Automotive Repair News Today

Braxton Critcher [00:00:05]:
Michael Smith from the Institute of Automotive Business Excellence. What's up, Michael?

Michael Smith [00:00:13]:
There's a lot up in our industry, I'll tell you that.

Braxton Critcher [00:00:16]:
This is the first time you and I have met.

Michael Smith [00:00:18]:
Absolutely.

Braxton Critcher [00:00:19]:
It's pretty cool.

Michael Smith [00:00:20]:
It's a pleasure. It's a pleasure to be here. Heard a lot about you guys and it's nice to make this connection.

Braxton Critcher [00:00:25]:
Yeah. And I learn every day more about what you guys do at the Institute. So I'm excited to pick your brain. Of course, I've talked plenty of times with Cecil and Kent, but this is the. The other big head in the.

Michael Smith [00:00:40]:
That's one way to put it.

Braxton Critcher [00:00:45]:
So let me tell you a little about me, Michael. So, you know, a lot of the listeners will know this, but I used to work for radio stations and for many years did, you know, on air work and video production and podcast production. And finally Lucas pried me away and said, you know, I could really use you. And so that was earlier this year, in 2024, March, late February. And so I came from outside the industry and I understand you did, too. So that's unique and that's cool connection there. But I'm learning a lot about the industry and you said something interesting that I agree with. I think Cecil Bullard will forget more about this industry than you and I will ever learn about it.

Michael Smith [00:01:30]:
I believe is true, too.

Braxton Critcher [00:01:31]:
Yeah. So I have learned a lot. But my goodness, the one thing that I've learned the most is that the industry is changing. And I think it's changing for the good, for the better of the industry, for all involved. But what's really interesting that I'm trying to get a grip on is just how the industry is changing, but also how the change may change with the upcoming administration start in January. So trying to read into that some. And I'm assuming you've done some of that research as well. And so I'd love to kind of pick your brain about your perspective on how things may change even more or change and change again.

Michael Smith [00:02:14]:
Oh, it's. And it's going to change and change on top of change. And I know we've entered a dynamic phase in my personal opinion, just by way of background. I came from the big consulting firms and I have played with clients in probably 50, 60 different industry verticals before I fell into hours. And I just, I met a player here who introduced me to our business, the business that all your listeners are in, and. And I fell in love with it. And I'm saying all that to give you the reason we're the. One of the last great.

Michael Smith [00:02:47]:
And we hate to say this about ourselves, but here's how the outside world looks at us. We're one of the last great mom and pop industries on the ground. And mom and pop simply means there's lots of small business entrepreneurs, a lot of single individuals, married couples, family businesses that have been in this industry, which.

Braxton Critcher [00:03:05]:
I don't think is a bad thing. I mean, maybe some people see it as that, but I think it's. It's. That's what makes this industry so good is because.

Michael Smith [00:03:15]:
Absolutely. Absolutely. And when. And part of what occurred to me as I showed up, I guess, going on eight years ago with that first client in this industry was looking at it and realizing that what's in our future and what we're starting to see play out now. I'm going to speak into the change that's coming, if you will, is the fact that we're not going to be a mom and pop industry a decade from now. We're not going to be at five years from now. We're in the middle of a. I don't think so.

Michael Smith [00:03:39]:
We're in the middle of a transition. And part of it, you know, we held fast in terms of. I'll say this about our industry. Fixing cars gets harder and harder every day. And you know, if you thought you could fix your carburetor and your garage in the 50s, you could. If you think you can take the computers apart as an amateur and figure out what's wrong. Just even programming a window switch now. Right.

Michael Smith [00:04:00]:
It's just so complicated.

Braxton Critcher [00:04:01]:
Listen, there's a lot of technicians that don't know how to do that yet.

Michael Smith [00:04:04]:
Well, constant training and big expense and all that. And the tools and the diagnostic tools. Oh my God. So the, so the backyard mechanic thing is, you know, has sort of faded away a bit and people still dally, but we know it's way over our head in most cases. And all that having been said, this mom and pop industry is there've been a lot of mom and pops hanging on, waiting to see what's going to happen. And what I mean by that is we think that there's at least 2/3 of the owners in our industry that are baby boomers. That puts them this year at age 60 to age 74. So 2/3 of our owners are over 60, if you will, and they've been hanging on.

