September 27, 2024 • 15 mins
Can vehicle shortages actually benefit repair shops? Discover how the ongoing UAW strike impacting Ford, General Motors, and Stellantis is reshaping the auto care industry. This episode of Traction Control explores the unexpected silver linings of vehicle shortages, particularly the spike in demand for high-wear parts and maintenance services. We also tackle the effects of severe weather in the South and soaring prices for new and used cars, while shedding light on the expanding electric vehicle market fueled by government incentives and regulatory pushes across the globe. Don't miss insights on how the auto care industry can adapt to these changes by offering both ICE and EV-specific parts and services.
Are semiconductor shortages here to stay? Find out how these persistent supply chain disruptions are affecting both new vehicle production and the aftermarket. This episode unravels the complexities of the chip crisis and provides actionable strategies for businesses, from stocking up on critical components to pivoting towards service-based solutions. We also delve into broader economic factors like inflation and the looming East Coast port strike, advising businesses on how to stay resilient.
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
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Stacey Miller (00:13):
Welcome to Auto Care On Air, a candid podcast
for a curious industry.
I'm Stacey Miller, vicePresident of Communications at
the Auto Care Association, andthis is Traction Control, where
we chat about recent news fromthe global to the local level
and what it may mean to theindustry, featuring guests on
the front lines.
Let's roll.
(00:34):
Welcome back to another editionof Traction Control.
We are following a lot of newshappening globally, and there
are quite a few things on thetop of our mind today that we
want to share with the industrywhat's happening and what it
could mean to your business.
So the top story on everyone'sradar today is the UAW, the
United Auto Workers Strike,which is continuing to grip the
(00:57):
US automotive industry.
Workers are striking at keyproduction plans of the big
three automakers, so that's Ford, general Motors and Stellantis,
and with each day that passesby, production delays are
growing, unfortunately, and thepressure on supply chains is
intensifying.
Just these black swan eventsfor the supply chain just
(01:17):
continue, and we're going totalk a little bit more about
that.
So what does this mean for theautomotive aftermarket or the
auto care industry?
Obviously, vehicle shortagesare top of mind, and the strikes
are already reducing theavailability of new vehicles on
the road.
That's not a bad thing for theauto care industry and, in
(01:38):
response, drivers are likely tohold on to their older vehicles
longer, so that's moreopportunities for repair and
maintenance in the industry.
So do prepare for an uptick inbusiness, especially when it
comes to parts like brakes,tires, batteries and other high
wear items.
Let's not forget there's alsosome severe weather events that
(02:01):
are happening, sadly, in theSouth, and so there are
opportunities there for folkswho are preparing their vehicles
, who may be road tripping outof those areas.
Help keep them on the roadsafer longer and to weather that
storm, so to speak.
As that strike drags on, pricesare going to continue to go up
as well.
Right, we saw this during COVID.
(02:23):
We saw this when there wereother impacts to ports and
canals.
So rising costs for vehiclescould trickle down to
aftermarket parts, especiallythose sourced directly from the
automakers.
An increase in prices for bothnew and used vehicles, which
could again push drivers tospend more on maintaining and
(02:43):
upgrading their current cars.
And then, obviously, thebiggest thing it means for our
industry are the longer thesestrikes last, the more it's
going to impact our supply chainof key components like
semiconductors and specialtyparts.
So we know that manyaftermarket businesses rely on
these same supply chains.
(03:04):
So it's critical to keep aclose watch on your inventory
and stay ahead of thosepotential shortages.
Right, overstock those parts.
So, while this strike ispresenting challenges, it also
presents opportunities for thosewho are prepared.
So if you're in the USautomotive aftermarket.
Now is the time to communicatewith your suppliers, prepare for
(03:25):
that increased demand andreassure your customers that you
can meet their repair andmaintenance needs despite those
disruptions.
Next up, we have somesignificant updates on the
electric vehicle market, whichcontinues to expand despite some
setbacks.
So there are some recentdevelopments in the US, europe
(03:46):
and China that are making wavesas governments are kind of
doubling down on their plans tophase out internal combustion
engine vehicles.
Now earlier on you heard usreport on traction control and
we interviewed the president ofthe IER, tom Pyle.
