught without product. But yeah, it's super challenging and it's hard to plan, I think, from a strategic standpoint.
Speaker 2:Again, some of these investments that you're talking about, even in new technology Right, it takes years to make sure that the tooling's right and to do quality testing and to get all of them, everything, shored up so that you know our manufacturers can offer a product out in the market that is, you know, as good, if not better, than maybe what came on the vehicle. So absolutely it's super challenging. I know everybody, I think, has been paying a lot of attention to the updates that the Auto Care Association has been providing, which have been super helpful. The tariff calculator, amazing, very simple, you'd understand. So there's a lot of resources, luckily, but until there's more clarity longer term, I think it's going to be hard for businesses to really make big strategic decisions. You know, looking out 5, 10, 20 years.
Speaker 1:Absolutely, and you know we talked earlier about consumers right and how consumers are behaving in an environment of higher costs. And I'll read one quote so this was a member who does business in both Mexico and Canada that if the tariffs are maintained it will impact sales into and out of both countries, which will slow business due to the additional costs. And certainly what we've seen is that when costs go up, whether it's labor costs, input costs ultimately they get passed on to the consumer, so challenging for the consumer. And you know you mentioned a couple of other interesting points, such as the quality assurance and kind of. Another thing that I found interesting was in addition to quality, because if you as a supplier have to switch your sourcing, how do you manage that from a continuity standpoint as well as factor in time, to allow for testing and quality control of products from a different supplier, because you certainly want to be able to sell high quality products to your customers, who expect a certain level of product reliability.
Speaker 1:Another quote I'll read is this one I am concerned about retaliation, therefore making my products uncompetitive in export markets like Canada and Mexico. So the retaliation theme came up and I'll just read one more. I could probably talk about this all day, but something that I that resonated when you were talking about higher technology parts where one member shared, where one member shared. There are numerous automotive aftermarket parts categories that are not cost effective to produce in the United States, that the industry relies on overseas manufacturing. So when I read something like that, it makes me think of the cost of doing business one, but also the fidelity and quality that's required from a technician from an equipment, and quality that's required from a technician from an equipment from a tolerance, measurement and testing standpoint. So certainly challenging things that have come up in the face of all these kind of potentially new and affected tariffs.
Speaker 2:Absolutely. You know you talk about quality on the professional side. Quality is so important because it's their professional relationship on the line every time they're installing a part, and so, in order to trust in the products that they're getting, that's a crucial, crucial step and something that I know the industry takes very seriously and the manufacturers that are part of the aftermarket are certainly committed to. But that's you're right, that's a whole piece of the pie that takes time, energy, effort and investment honestly. So, you know, with cost structures being challenged, maybe with additional costs elsewhere, if it's tariffs or you know, potential export revenue down that also, I think it's probably part of the consideration that some of these companies are trying to understand. Okay, you know what do I have to even invest?
Speaker 1:Yeah, and I think when we're thinking about long range planning for companies in the aftermarket or a lot of industries, I think this is very poignant. So we asked if you're currently or previously, if you currently or previously sourced from China, have you attempted to shift sourcing from China to other countries due to the tariffs? And three quarters of our participating companies said yeah, we've actually tried in the past or looking to source from other countries. And the follow-on question for those three quarters of the companies who have were you able to fully replace Chinese suppliers while maintaining quality and production capacity? Half of them said no and 40% said yes, but partially. So when you're looking at these another quote, talk about it took decades to set up our supply chain. You can't just do this overnight. We've looked at it, we've tried, we were always looking at how to run our business efficiently and, like I was saying before, there's a reason why things are there. So I think that kind of comes back to one of the top questions.
Speaker 1:One of the first questions we had in the survey was really about sentiment, right, and how would you characterize the business outlook for your company? And nearly half said negative. A third said positive. So certainly the turmoil and anxiety, if you will, during that very highly uncertain time. And I pause there because it is still an uncertain time in terms of what we'll go through. Is there a 90 day, xyz? So we're all still waiting with bated breath, I think.
Speaker 1:But that cert, that uh survey question for the audience's benefit while that was mid-march to late april or to early april, we have in a monthly business confidence index survey that we send to our members. So if you are a member of the Auto Care Association and you're not participating in the BCI ECI study, certainly let me know and we can add you to the distribution list, because that's a real that you know has has, uh, the sentiment has become a little bit more challenging or more negative due to everything that's been going on. So, yeah, so um, fascinating study and I'll uh, we'll be publishing some articles on findings of that as well as the repair shop study. But hopefully that that helps answer your question, olivia.
Speaker 2:Yes, absolutely it's. You know, you guys are uniquely positioned as touching all elements of our aftermarket as our representatives, all kinds of places including the entire supply chain right. Everywhere. So, it's always great to get your perspective on what you're seeing. Sometimes we can feel like ours can be narrow to what we're dealing with day to day and you guys can kind of zoom out and help us understand how everybody else is dealing with things.
Speaker 1:Well, thank you, I appreciate hearing that and you know NA Williams is a wide-reaching company, if you will, and we're certainly delighted that you and so many others in your organization are so involved and engaged with AutoCare.
Speaker 1:And one of the values and benefits of being at a trade association where you see so much industry cooperation, sharing of knowledge, and certainly it's very fulfilling to be at Auto Care Association where we can kind of be the voice of the industry, if you will and, excuse me, help our members do better business, form strong relationships and continue to serve our customer, the end customer, well, I think.