Michael Smith [00:04:43]:
Cause in 2007 and 8, their investment portfolios tanked when the economy shrunk. We had Covid rolled up and the Fed said, hey, Here's a bunch of cash. Stuff it in your bank in case you need it. Cause you're an essential business. So they were like, well, maybe I'll stick around yet a little bit longer. A lot of these guys would have timed out as baby boomers long ago, but it's all backed up. Yeah, go ahead.

Braxton Critcher [00:05:04]:
Cecil and I have talked about that a little bit and you know, I don't think that podcast has come out yet, but hopefully soon it will. But I think that the owners that are of the older generations that are about to phase out, a lot of them do things correctly. They're, they're trying to improve and upgrade and stay informed with what's happening in the industry. But I think a lot of them aren't because they understand that they're about out of here and they're not upgrading, they're not staying up to date on training and equipment. And so that's actually hindering the industry. And I'm with Cecil that whenever a lot of those folks do phase out, that's the next phase of the industry that will continue to improve. Because it's kind of like waiting phase. That's.

Braxton Critcher [00:05:54]:
We're kind of, I think that's waiting.

Michael Smith [00:05:56]:
Well, and this. And you, you know, Cecil knows we talk about this. You guys talked about it. This stuff gets more and more expensive every year. The complexity of the vehic vehicles, the diagnostic expenses, the cost of the software, you know, if you're a general repair shop and pretty much whatever drives in your driveway you're supposed to be able to figure out and fix that is getting to be a more and more expensive proposition. So, I mean, you know, you and I were talking there. There are trends that we're watching, and one of them is that the old general repair, fix it all, be all things to all people model is almost dead. It needs to be, if it's not strategically, because this, this isn't going to sustain over time.

Michael Smith [00:06:34]:
And unique competitive advantage, something I talk with clients about all the time. And it's an interesting conversation, right? I say, so what's unique? And they say, well, we have a repair. We have warranties attached to our parts companies. And I said, anybody else in the room have that? And all the owners put their hands up, okay, guys, that's not unique. Take it off the list. And it's just that issue that we're going to be specializing, we're going to be changing the older guys that are holding on and have been holding on. The old way of selling it traditionally, of course, was to sell it to the next key employee in line. You'd hold onto the real estate.

Michael Smith [00:07:06]:
If you owned it, they'd rent it from you. Your family held that as cash flow for your retirement. When you died, they'd sell the property to the new owner. And so then that person went on for 10, 15, 20 years owning the business and the property. And so that was the transition, that was the succession plan. And it was all over our industry and it happened all the time. Now there are professional private equity firms that are out there wanting to invest. There are professional consolidators that have been built by the private equity firms that are coming in to rate us basically and cherry pick some of the things that they can, I guess in some way, I'll say change.

Michael Smith [00:07:41]:
I say if it's not done well, it takes advantage of us as owners. There are also private equity investors that are rising up from the ranks and saying, you know what, I'm going to consolidate and I'm going to invest my own money and I'm going to grow this thing to a point where then maybe I'll find another partner at some point. So all that having been said is simply to say it's not the old mom and pop succession plan anymore next year.

Braxton Critcher [00:08:03]:
And do you feel like that's, that's a good thing? What's your perspective on that, that shift?

Michael Smith [00:08:09]:
Yeah, my perspective on that. I hear this all the time. Well, I don't want to play the corporate game. I don't want to be swept up into the investment community. And my answer to that is, then don't. It's fine. But, but here's what's going to happen when the industry collapses, when the mom and pops leave. And a lot of them, I hate to say it, but the investment world recognizes the fact that a good 8 out of 10, 9 out of 10 mom and pop shops have used it as a cash machine over time.

Michael Smith [00:08:37]:
And there's nothing of real value for an investment firm to buy. It's terrible to say that, but it's a statistical perspective, right? When the real investors look in, they're like, nope, most of these companies have not, they've not. The owners have not built value into them. So they're not worth buying. And what that means is if there isn't a successor in line to sell it to, that you can essentially sell a no value company or a low value value company to the next, you know, the next kid behind you, if you will, on the pipeline. You've either got to sell it to a local competitor and again, Maybe get less than it's worth in the market, or close the front door. And that's the part that we see. I make this presentation, people come back to me.

Michael Smith [00:09:19]:
A couple months later, I had no idea. I went home, I started driving by a bunch of competitors. It says closed, they're not open anymore. They just locked the front door and walked away. And so I say that here on this podcast, too. You know, drive around, take a look at the people that you used to compete with and, and the ones that are going to go out of business are the ones that are a little smaller, had a little more difficulty, weren't quite so profitable, didn't have multiple locations, that kind of a thing. But our industry is collapsing. And if we don't think it's there, we are.