There was a study that came outthat said that nearly 50% of EV
(04:07):
owners are planning to returnback to ICE vehicles, and we're
starting to learn that theinfrastructure demands, the
range, anxiety and the cost areall becoming barriers to
purchasing those electricvehicles.
So there are some newgovernment incentives and
regulations to try to help keepthe adoption of electric
(04:27):
vehicles on course.
So over the past week or so,the US government announced
further tax incentives for EVbuyers and the EU introduced
stricter emissions targets forthe automakers as well.
China, which we know as theworld's largest EV market, is
also rolling out subsidies toboost EV sales and charging
(04:49):
infrastructure.
Now, in response to theseregulatory pushes.
Nearly every major automaker isannouncing new EV models from
compact cars, there's someluxury electric SUVs that are
being introduced and some legacyautomakers are ramping up
production capacity for EVs inan effort to stay competitive in
(05:10):
a rapidly shifting market.
So it's a really big game offlip or flop where one day
they're all in, the next daywe're going to scale back
production and there's some newincentives, so they're still
pushing.
So we're keeping our eye onthis.
What does it mean for the autocare industry as consumers, as
some of them are transitioningto EVs?
(05:32):
Traditional parts and servicesfor internal combustion vehicles
.
We're going to need to monitorthat.
Oil changes, exhaust systemrepairs, engine maintenance
those are all reallycharacteristic of those ICE
vehicles.
We're still going to need those.
Will they decline a ton?
We're going to keep our eye onthat.
We know that EVs have their ownset of needs, from battery
(05:56):
replacements and softwareupgrades, suspension work and
tire replacements and it's a lotfor businesses to manage from
the manufacturing side, from theinstallation side and from the
part side.
So the trick for auto careindustry businesses is really
going to be adapting, watchingthe changes, offering EV
(06:18):
specific parts and serviceswhere necessary, but don't put
all your eggs in one basket.
As we continue to monitor whatthe penetration is going to be
of these over the next couple ofyears, we're going to be
updating our forecasts at Apex2020-24 and releasing a new
report with those forecasts.
(06:39):
So stay tuned for that, and ifyou're visiting us at Apex 2024,
you're going to be the firstones to get access to that
report.
Now, as EV adoption continues tobe pushed, what is one of the
most lucrative areas for theaftermarket and perhaps battery
maintenance and refurbishment?
(07:01):
Right, we know that thosebatteries are large, they're
very expensive and that's goingto be a key component to keep
those batteries fresh on theroad, accessible and with a long
range over time.
Right, lots of studies that aretalking about the range anxiety
that goes on with them, how thehot weather affects them, how
(07:23):
the cold weather affects them,and again, we're experiencing
more extreme weather events thatcould impact that.
So how can we optimize thebatteries in these?
How can we help withmaintenance bringing them to the
customer, for example, andmaking them sustainable?
Because that's also a keyconcern with EVs is how are we
making the management of thosebatteries, the creation and the
(07:44):
disposal of them, moresustainable for the environment
and also in costs because theyare quite expensive.
So that shift to EVs itcontinues to be this wild card
for us.
It's shifting in a bunch ofdifferent ways and to stay
relevant we have to make surethat we're continuing to monitor
(08:04):
that.
Position your business as ago-to for both traditional and
EV specific services and let'skeep our eye on that hybrid and
hydrogen as well.
Mark Bogdanski (08:16):
This is the Aftermarket Homecoming and
experiences.
This truly is the aftermarket'shomecoming and you do not want
(08:56):
to miss it.
Register now at apexshowcom andI hope to see you there.
Stacey Miller (09:02):
Now let's talk about an issue that doesn't seem
to go away, and it issemiconductor shortages.
The automotive industry hasbeen dealing with chip shortages
for the past few years.
It's nothing new and it lookslike we are entering another
wave of shortages, driven by acombination of supply chain
disruptions and rising demandfor advanced electronics in
(09:24):
vehicles.
So just this week, severalautomakers warned that their
production schedules might bedisrupted again due to a lack of
chips.
This issue affects not just newvehicle production but also the
aftermarket.
I mean, the first time thishappened, I remember stories of
cars that were sitting on lotsand they looked brand and shiny
(09:47):
and new and ready to be sold,but lo and behold, they were
missing chips to be sold.
