Automotive Repair News Today

Braxton Critcher [00:00:05]:
You're listening to automotive repair news today. Thanks for doing so. My name is Braxton Critcher. Don't forget you can always find up to date news on the industry on any of your favorite social media platforms. Just search for automotive repair news today. Also, exclusive videos and full length interviews. Also posted video version on the Automotive Repair news Today YouTube channel. Today's interview is with Paul McCarthy and Ann Wilson from the Motor Equipment Manufacturers association.

Braxton Critcher [00:00:38]:
That's MEMA because the us government just granted $100 million to aftermarket suppliers to help them. This is actually for small and medium sized suppliers to help them stay up to date on current evolution. Parts. Big news, and Paul and Ann are here to talk about it. Here's our conversation.

Braxton Critcher [00:01:02]:
All right, so the story, the news is there's a lot of EV cars, parts hitting the market and have been for several years, but it's saturating the market and continuing to do so so much that part suppliers, you know, are a little bit behind and wanting to keep up with, with demand. So the news that I read about and wanted to hear some more from you guys is that the us government is hoping to supply some of the financials to help those suppliers keep up with the demand. So let's start with you and kind of give me your take on the news and what you know about what's happening.

Ann Wilson [00:01:50]:
Sure. Well, Brax, thanks for having me today. I think we want to go back a little bit and just sort of level set where we are. So in the last three and a half to almost four years, the federal government has instituted two really important programs for the supply base, which includes the aftermarket and OE suppliers. One is in the infrastructure bill, which is, I think, almost four years old. They provided money for battery recycling and other operations like that. So it was really trying to take a look at, you have all these battery electric vehicles out there, or even plug in hybrids or hybrids, and how do you recycle them? How do they have multiple uses? And then I think, as almost everyone knows, the Congress passed what's called the Inflation Reduction act, the Iraq, and it had lots of different pockets of funding for zero emission vehicles, including conversion grants, included tax incentives. So lots of different programs.

Ann Wilson [00:02:53]:
And last summer, Mima started working with the White House and raising our concerns that some of this funding wasn't really getting down to smaller suppliers. And this is particularly and immediately important for the OE business, OE automotive. So as we look at that trajectory that you were just mentioning on where we are going with EV's, how do smaller suppliers keep up with this transition, fund what they need to fund and move forward in it. And so what the White House did a couple weeks ago, after working with us for months, is really an important step. It is $100 million, $50 million of conversion grant money so suppliers can convert a facility to make more zero emission vehicles. So this isn't just battery electric. This could be a plug in hybrid. This could be.

Ann Wilson [00:03:50]:
It might even be something that just improves an ice engine, and it could be hydrogen fuel cells. So it could be a lot of different things is how we view the zero emission space. And then the other $50 million is to help with retooling. And they're going to do that in a little bit different way. They're going to provide federal expertise to smaller suppliers to come in and say, you know that you're in the ice business right now. Maybe you're not in the aftermarket at all, or maybe you only want to keep part of your facility going in the aftermarket. What is your future? What's your business for the future look like? And then what do you need to get there? So how do we need to retool your facility? What new equipment do you need? That kind of thing. And both of these are grants.

Ann Wilson [00:04:38]:
And that's important because most suppliers can't take on more loans. Now, another part of this whole program is also a workforce hub, and this is one where I think Paul can fill me in on some of the things that has to do specifically with aftermarket. But this is a workforce hub to train and retrain upskill workers to operate in the battery electric, zero emission world. And we're hoping that this can be both for manufacturing as well as for repair shops. And, Paul, you might want to just sort of add some of the things that you all have been working on in the hopes that we can move that forward.

Paul McCarthy [00:05:22]:
Yeah, well, I'm not sure how much of that we can talk about at this stage. Taking a step back at what Anne said, we'll see how much of this government assistance is really applicable can work for our aftermarket suppliers. Aftermarket isn't always the first thing that the government thinks of, but it is great to see their support for the supplier community, the manufacturer community here in North America. But one of the big things that I would say is, again, whether we get help from the government or not, is just how much the suppliers, the manufacturers, are doing to help prepare our industry for this new technology. And when you look at training in our industry, most of it ultimately comes back to the suppliers to the manufacturers. We're the ones who create the technology, who are developing the parts, and we're the ones who are supplying a lot of that training, whether it's directly to the technicians or whether it's to our channel partners. And there's been a huge effort to try to develop technology around some of this repair area and the new technology around EV's. And the ultimate goal that we have, and that we're committed to as the aftermarket suppliers association, is to ensure that people can trust the aftermarket.