Michael Smith [00:09:48]:
It's just a way of answering your question. Hey, we don't have to like this, but it's going to happen. It's happened in, like I said, you know, two score, three score, other industries before us. Going to happen here, too.

Braxton Critcher [00:09:59]:
Yeah.

Michael Smith [00:09:59]:
And so you. Yeah, go ahead.

Braxton Critcher [00:10:01]:
I will say. Can you turn your mic down just a touch? Is that possible on your end?

Michael Smith [00:10:06]:
I'll do my best. I don't know quite how to do that, but I'll give it a try here.

Braxton Critcher [00:10:10]:
There might be a knob somewhere.

Michael Smith [00:10:12]:
Yeah, what I can do too, is not talk quite so loud.

Braxton Critcher [00:10:16]:
No, no, I think it's fine. I think I want you to talk like you would.

Michael Smith [00:10:20]:
See if this. Yeah. See if that's any better. That's all.

Braxton Critcher [00:10:22]:
I know it looks like on my end that you're. It sounds fine to me, but it looks like you're a little hot, but okay, no worries. Okay. Now, so you used a word there, the word collapse. And you know, when I talk to people around the industry, including Cecil, they feel like the industry's health is in a really good place.

Michael Smith [00:10:42]:
Oh, I agree.

Braxton Critcher [00:10:43]:
Now. Now, when you say the word collapse, that might cause some anxiety for folks, and I understand it caused my heart to go up a little bit. And so what. Explain what you mean by that. A good collapse. It's a good collapse. Okay.

Michael Smith [00:10:58]:
Yeah, I talk about it as a collapse because we're going to go from what we think somewhere around 230,000, 235,000 companies on the government roles in our industry, so close to a quarter of a million. And at the end of the day, in other industry verticals, when the mom and pop industries have shrunk in terms of the number of players, the players themselves get much, much bigger and the Number of competitors gets much, much smaller and the nature changes. Right? This comment I made earlier about, I don't want to play the corporate game. They become corporate machines, right? And we watched it in the old drugstores on the corner. Right now we have the CVS's and the Walgreens. And then a chunk of that stuff's being bought either online or from Amazon. We watched it happen to bookstores. Then came the Borders and the, the big stores.

Michael Smith [00:11:52]:
And now a lot of that stuff's done online. So just industry after industry, the nursing, the funeral home business, the nursing home business. I was in the future in a consulting firm that supported the funeral home company industry collapsed. And all the mom and pop brands that you see on the corner in most towns when you drive by what used to be there for 150 years, the mortuary, if you will, most of that stuff, although it's branded as it used to be, is owned by corporate consolidation firms. And you know, there's scale, right? You can, I remember the stats. You can, they used to be able to buy a casket at about 1200 bucks a piece and resell them for 1500 bucks to when it was a mom and pop store. When you do it on a corporate basis, you get them container, container by container at 100 bucks a piece. So your margin goes from 300 bucks to, you know, to 1400 bucks.

Michael Smith [00:12:42]:
And that is a hard thing for the remaining mom and pops to deal with. And that's what I mean by the collapse. It will be more difficult in the future. And this is not a happy message. This is one, one of the downsides. If you choose not to think about this consolidation system and decide to stay a one shop system, you're going to be struggling with bigger and more powerful local competitors that are either homegrown or outside funded. And it's just going to make life even more difficult than it already is.

Braxton Critcher [00:13:12]:
That makes me sad. It does. I hear what you're saying about the collapse being a good thing, you know, for the, for the state of the industry and continue it moving forward. But I, I like the fact that when I go to a repair shop that it's owned locally and the owner's been there for 20 years, his parents ran the shop and they know who, you know, and there's a connection there. You know, I, that, that makes me sad, honestly, when I hear that I, I, I kind of hope it doesn't happen super quick.

Michael Smith [00:13:42]:
Well, it, it and it will happen. And now, you know, you were asking a question right at the very Beginning about the ramifications of the, the elections that we.

Braxton Critcher [00:13:51]:
Yeah, and we'll get there. We'll get there.