But lo and behold, they weremissing chips.
So why is this happening?
No-transcript.
It's packed with electronicsthat rely on those
semiconductors.
So your infotainment system,your ADOS features, those all
(10:09):
require chips and semiconductors, and the chips are also crucial
for products like thediagnostic tools and the
performance upgrades that wehave to our car.
So there may be some potentialdelays in sourcing replacement
parts that rely onsemiconductors, right, think
about ECUs, electronic controlunits, sensors or other key
(10:32):
components.
So again, how do we prepare.
How do we respond to thisongoing shortage?
Stock up on critical componentswhen you can, as soon as you
can, if your business relies onparts that contain those
semiconductors, work with yoursuppliers now to ensure you have
enough inventory to meet demand.
And if parts become scarce orprices are spiking due to the
(10:56):
chip shortage which, if youfollow history, what's happened
the past couple of years, wecould say that they will in the
past couple of years, we couldsay that they will.
If you're able to work on laboror service-based solutions
diagnostic repairs, softwareupgrades and you can focus on
those in your business, that canhelp mitigate the impact.
So those semiconductorshortages may continue to be a
(11:19):
headache for the auto careindustry, but they also present
an opportunity to offer somealternative solutions when parts
are hard to come by.
Finally, we can't ignore theglobal economic picture.
Inflation remains a key issueand it's affecting everything
from raw materials and energycosts to consumer spending
(11:42):
habits.
I certainly am spending less onthings, as I continue to keep
my eye on inflation and theelection and with that, driving
up the costs of goods andservices.
Vehicle prices are still high.
Consumers are becoming moreprice sensitive, especially in
an uncertain election seasonthat's coming up, so this can be
(12:02):
a bit of a double edged swordfor the auto care industry.
So, on one hand, consumers maydelay purchasing a new vehicle
and instead invest inmaintaining or upgrading their
current one, which is great.
That increases demand for partsand services Again great news
for our recession resilientaftermarket.
However, on the other hand,they may be looking for more
(12:24):
affordable options, meaningbusinesses in the aftermarket.
However, on the other hand,they may be looking for more
affordable options, meaningbusinesses in the aftermarket
may need to find ways to offercost effective solutions without
sacrificing quality.
Now, inflation also.
It affects our operating costs.
So the cost of doing businessfrom labor to materials, we
understand is going up.
(12:44):
So to maintain profitability,it's important to evaluate your
pricing strategies, youroperational efficiencies.
Many businesses are alreadydoing this, but if you haven't
taken a closer look at this, forthe long term, this is going to
be something that we advise ourcompanies to do.
So inflation is going tocontinue to play a key role in
how drivers spend their money onvehicles and vehicle
(13:07):
maintenance.
So if you can offer flexible,budget-friendly solutions while
managing your own rising costs,you're going to be best
positioned to weather this storm.
Now the last story that we'remonitoring that we want to
advise you on is the East Coastport strike that is looming for
the first time since 1977.
(13:29):
So thousands of dock workers atevery major East and Gulf Coast
port are threatening to strikeearly next week, which would
close some trade gateways thathandle about half of all goods
shipped in containers in and outof the US.
So negotiations have beenstalled for months.
Apparently Both sides aretrying to bargain.
(13:53):
We don't know if they'rewilling to bargain, but we're
monitoring this situation reallyclosely.
And that union represents about45,000 dock workers and 36 US
ports.
So the contract expires atmidnight on September 30th and
(14:13):
we're going to provide an updateon that as that news breaks.
So we're going to be followingthat very closely because
obviously that is a lot of goodsand services that could cause
significant disruptions.
One analysis estimated thatthat could cost the US economy
as much as 5 billion a day andwe know that many of our
(14:33):
vehicles and our parts arecoming in through those ports.
Those ports are extremelyimportant.
So how to prepare I meanmitigating the potential impact
of a strike by bringing productsin earlier or shifting products
to the West Coast is somethingthat we've heard the National
Retail Federation do.
But keep your eye on thosedisruptions.
(14:57):
Talk to your suppliers andwe'll keep you abreast of the
news as it breaks.
So thank you for joining usagain for another episode of
Traction Control.