Paul McCarthy [00:06:37]:
And whether that's technicians or whether it's our end customers, the consumers who come into the shop, that the aftermarket can repair every vehicle, whatever the technology. And by the way, when we think about Ev's and some of the repair needs, it's not just, you know, we hear from some shops who say, I don't want to mess with those battery packs or the motors, and maybe you make that choice. But if you look at EV's and what's breaking, it's not just those things. And EV's, by the way, are having more problems than conventional vehicles. If you look at the data, it's many of the things that we know and we already repair. So it's a lot of undercar things, suspension components, drive shafts, there's brakes, there's obviously a lot of tires. There's h vac systems. So we need to prepare the aftermarket to repair these vehicles and be comfortable around EV's.

Paul McCarthy [00:07:26]:
Even if you're not saying I'm an EV repair shop.

Braxton Critcher [00:07:33]:
I guess my question.

Braxton Critcher [00:07:34]:
Is just how different. You just talked about this, Paul, but just how different are the repairs for EV's versus an ice?

Paul McCarthy [00:07:46]:
Well, it's a great question because it depends on what you're looking to repair. The vast majority of repairs on EV's are going to be similar. They are undercar, they are tires, they are h vac, they are twelve volt batteries. There's all kinds of things that we know how to do, but there is a need for shops to get comfortable enough of the high voltage systems that they'll be working around so that they can safely deal with those vehicles. Because in some cases, you look at a braking system, well, there's regenerative braking, just as we have in the hybrids. You need to be comfortable around the higher voltage to be able to do it. By the way, there's not a lot in those things that are more than what you need with hybrids. And then there's the really high complexity stuff.

Paul McCarthy [00:08:28]:
There's working on the motors and some of the electrical systems, and that is a higher degree of complexity. And then there's the battery packs, which is the highest degree complexity. So there's no doubt that there's some very high complexity items that are going to take a different level of expertise and a different level of training. But there's an awful lot of very conventional type of repairs where we're going to have to just get comfortable with EV's and we can get comfortable with EV's and that we can just be able to do what consumers expect us to be able to do. So there's a lot of things that techs, with the appropriate training should absolutely be able to do on these vehicles. And longer term, we think all these systems can absolutely be repaired safely with appropriate training and tech. Again, that vision of the aftermarket, we can repair every vehicle, whatever the technology. And I'd also throw out, you know, there's so much focus on EV's.

Paul McCarthy [00:09:19]:
They've taken all the oxygen out of the room that it's worth remembering when you talk to our member executives, the growth story for the aftermarket the next five to ten years, it's adas, it's driver assistance systems. It's not necessarily EV's. And those are technologies we're seeing, again, a lot of effort being put in by the manufacturer, the supplier community to make sure our folks are trained and able to repair those technologies.

Braxton Critcher [00:09:44]:
Yeah, and I want to go back to you. So when you read a story like.

Braxton Critcher [00:09:49]:
This where there's $100 million going into.

Braxton Critcher [00:09:51]:
The market, my first question is, how long do you think it will take the market to feel comfortable where they're at, to where they can sustain and feel that like they're in a good place with this funding? And secondly, you know, $100 million is a lot of money, but it's also not in some ways. And so is that enough to help sort of boost the market to where it needs to be?

Ann Wilson [00:10:24]:
Well, one of the things that our members have been saying to the folks in Washington and the states is we're going to need consistent funding, and it's going to be over time. It's not going to be just sort of like a one and done kind of thing. You know, we can do the inflation Reduction act, we can do this and we're done. We're going to have a number of different transition points. And the Environmental Protection Agency regulations actually envision that we'll make some transitions and use more battery. We'll use more hybrid vehicles, plug in hybrid vehicles, perfect the ice vehicles, and then we'll have even more battery electric vehicles. So we're going to move that forward. I think there's a couple of things, though, to remember on the amount.

Ann Wilson [00:11:08]:
One of them is there is a deep hunger in the supply chain for this. So if you look at OE suppliers, I'm not talking about the aftermarket, necessarily the OE suppliers. What we've seen is the greatest fragility are in the smaller suppliers. They came out of COVID having gone up and down, up and down, about where ability to keep their facilities working, be able to sell their components to a parts manufacturer, sell it to a vehicle manufacturer. Then they had the chips crisis, where they may not have been purchasing chips. But obviously, if you don't, you know, cars aren't being manufactured, they're not selling their parts. So they came into 2024 in a very fragile position, and that fragility did not allow them to invest in this tooling in some other manufacturing facilities and also in training all of those things that are going to be necessary to really move this country. So, you know, is it enough? No, but is it a great step forward for this point in time? Absolutely.