Michael Smith [00:13:52]:
Yeah, well, that, that had an impact, right. We, this, this in my opinion and we will get there. We were headed down a road of sort of government mandate and regulation and pressure to standardize into a new set of automotive systems than, than we came from. And we have a little bit of a window here and again we can unpack this later but and talk about in terms of how fast this is going to happen. We've got about at least a two year, if not a four year hiatus at this point that we're going to return to a more free market approach to this which is just going to slow it down a little bit and give the OEMs who have been really struggling, the automotive manufacturers a little bit of a time to digest and figure out what's the free market want in terms of vehicles, not what's the government going to tell us to produce then to try to sell to the consuming market. So there's a lot that's shifting at this point. So you're right. I mean there's, there's an upside and a downside to all of this and it'd be nice for the folks that are in the industry, those that don't want this sort of corporate revolution, if you will.

Michael Smith [00:14:53]:
It's coming. It'd be nice if it didn't have to happen. And I wish I could say we can see some hope in there that you can avoid it. You can stay a single shop if you will, but the market around you is going to change. There's doesn't seem to be much that's going to stop that. And so I, you know, and I'll say this real quickly and stop talking at this point, but there's really three ways to do this, right? One, get out of the business now before it changes to something that you don't like to run for the hills. Right. And you know, sell it to somebody and then, you know, disappear.

Michael Smith [00:15:23]:
Right. The second thing is that you grab onto the palm trees when the waves coming in and you stay on the beach and hope it's not going to, going to get you right. I'm just going to keep doing the same thing I used to do and hope this thing passes. And the reality of it is in every other industry it'll wash all the trees off the beach. Right. So it's, I mean there will be a handful of them left, but it's going to be a rough ride if you Decide to stay put and do nothing. And then the third approach is, and I always joke with my clients, let's build jet skis, let's go out there and get on that wave and let's go play. Because if it's coming, we might as well go out there and see what it's going to look like.

Michael Smith [00:15:55]:
What's been done before successfully in other industries, what are the options that we have that we didn't have before and see if we want to play. So you can get out, you can, you can hang tough, or you can make the most of what's coming. And those are all new strategy options that sort of weren't there before. Right. So it is a good time to be in this industry. I agree with Cecil. It's just a time of change. And change ain't going to change.

Michael Smith [00:16:17]:
It's not going to stop changing. It's going to pick up. If anything, it's going to get faster.

Braxton Critcher [00:16:20]:
So you're telling, you're telling folks if they want to remain the same, you either got to get out or brace for impact.

Michael Smith [00:16:29]:
Brace for impact. Here's what brace for impact looks like. Think about the collision business. Our cousins, right? They're not exactly who we are, but they had a faster move than we did. They were a bunch of mom and pops too. But the difference in that industry was that the insurance companies were the payers. So the customers that drove the cars that had the accidents weren't the payers. The insurance companies did.

Michael Smith [00:16:51]:
So they used their leverage to say to the industry, hey, you have to change and we're going to make you look a lot more like healthcare. An auto repair. At this point, we don't have that, unfortunately. Yeah, unfortunately. And that's kind of, that's kind of the model, right?

Braxton Critcher [00:17:04]:
Oh, it's the worst. You get into a car accident, good luck for the next six weeks of your life.

Michael Smith [00:17:09]:
Well, and, and that's then you enter the system, right? And if you have your car insurance company goes to battle with your, with your auto repair company, it's the same as healthcare. You can pick one that's on their short list and they'll pay the whole repair. But you, you get what they give you. You want to do your own thing with an independent now, they're going to fight with the independent over what they're willing to pay versus what it wants to charge.

Braxton Critcher [00:17:30]:
It's all.

Michael Smith [00:17:30]:
And you go to a market, there's still some mom and pop auto repair stores, not the repair, the collision stores. Right. But they struggle and they have to have a soup or specialty of some kind to stand in the middle of that and take cash, cash only, those kind of things. So, you know, you can survive this, but it's not going to be the same business that we had before. And so this isn't meant to be discouragement, but, you know, my job is to stand out there and wave my arms and go pay attention to everybody so that you know what's coming. And whether you like it or not, we need to be ready for it. And there's lots of options that you can make in decision making. Think them through, decide what's right for you and then execute on it.

Michael Smith [00:18:04]:
But don't be surprised, for God's sakes. I don't want anybody to be surprised because we don't have to be. It's here. It's already, it's getting bigger. We know what it's going to look like. It's forming and changing as we go. So that's why we're talking to each other. We want the news, the word to be out there, get people thinking about this and then.