Speaker 1:One last topic I'd like to broach here for a few minutes before we call it a wrap, olivia, is EVs. Now, as you know, we do a forecast. It's a joint study with MEMA. We engage an external consultant and we have these forecasts that go out to 2045 in terms of adoption and penetration 45 in terms of adoption and penetration, and I look forward to updating this study with the group because I know they do a lot of scenario planning to say, you know, here's a bunch of conditions that will affect and boy, I don't know if anyone saw what has happened over the last few months. I would expect it to have been a very low percentage of chance happening. But, olivia, how are you thinking about EVs and consumer adoption, at least in the United States?
Speaker 2:Yeah, you know it's interesting. It's like any technology that we've seen, I think, personally, you know, obviously it impacts a larger system in the vehicle. But you but? If we compare what's on the road today in an ICE format to what was on the road 50 years ago, there's just so much more technology baked in, and be the people who have to try to estimate what's going on with EVs.
Speaker 2:I also think that it's a technology, it's established, it has use cases that make sense for consumers, especially in markets that have infrastructure that's set up to really support it, and there are people who like it. There are also people you know who have tried it maybe, and it didn't work for them. It doesn't mean that that technology isn't going to continue to evolve and the timeline of that, I think, obviously, is pretty dependent on that OE investment and we have seen some pullback there. But at the end of the day, I think it's something that we're going to continue to see more and more of, just because it is a new technology and there are benefits to certain consumers and, again, as different infrastructure rolls out, it becomes more accessible to more people. So we'll see. I don't, I I'm not going to guess.
Speaker 1:Yeah, yeah, it was kind of a vague, open-ended question, but your commentary is really helpful and some of the things that I think about are the following. One is, like you said, it has been adopted. To what degree varies by region, by socioeconomic and make model. So, from a catalog management standpoint, certainly more things that a store owner, a shop owner, a distributor, a manufacturer they're going to continue to pay attention to, and kind of the larger macroeconomic factors that will certainly influence adoption, charging infrastructure right, influence adoption, charging infrastructure right, policy, regulatory, what's required. Certainly, regulation drives a lot and if regulations and goals are reduced then I would expect to follow, at least in the United States, that the adoption would not go quite as quickly as under other administrations, if you will. So, yeah, I think from a technology standpoint, that said, if technology is superior for the consumer, the price is acceptable and the prices are on par with internal combustion engine vehicles, then yeah, it'll be interesting to see what plays out in the market.
Speaker 2:I remember I'm dating myself, but I remember in high school we had an environmental science class and they invited Toyota to come and show us the new Prius hybrid and you know I didn't even believe this like car of the future with, you know, regenerative braking, and you know it felt like sci-fi, and now you know that's not a big deal.
Speaker 1:so I also think standards are. It's almost a standard now, right yeah?
Speaker 2:yeah, exactly, and and so again, I think new things are always kind of novel at first, and you have early adopters that really go after it, and then you have people who are more hesitant. There's obviously concerns around range anxiety, depending on where you live, that charging infrastructure is really important. But again, it's a technology and at the end of the day, while certain systems are very different you know, the window switches are the same, the, you know, there's still a ton of components that go on to those vehicles that are very similar, if not the same, and then there are brand new categories that, as these vehicles are aging, are just part of our aftermarket pool, that now our technicians are learning how to repair and understanding how they can support that type of vehicle after the warranty period. So I think it's all opportunity for us.
Speaker 1:Yeah and I think it'll be interesting as new technologies evolve and are introduced let's just say ADAS and detectors and adaptive cruise control, lane departure systems. It's interesting to think about standardization what kind of what the industry standards are, how those are established I mean things that we're not going to be able to get into today but certainly, as technologies develop, very exciting to see them be applied and standardized as appropriate throughout the industry. So, olivia, it's been so great talking with you. I've learned so much and it's just so great to work with and collaborate with somebody who's on the same sort of data data-driven decisions page. So I love it.
Speaker 1:And just a couple of fun closing questions. One I don't know if I shared this one with you and Jackie before we in our prep call, but I just kind one with you and Jackie before we. Uh, um, in our in our prep call, but I just kind of thought of it now as we approach summer. Imagine you have tickets for you and your family to go to the summer Olympics. Like, what kind of events would you be interested in going to? I'm assuming you're into some sports, but you know if I can always change the question if we need to.
Speaker 2:Well, we, we are into sports. I think, honestly, I'd like to see anything at that level. I mean, that's what makes even watching the Olympics here at home so fun. I have a colleague who has a daughter who does some of the track and field events and she was actually in the Olympics. That was super fun, you know. So I think we'd watch anything. I will tell you, um, in terms of fun, fun sport plans, I guess this is this is not the olympics, but um, my family and I are going to go get to see the savannah bananas.
Speaker 1:Um baseball oh wow, is that like a minor league team?
Speaker 2:kind of like a minor league. Yes, but they they incorporate other elements of, almost like the globetrotters oh okay, so it's like a fun sort of entertaining yeah so it's not quite olympic sport, but certainly entertaining definitely, definitely.
Speaker 1:And I don't know, maybe do you and your family eat pizza at home? Oh yes. So what are?
Speaker 2:some of your favorite toppings? Oh, good question, we are. Surprisingly, my whole family likes mushrooms Mushrooms. I know that can be controversial, sure.
Speaker 1:All right, well, mushroom pizzas, entertaining, baseball games it sounds like there's going to be a lot of great things happening in your household over the summer. So, olivia, thanks again for joining us, and to all of our listeners, thank you for joining us for this edition of Indicators and we look forward to seeing you on the next episode. So we'll sign out here. Thanks for tuning in to another episode of Auto Care On Air. Make sure to subscribe to our podcast so that you never miss an episode. Don't forget to leave us a rating and review. It helps others discover our show. Auto Care On Air is proud to be a production of the Auto Care Association, dedicated to advancing the auto care industry and supporting professionals like you. To learn more about the association and its initiatives, visit autocareorg.