Make sure you're following AutoCare Association on social
media, where we'll also keep youas updated as possible on the
news as it breaks.
Thanks for tuning in to anotherepisode of Auto Care On Air.
(15:18):
Make sure to subscribe to ourpodcast so that you never miss
an episode, and don't forget toleave us a rating and review
that helps others discover ourcontent.
Auto Care On Air is aproduction of the Auto Care
Association, dedicated toadvancing the auto care industry
and supporting professionalslike you.
To learn more about theassociation and its initiatives,
visit autocareorg.
Welcome to Auto Care On Air, a candid podcast
for a curious industry.
I'm Stacey Miller, vicePresident of Communications at
the Auto Care Association, andthis is Traction Control, where
we chat about recent news fromthe global to the local level
and what it may mean to theindustry, featuring guests on
the front lines.
Let's roll.
(00:34):
Welcome back to another editionof Traction Control.
We are following a lot of newshappening globally, and there
are quite a few things on thetop of our mind today that we
want to share with the industrywhat's happening and what it
could mean to your business.
So the top story on everyone'sradar today is the UAW, the
United Auto Workers Strike,which is continuing to grip the
(00:57):
US automotive industry.
Workers are striking at keyproduction plans of the big
three automakers, so that's Ford, general Motors and Stellantis,
and with each day that passesby, production delays are
growing, unfortunately, and thepressure on supply chains is
intensifying.
Just these black swan eventsfor the supply chain just
(01:17):
continue, and we're going totalk a little bit more about
that.
So what does this mean for theautomotive aftermarket or the
auto care industry?
Obviously, vehicle shortagesare top of mind, and the strikes
are already reducing theavailability of new vehicles on
the road.
That's not a bad thing for theauto care industry and, in
(01:38):
response, drivers are likely tohold on to their older vehicles
longer, so that's moreopportunities for repair and
maintenance in the industry.
So do prepare for an uptick inbusiness, especially when it
comes to parts like brakes,tires, batteries and other high
wear items.
Let's not forget there's alsosome severe weather events that
(02:01):
are happening, sadly, in theSouth, and so there are
opportunities there for folkswho are preparing their vehicles
, who may be road tripping outof those areas.
Help keep them on the roadsafer longer and to weather that
storm, so to speak.
As that strike drags on, pricesare going to continue to go up
as well.
Right, we saw this during COVID.
(02:23):
We saw this when there wereother impacts to ports and
canals.
So rising costs for vehiclescould trickle down to
aftermarket parts, especiallythose sourced directly from the
automakers.
An increase in prices for bothnew and used vehicles, which
could again push drivers tospend more on maintaining and
(02:43):
upgrading their current cars.
And then, obviously, thebiggest thing it means for our
industry are the longer thesestrikes last, the more it's
going to impact our supply chainof key components like
semiconductors and specialtyparts.
So we know that manyaftermarket businesses rely on
these same supply chains.
(03:04):
So it's critical to keep aclose watch on your inventory
and stay ahead of thosepotential shortages.
Right, overstock those parts.
So, while this strike ispresenting challenges, it also
presents opportunities for thosewho are prepared.
So if you're in the USautomotive aftermarket.
Now is the time to communicatewith your suppliers, prepare for
(03:25):
that increased demand andreassure your customers that you
can meet their repair andmaintenance needs despite those
disruptions.
Next up, we have somesignificant updates on the
electric vehicle market, whichcontinues to expand despite some
setbacks.
So there are some recentdevelopments in the US, europe
(03:46):
and China that are making wavesas governments are kind of
doubling down on their plans tophase out internal combustion
engine vehicles.
Now earlier on you heard usreport on traction control and
we interviewed the president ofthe IER, tom Pyle.
There was a study that came outthat said that nearly 50% of EV
(04:07):
owners are planning to returnback to ICE vehicles, and we're
starting to learn that theinfrastructure demands, the
range, anxiety and the cost areall becoming barriers to
purchasing those electricvehicles.
So there are some newgovernment incentives and
regulations to try to help keepthe adoption of electric
(04:27):
vehicles on course.
So over the past week or so,the US government announced
further tax incentives for EVbuyers and the EU introduced
stricter emissions targets forthe automakers as well.