Michael Smith [00:18:20]:
And then come for more, for more conversation, if you will.

Braxton Critcher [00:18:23]:
And now, you know, something that's been percolating a lot in the past, I'd say year, but really it started a long time ago, but it's really got a lot of attention because of how important it's becoming with the technology and cars. Today is the repair act, and it got tabled back in September because of the election. It's going to be reintroduced in January, February, and I believe it's going to get passed. But where do you think the importance lies with what you're talking about? The change that's happening in the industry and that bill, I mean, it's all intertwined.

Michael Smith [00:18:59]:
Well, it is all intertwined. And let me come at it from a bit of a different angle, not to talk about the act. We'll get back to the act in a minute. The OEMs, they're in a really funny place, right? If you think about it, they have big changes that are occurring around them. The connectivity of the cars to the Internet, and this is what the repair acts about. Can they have direct communication with the vehicle, call it in for service without us even knowing about it? Right? That's, that's really what. Where that comes from. They've got big discussions that they're having about drivetrains, right.

Michael Smith [00:19:30]:
Are we going to do electric? Are we going to do hybrid? Are we going to do hydrogen? Is there something else that's out There, there are battery companies working on solar to be on the roof of your car so you don't have to stop and charge it all the time. There's a lot of stuff happening. And here's the point. The OEMs are not in the middle of most of that. Then you add to it this shared mobility thing about people calling the Ubers and the kids today. I mean, When I was 13, 14 years old, I was breathing in the mirror waiting for my myself to get older so I could go take driver's ad so I could get my driver's license. And there are kids in high school now, they're like, what do I need a driver's license for? I'll just call an Uber. Right.

Michael Smith [00:20:06]:
And it's not a funny thing. It's a generational shift in terms of a reliable taxi cab that isn't as expensive, that'll get you where you want to go. And so these kind of things, when the OEMs, if they can all of it, if they can control all of it and be on the front end of it, It's a huge 30 billion dollar difference between what the car manufacturing industry profits look like versus if technology companies do the computers and independent repair people do the repairs in the shop and they never show up in the service department of the dealership. The dealership model itself is fading away in front of the OEMs because people won't sit there and put up with that, the younger generations. And so there are different distribution models that are forming. So my point, it is back to the repair act. It's like this is one more thing that the OEMs are trying to hold on to, that, you know, that we want to peel away from them to make it more independent, more free. It's better for the consumer, in my opinion.

Michael Smith [00:21:04]:
It's better for the industry. It isn't in their best interest and they're grabbing every straw they can grab at this point to try to hold on to as much control as they can have, in their terms, an incredibly unknown future. Yeah, so it's, you know, I'm not surprised that this is a battlefront. They have 19 of them going at once at this point, and they're not going to give up easily. Oh, yeah, you guys go ahead and take all that data and do whatever you want and, and we'll just focus. They're going to try to hold on to all they can because if they lose control of all of it, it's a $34 billion shift to less than 4 in terms of profits in the OEM world, there's a lot of money on the table for them to dominate all this stuff. So, so I guess, I guess it's a way of saying we're in for a battle and we should be right. They're fighting for their life and we're fighting for ours.

Michael Smith [00:21:48]:
And that's.

Braxton Critcher [00:21:49]:
Everybody's scared, Everybody's scared, Everybody's scared.

Michael Smith [00:21:51]:
Everybody's scared of the future. It's a great big unknown and it's coming, something's coming. We just don't know what. Right.

Braxton Critcher [00:21:57]:
So, so it really, I felt was, I mean, it was on the tipping point about to get passed. And you know, the people that I've talked to at the Auto Care Association, Lisa Fauchet and I had a conversation about this a few months ago and she feels that they're going to have to reintroduce it. There's some new Congress people involved that, you know, got elected that weren't there previously, and so they're going to have to reintroduce and things like that. But, but she feels very confident that it will get passed, but she doesn't know exactly when it'll be sometime next year, she hopes. Are you, are you in that same strand? Do you feel confident that you get past.

Michael Smith [00:22:31]:
Yeah, I'm back into the politics of it again, right? This idea that we're moving, at least for the near season, into a more free market approach. And so this idea that we, and again, small business is going to be a focus of the new administration to make sure that we keep the middle class robust and strong from the model that we were headed to toward previously. And so from that perspective, I believe there will be a lot of small business support, mid sized business support. I think that there will be a greater attention in the short run on monopolies, oligopolies, right where we have a handful of players dominating a big industry. Those are conversations that kind of went away in the last few years and they're going to be back again. Because when you come at it from a more capitalistic approach, if you will, than a government controlled approach, those conversations become important. The middle class in the US has always been the economic engine and we were working our way away from that just recently. And now we're going to be working, at least, as I say, in the short season, back into that again.