Ann Wilson [00:12:15]:
I think there's a lot of questions overall across the country, and we're getting this over and over again of, you know, what's going to happen after the elections. It's difficult to see. I know our members want us to continue down a path where there is a future for battery, electric and other zero emission vehicles, maybe not quite in the same timeline that the Environmental Protection Agency has put out there for right now, but they don't want to take a step back where we only talk about internal combustion engines because this is a global industry and we're competing against Europe, we're competing against Japan, we're competing against China. And if we don't have a market for these zero emission vehicles, we're not going to make them here, we're not going to make the components here, and that's not going to be good for manufacturing. It's not going to be good for jobs, it's not going to be good for technology development. And ultimately, it's not going to be good for the aftermarket because the aftermarket is preparing to be that tail in there and providing components and repair and service components for both ice and battery electric at the same time. And that known sort of trajectory is really helpful for manufacturing, and we need to perfect that trajectory rather than turn our back on it.

Paul McCarthy [00:13:39]:
Yeah. And if I can key in on two things, Ann said, the first is just an important point that she made about making sure we have some actual domestic supply of these replacement EV's. There's been so much subsidy in China around electric vehicles and especially the electric vehicle components. So it's going to take us time to develop that supply base. It's nice to see some investment in having some of those capabilities domestically for the US. And another thing that Anne said, which I think is a great insight, is that this is a long term thing. You don't fix this with this little bit. And our evolution towards zero emissions is going to take a long time.

Paul McCarthy [00:14:20]:
Ice vehicles are going to be around a long time. This isn't this radical revolution that people talked about where all of a sudden the EV's come and we're all driving EV's tomorrow. This is a radical evolution. This is going to take place over decades, and it'll be fascinating to see how this develops as we talk about the lifecycle of EV's and the aftermarket opportunity. Because you look at ice vehicles, we got a 25 year lifespan of vehicles out there, and EV's aren't necessarily designed for that. So increasingly, our members are looking at this need where there may be a return of the rebuild, that at, you know, age twelve to 15, we're going to have to rebuild a lot of these major systems on EV's, whether it's control systems, inverters, the battery packs themselves, motors, and make sure that they have that next decade, 15 years of life, so we can have affordable mobility in the US. And we think that could be a very interesting aftermarket opportunity. As we talk about, Ann talked earlier about some of the recycling, the remanufacturing of these vehicles to make sure that EV's can give us what ice have given us, which is affordable mobility for all Americans, whatever your income level, across that 25 year lifespan of a vehicle.

Paul McCarthy [00:15:33]:
So we're going to see more interesting opportunities, more need for investment and innovation and real, you know, that great aftermarket creativity, entrepreneurship to deliver for consumers.

Ann Wilson [00:15:45]:
Yeah. You know, Braxton, I would just add one thing. I was on a panel on Friday in Lansing, and it was really trying to talk about manufacturing and justice and equity. And so I was sort of the odd person out. There was a lot of conversations about different ways to get to equity, a very, very important concept and a very important work. But I also said, you know, cost of a vehicle is now, what, 50, $55,000 way exceeds most Americans ability to even finance. And if that's the kind of investment we're talking about, it's going to be and even more than that, for a battery electric vehicle, we're going to absolutely need to make sure that that vehicle has value, has value for the initial owner, but has value for the second owner, or the initial owner decides to keep it 15 years. And that's going to take, it's going to take time.

Ann Wilson [00:16:42]:
I often say it's not like walking into an absolutely dark house and switching on lights all of a sudden, and then you can see everything. It's going to take time, but it's going to take. This investment's really important, but continued investment and the continued attention to this is going to be really important.

Braxton Critcher [00:17:00]:
So a lot of folks that are listening to this podcast right now have some sort of hand in, in automotive repair independence. Specifically, what do you think this story means for repair shops today and in the future?

Ann Wilson [00:17:16]:
Well, Paul, maybe I'll start and then you can do cleanup. So you can, you're more the voice of the on the street and I'm still inside the beltway. I think there's a couple things. If you're in the repair business and you haven't actively been involved, the right to repair efforts that are going on right now in Washington, across the country, you need to now because this is just another example of how much more complicated vehicles are going to get, how much more we're going to be dependent on telematics, over the air updates. So you need to be involved in that now. But I think the other part to look at this is, this is a great opportunity for repair shop and aftermarket to take a step back. Maybe not a full step back, maybe more like a half a step back and look at what is happening in the OE world as you decide where you're going to invest. So, you know, there, you know, we have this first generation of people who are buying battery electric vehicles and they are, you know, absolutely embracing those vehicles.

Ann Wilson [00:18:22]:
So is the next going to be both battery electric and plug in hybrids? Are we going to see a growing number of ice vehicles with other technologies associated lightweighting other things to make them more fuel efficient? So it gives them a chance, the aftermarket, a chance to sort of look at the trends that are happening and decide where you're going to put your next major step. And then the final thing is, I think we're going to have to work with federal government, state governments to make sure that the aftermarket, in turn, as adequately has the resources to be successful in this next journey. We need repair access, but we're going to need that investment, too.