China, which we know as theworld's largest EV market, is
also rolling out subsidies toboost EV sales and charging
(04:49):
infrastructure.
Now, in response to theseregulatory pushes.
Nearly every major automaker isannouncing new EV models from
compact cars, there's someluxury electric SUVs that are
being introduced and some legacyautomakers are ramping up
production capacity for EVs inan effort to stay competitive in
(05:10):
a rapidly shifting market.
So it's a really big game offlip or flop where one day
they're all in, the next daywe're going to scale back
production and there's some newincentives, so they're still
pushing.
So we're keeping our eye onthis.
What does it mean for the autocare industry as consumers, as
some of them are transitioningto EVs?
(05:32):
Traditional parts and servicesfor internal combustion vehicles
.
We're going to need to monitorthat.
Oil changes, exhaust systemrepairs, engine maintenance
those are all reallycharacteristic of those ICE
vehicles.
We're still going to need those.
Will they decline a ton?
We're going to keep our eye onthat.
We know that EVs have their ownset of needs, from battery
(05:56):
replacements and softwareupgrades, suspension work and
tire replacements and it's a lotfor businesses to manage from
the manufacturing side, from theinstallation side and from the
part side.
So the trick for auto careindustry businesses is really
going to be adapting, watchingthe changes, offering EV
(06:18):
specific parts and serviceswhere necessary, but don't put
all your eggs in one basket.
As we continue to monitor whatthe penetration is going to be
of these over the next couple ofyears, we're going to be
updating our forecasts at Apex2020-24 and releasing a new
report with those forecasts.
(06:39):
So stay tuned for that, and ifyou're visiting us at Apex 2024,
you're going to be the firstones to get access to that
report.
Now, as EV adoption continues tobe pushed, what is one of the
most lucrative areas for theaftermarket and perhaps battery
maintenance and refurbishment?
(07:01):
Right, we know that thosebatteries are large, they're
very expensive and that's goingto be a key component to keep
those batteries fresh on theroad, accessible and with a long
range over time.
Right, lots of studies that aretalking about the range anxiety
that goes on with them, how thehot weather affects them, how
(07:23):
the cold weather affects them,and again, we're experiencing
more extreme weather events thatcould impact that.
So how can we optimize thebatteries in these?
How can we help withmaintenance bringing them to the
customer, for example, andmaking them sustainable?
Because that's also a keyconcern with EVs is how are we
making the management of thosebatteries, the creation and the
(07:44):
disposal of them, moresustainable for the environment
and also in costs because theyare quite expensive.
So that shift to EVs itcontinues to be this wild card
for us.
It's shifting in a bunch ofdifferent ways and to stay
relevant we have to make surethat we're continuing to monitor
(08:04):
that.
Position your business as ago-to for both traditional and
EV specific services and let'skeep our eye on that hybrid and
hydrogen as well.
Mark Bogdanski (08:16):
This is the Aftermarket Homecoming and
experiences.
This truly is the aftermarket'shomecoming and you do not want
(08:56):
to miss it.
Register now at apexshowcom andI hope to see you there.
Stacey Miller (09:02):
Now let's talk about an issue that doesn't seem
to go away, and it issemiconductor shortages.
The automotive industry hasbeen dealing with chip shortages
for the past few years.
It's nothing new and it lookslike we are entering another
wave of shortages, driven by acombination of supply chain
disruptions and rising demandfor advanced electronics in
(09:24):
vehicles.
So just this week, severalautomakers warned that their
production schedules might bedisrupted again due to a lack of
chips.
This issue affects not just newvehicle production but also the
aftermarket.
I mean, the first time thishappened, I remember stories of
cars that were sitting on lotsand they looked brand and shiny
(09:47):
and new and ready to be sold,but lo and behold, they were
missing chips to be sold.
But lo and behold, they weremissing chips.
So why is this happening?
No-transcript.
It's packed with electronicsthat rely on those
semiconductors.
So your infotainment system,your ADOS features, those all
(10:09):
require chips and semiconductors, and the chips are also crucial
for products like thediagnostic tools and the
performance upgrades that wehave to our car.
So there may be some potentialdelays in sourcing replacement
parts that rely onsemiconductors, right, think
about ECUs, electronic controlunits, sensors or other key
(10:32):
components.