Michael Smith [00:23:31]:
So that bodes well in my personal opinion, for things like the Repair act in the next couple of three, four years and we'll see where we go after that. It's a great Giant unknown. Will there be a pendulum swing the other way in four years? Are we going to get eight years or 12 years of this swing? And I know what I want. Right. In the business that we're all in. But we'll, we'll see what happens.

Braxton Critcher [00:23:50]:
Yeah, it's, it's, it's really, when you sit back and think about it all, it's hard to process if there's a lot of information. But, you know, I was reading an article yesterday or the day before about EVs, and you know, there's been, of course, a lot of progression in that industry. And you know, they're, they're. The model that they thought they would be at today is far, farther along than where they really are. They've slowed down considerable and ICE is still dominating the market and will for a while. And, you know, I was reading an article about the new administration is coming in in January. It may suppress that market even more. And I think most of it is because a lot of the EVs that are designed and built are overseas and there's going to be tariffs put on those things.

Braxton Critcher [00:24:43]:
Things.

Michael Smith [00:24:44]:
Absolutely.

Braxton Critcher [00:24:45]:
What have you read into about the EV market and that industry and where it's at today and what the election may change in effect?

Michael Smith [00:24:53]:
Oh, yeah, no, I absolutely agree with you on that. And I'll say that the tariff question is a big one. There's also an infrastructure question. Right. And it's no joke that California has been leading a lot of the thinking about how to sort of mandate.

Braxton Critcher [00:25:07]:
Well, I read an article too, and it may have been the same one, but Colorado now leads in ev.

Michael Smith [00:25:12]:
Well, it's crazy. Yeah. Yeah. In terms of statistical ownership, but, you know, in terms of legislation and thinking, Colorado has, historically, a lot of states have followed California's lead. And so, you know, whoever's got more on the road, that's all very interesting. There are a handful of states that are focused on that. But I guess my point is California made a, made a declaration that by 2030 they were going to have a certain proportion of EVs on the road and so many would be. Only certain kinds would be sold.

Braxton Critcher [00:25:43]:
I think it was 202034 was their mandate of absolutely every car sold will be ev. And that's been shut down. But.

Michael Smith [00:25:51]:
Well, that data I'm not sure. And part of the reason it's been shut down, one is the political wins, but the second thing is an infrastructure question. A month later, they're like, hey, it's summertime. Would you guys all turn your air Conditioners down the, the grid can't take the, can't take the pressure.

Braxton Critcher [00:26:04]:
Yeah.

Michael Smith [00:26:05]:
And so we're not ready. We're not ready. And that's, and that's part of it is you can government mandate the vehicles all you want, but if we're not ready for it, and I, you know, I'm not going to EVS down. That's not the point of this podcast. But you get those big EV trucks out there with those batteries in them, they outweigh regular semi trucks rolling down the road. They're significantly heavier. They're going to tear up the roads. Well, who pays for the roads? Well, the feds and local governments and counties and that this stuff has huge ramifications across all kinds of angles.

Braxton Critcher [00:26:34]:
And a lot of it is. There aren't enough charging stations.

Michael Smith [00:26:37]:
There's not enough charging stations.

Braxton Critcher [00:26:39]:
Infrastructure for all this stuff is not ready. And it will.

Michael Smith [00:26:42]:
Charging stations driven with diesel. Right. They got diesel generators.

Braxton Critcher [00:26:46]:
How does that make sense?

Michael Smith [00:26:47]:
Isn't that crazy? And because it's a market just grasping its solutions again, you know, in the trail of a government making a declaration, you know, and I feel for the OEMs, I gotta say, as much as we see them as they're our greatest competition with the, the dealership service departments and all that, you know, what's Mary Barra gonna say at GM when BlackRock, their largest investor, calls and says, hey, we really want to push this electric agenda and this global climate issue and we really want you guys to respond to it. When your largest investor calls and says, this is what I want from you, what do you say? Oh, absolutely. Let's. Let's work on this stuff. We're all in.

Braxton Critcher [00:27:26]:
It all comes back to money.