Paul McCarthy [00:19:04]:
Yeah, well, those are great points, Anne. Again, I'd reinforce what you said. Right? To repair. This is at the heart of everything, to have the access, the repair information we need to repair vehicles as we get to this new technology. And then the broader thing, I think, is, I think this news says it's great that the government cares, that we have a strong aftermarket supplier community, but government's not going to solve this problem. What is going to solve the problem is the aftermarket and your manufacturers, the suppliers, investing in the training, making sure that we have those parts that we need for these vehicles. If somebody comes in with an ev, we can say, yes, we can get that part and the independent aftermarket can repair it. And again, that envision, which is absolutely true, our folks who develop the technology believe it, that the independent aftermarket can be trusted, that techs can be trusted to repair every vehicle, whatever the technology.

Paul McCarthy [00:19:59]:
We have the training, we have the parts, and we're going to get there as an industry and have that trust consumers.

Braxton Critcher [00:20:07]:
Anything else you would both like to add?

Paul McCarthy [00:20:13]:
Not from my side. No.

Ann Wilson [00:20:15]:
No, this is good. I'm glad we talked about the way this is all going to fold together, where we see it going.

Braxton Critcher [00:20:21]:
It's all connected.

Ann Wilson [00:20:22]:
Yep, it definitely is, Braxton. No, the two of us are happy to do this again at any time.

Paul McCarthy [00:20:27]:
Yeah, I did have one more, which we sometimes hear from folks, the shop community, is that they're scared of the new technology. And the answer is, we should not.

Ann Wilson [00:20:35]:
Be scared of the new technology.

Paul McCarthy [00:20:36]:
Independent aftermarket. Absolutely. Can you see it at apex with our boost, where we have demonstrations of people fixing adas, fixing Ev's? It's all a matter of training, and it's all a matter of giving the aftermarket the time to work its magic and have that entrepreneurship and get. And get the training and the knowledge and the parts in people's hands. But the supplier community is working like the devil to make that happen, you.

Ann Wilson [00:21:00]:
Know, building on what Paul said. So I had a call a couple weeks ago with its commercial vehicle supplier, but who was one of the first manufacturers in California? I mean, that's, you know, his, I think his great grandfather. You know, they started something that had to do with, you know, it wasn't even internal combustion engine. It wasn't vehicles, as we know, carriages.

Braxton Critcher [00:21:24]:
And then moved to light sales.

Ann Wilson [00:21:28]:
And if you look at that and you look how far, you know, and that's not that far away, you know, we're just moving our house. We're selling a house and moving it. I have. I have things in my house that were my great grandfather's, who was a blacksmith, you know, so that is not so remote from the day to day. And there is no doubt in my mind that our industry, the aftermarket industry, can do this. Sometimes we have to remember where we came from, because where we're going is going to be different. But we've got here, and that's, I think that same kind of real enthusiasm for the industry is going to carry us forward.

Paul McCarthy [00:22:06]:
And I know we're over here, but I'll just mention the Braxton, because what Anne said was so great, and we're celebrating as Mima, our 120 birthday. We just had it last month. So it's 120 years, the aftermarket, fixing these vehicles. And it gives us that perspective because every time there's been new technology, the answer was, oh, wow, we can't repair that. So you had it in the fifties when we had things like power steering and power brakes and automatic transmissions. They were like, well, those are hydraulic systems, those aren't mechanical systems. Mechanics can't repair that. Well, obviously we can.

Paul McCarthy [00:22:38]:
It's ridiculous now to say, oh, my gosh, could we work on a power braking system? You know, when electronics came in with the emissions control, the seventies and eighties, oh, my gosh, there's nothing for us to do under the hood. And the answer was, well, of course not. Doesn't turn into segment after segment whether it's electronic ignition. Oh, there's nothing we're going to do. That's a great market for us. Fuel injection, et cetera, electronic control units. So the aftermarket is proven again and again. We adapt, we advance and we learn, and that's exactly what we're seeing happen again with the new technologies.

Paul McCarthy [00:23:11]:
So a few years ago, people in the aftermarket were scared, were no longer scared. It's just about getting the training, getting our techs to have that knowledge. We absolutely, positively, again, can do that vision. The independent aftermarket can enable and be trusted to repair every vehicle, whatever the technology.

Braxton Critcher [00:23:30]:
I think you both plead cleanup on.

Paul McCarthy [00:23:31]:
That one and send it.

Ann Wilson [00:23:34]:
No, we're good. No, thanks, Braxton. We appreciate it. And I appreciate your interest, really, do.