So again, how do we prepare.
How do we respond to thisongoing shortage?
Stock up on critical componentswhen you can, as soon as you
can, if your business relies onparts that contain those
semiconductors, work with yoursuppliers now to ensure you have
enough inventory to meet demand.
And if parts become scarce orprices are spiking due to the
(10:56):
chip shortage which, if youfollow history, what's happened
the past couple of years, wecould say that they will in the
past couple of years, we couldsay that they will.
If you're able to work on laboror service-based solutions
diagnostic repairs, softwareupgrades and you can focus on
those in your business, that canhelp mitigate the impact.
So those semiconductorshortages may continue to be a
(11:19):
headache for the auto careindustry, but they also present
an opportunity to offer somealternative solutions when parts
are hard to come by.
Finally, we can't ignore theglobal economic picture.
Inflation remains a key issueand it's affecting everything
from raw materials and energycosts to consumer spending
(11:42):
habits.
I certainly am spending less onthings, as I continue to keep
my eye on inflation and theelection and with that, driving
up the costs of goods andservices.
Vehicle prices are still high.
Consumers are becoming moreprice sensitive, especially in
an uncertain election seasonthat's coming up, so this can be
(12:02):
a bit of a double edged swordfor the auto care industry.
So, on one hand, consumers maydelay purchasing a new vehicle
and instead invest inmaintaining or upgrading their
current one, which is great.
That increases demand for partsand services Again great news
for our recession resilientaftermarket.
However, on the other hand,they may be looking for more
(12:24):
affordable options, meaningbusinesses in the aftermarket.
However, on the other hand,they may be looking for more
affordable options, meaningbusinesses in the aftermarket
may need to find ways to offercost effective solutions without
sacrificing quality.
Now, inflation also.
It affects our operating costs.
So the cost of doing businessfrom labor to materials, we
understand is going up.
(12:44):
So to maintain profitability,it's important to evaluate your
pricing strategies, youroperational efficiencies.
Many businesses are alreadydoing this, but if you haven't
taken a closer look at this, forthe long term, this is going to
be something that we advise ourcompanies to do.
So inflation is going tocontinue to play a key role in
how drivers spend their money onvehicles and vehicle
(13:07):
maintenance.
So if you can offer flexible,budget-friendly solutions while
managing your own rising costs,you're going to be best
positioned to weather this storm.
Now the last story that we'remonitoring that we want to
advise you on is the East Coastport strike that is looming for
the first time since 1977.
(13:29):
So thousands of dock workers atevery major East and Gulf Coast
port are threatening to strikeearly next week, which would
close some trade gateways thathandle about half of all goods
shipped in containers in and outof the US.
So negotiations have beenstalled for months.
Apparently Both sides aretrying to bargain.
(13:53):
We don't know if they'rewilling to bargain, but we're
monitoring this situation reallyclosely.
And that union represents about45,000 dock workers and 36 US
ports.
So the contract expires atmidnight on September 30th and
(14:13):
we're going to provide an updateon that as that news breaks.
So we're going to be followingthat very closely because
obviously that is a lot of goodsand services that could cause
significant disruptions.
One analysis estimated thatthat could cost the US economy
as much as 5 billion a day andwe know that many of our
(14:33):
vehicles and our parts arecoming in through those ports.
Those ports are extremelyimportant.
So how to prepare I meanmitigating the potential impact
of a strike by bringing productsin earlier or shifting products
to the West Coast is somethingthat we've heard the National
Retail Federation do.
But keep your eye on thosedisruptions.
(14:57):
Talk to your suppliers andwe'll keep you abreast of the
news as it breaks.
So thank you for joining usagain for another episode of
Traction Control.
Make sure you're following AutoCare Association on social
media, where we'll also keep youas updated as possible on the
news as it breaks.
Thanks for tuning in to anotherepisode of Auto Care On Air.
(15:18):
Make sure to subscribe to ourpodcast so that you never miss
an episode, and don't forget toleave us a rating and review
that helps others discover ourcontent.
Auto Care On Air is aproduction of the Auto Care
Association, dedicated toadvancing the auto care industry
and supporting professionalslike you.
To learn more about theassociation and its initiatives,
visit autocareorg.
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