Michael Smith [00:27:29]:
Well, money and politics, power and. Gee, have we had this conversation in the world before? Yeah, so. So the oem.

Braxton Critcher [00:27:38]:
So do you. Do you feel. Because, you know, I, I'm not sure exactly where I land on EVs, you know, I do think. I do think it's a good, It's a good thing to be progressing towards, to try to work towards. But, you know, people's opinions differ on whether EVs are good for this industry or not. And so with them slowing down, do you, do you feel like that's a good thing? Where, where do you stand on evs?

Michael Smith [00:28:05]:
There's a. There are always. And I'll answer it in a weird way, and then I'll get right to your question. There's a lot of technology currently under development too. Like, you know, hydrogen has not been given up on there also. But I'll say I think it's, I.

Braxton Critcher [00:28:18]:
Think it's Hyundai that's working more on hydrogen right now.

Michael Smith [00:28:21]:
And Toyota's been into that and looked at it and they come and they go and. Right. Some of the companies that, in the automotive industry that don't have the pressure that the western world is putting on their OEMs are coming up with slightly different answers and I find that interesting. Right. Look at, look more at what those guys are thinking because it's from more of an engineering standpoint and a sustainability standpoint than a sort of a political standpoint. But I'll, I'll come back to your question. EV vs Ice vs Hybrid. Most of the people that I talk to in our industry and they tend to be people who are in the top end of the, of the, of the repair store clients that we have.

Michael Smith [00:28:58]:
Right. Multi shop focusing on all this, they're coming down on the fact that they don't believe evidence be on a pure basis is really going to be the game. And it's going to be a hybrid of some sort. That the combination of ICE engines, they're more efficient in some ways. They're also, you know, I've got a client's in Alaska where it's 25 below and then 45 below and back to 25 below. The EVs have issues up there in the cold Minnesota, those kind of places. So it isn't a panacea that's going to solve all the problems. And it's always been a question, how far out into rural America is this going to go? Are the farmers going to be in an EV world and what is that going to look like? And if you move from the farms agriculturally in the country into the suburbs and from suburbs into the urban, where are the concentrations of these things going to be? And again, you know, back to ev, it's going to play a role.

Michael Smith [00:29:48]:
You know, Tesla put a big mark on the, on the, on the calendar and certainly Elon Musk is in the middle of lots of interesting conversations at this point. His influence goes a long way up, if you know what I mean, like to the top of all the conversations that are going on. He's kind of an antagonist to the system that was being built before. And so there's kind of the ego fight that's going on about who's going to win and who's going to be right. I know that it costs the American OEMs and the more traditional auto manufacturers more money to make an EV for quite A while than they could actually charge for it. So they were losing money trying to figure out how to make it a, make a money making proposition. End of the line, you know, at the end of the day, there are investors involved. And as much as BlackRock would like to control the power market and the car market and the global warming market and all that, all at one time, you know, there are lots of people that have an interest in the OEMs being profitable.

Michael Smith [00:30:40]:
So you can't just say, oh, just go full OEM and lose a bunch of money forever. There has to be a solution to that and that it isn't just as easy as a declaration from a largest investor of an interest in a direction. So to answer your question, it's a great unknown. I think EVs are going to be here. I think ICE is going to be here. I think hybrids are going to be growing in the middle, making the best of both worlds. And if there's alternative drivetrain that jumps out, there are water engines. And I don't have a clue how that would actually work.

Michael Smith [00:31:09]:
But the concept of it's interesting. It's, you know, it leaves no pollution whatsoever. So will that be big enough, powerful enough, or suppressed by the incumbent system? All kinds of questions. Yeah.

Braxton Critcher [00:31:20]:
You know, it's a constant tug of war between one thing versus the other. And there's got to be a medium somewhere that we just haven't found. You know, I think if you left.

Michael Smith [00:31:30]:
Us alone, Brett, if you left us alone and we were able to do just from an engineering perspective, just let the OEMs figure out what it should, should look like and then let us come behind them like we always did historically, and, and expand the capacity to serve the customer who owns their vehicles. We come up with different answers, but it's such a mess at this point. The technology companies are involved. Apple wants to build an electric car. They're not even talking to OEMs, they're talking to companies and they're going to manufacture their own version of a car. It's on the, it's, it's not coming, it's not ready to sell yet, but it's in the pipeline for conversation.

Braxton Critcher [00:32:04]:
I don't think I've heard about that.

Michael Smith [00:32:05]:
Well, the kids today say, you know, do you need an OEM to build a car for you to be comfortable with it? They're like, no. You ask old guys like me in their 60s and I'd say, yeah, they've learned a lot about roll cages and safety and all that. And the kids are like, no, just, just have it go to the computer companies. That makes more sense to me, me. So I'm. So the whole point is that everything's changing at once and it's a good thing. Is it a good thing or a bad thing? I don't, it doesn't matter. In a way, it's going to change.

Michael Smith [00:32:30]:
Right. So keeping up with these trends, watching them closely, figuring out where it's likely to go is where it gets interesting.

Braxton Critcher [00:32:37]:
We just got to learn to work together, all of us.

Michael Smith [00:32:40]:
Absolutely.

Braxton Critcher [00:32:40]:
And there is a good bit of that, there is a good bit of folks working together, but it seems like it's on, on just their sides of their industry, their influence.

Michael Smith [00:32:48]:
Well, everybody has a self interest for sure.

Braxton Critcher [00:32:50]:
If, if the technology companies at the OEMs, if the independents, if the government. Yeah. The state, all this stuff, if, if we could somehow find a way to put some of the differences aside and say, you know what, we all have opinions, but if we find a way to work together and work out happy mediums for the things that we disagree on, I'm, I promise you, things are going to be better for the entire country. We just don't know how to do that. And so I'm not sure if there's a good solution to, to do that. But it sure would help with all of this stuff that we're talking about, you know, because my fingers, my fingers.

Michael Smith [00:33:30]:
Are crossed that we're entering into a political season at least where we might be able to have sort of collaborative conversations across the aisle. Certainly that's the, the language that's being used at this point. A lot of the approaches are not to continue in division. You can argue which side it came from and when, and that's a wasted proposition of time on a podcast like this. But at the end of the day, we could finally have an administration that sat down and said, look, let's really do actually work together and do exactly what you're talking about and figure out what makes sense for the people, for the consumer, for humanity in a non political, non biased, non greedy kind of a way. Okay, I don't know. I sound like a philosopher sitting on the real world. I am in the real world.

Michael Smith [00:34:15]:
I live here every day. But if we can at least start at that level of conversation and have it be more transparent and be more open and actually share with each other with some idea that we might be able to get win wins like you're talking about, it doesn't have to be a win lose, then maybe we can enter into kind of a new phase of, of the markets at this point. And I join you on this. I'm optimistic, I fight for it. We talk about it all the time. And then we got to go, you know, we got to go fight the fight that's on the field at this point too. But yeah, let's, let's, let's work for a better future. That's literally what I'm doing in the industry at this point.

Braxton Critcher [00:34:47]:
Yeah, it's kind of a wait and see right now. Wait and see when the administration comes in next summer, let's see where we're at. And I mean, like you said, you really could make some, some ground in some of this stuff, so.

Michael Smith [00:34:59]:
Well, see, I think it's wait and see. And also, I'll throw this out there just for grins to think about. I think we need to be involved politically. I think we need to be involved talking to our, to our political leaders. We need to be involved at the community college level. Get out there and talk about what should be in the curriculum. Figure out pipelines to bring these students out of the trades and into our, our shops and into our industry and how to make those transition, you know, and I think there's a lot we can be doing on the positive side to build the pipelines without anybody's permission. Right.

Michael Smith [00:35:29]:
Let's just, let's go do the right thing in, in our world where each of us live, and then let's watch it sort of collapse together into a higher level thing than what we've watched been going on. And again, back to the private equity firms. Guys got a lot of money. They know how to make money. They don't necessarily know how to fix cars. And not all of them really care about the kind of humanity that we're talking about. So are they here? Yep. Are they here to stay? Probably.

Michael Smith [00:35:53]:
Yeah. But do we have to deal with them? We do. So let's frame the conversation ourselves. Let's get together and figure out where do we think this industry should go. And let's build projects, and I kid you not, let's build projects that they would be interested in investing in. Let's make this thing go the way we want it to go instead of sitting back in wonder and going, wow, wow, like you're watching a fireworks show. Wow, that was interesting. And watching the whole thing get changed over the top of us.

Michael Smith [00:36:19]:
And then we look up and go, I don't like this kind of illusion. What happened? How come? Where did we go? And I'm like, no, let's get out There and let's be vocal.

Braxton Critcher [00:36:26]:
Yeah, you gotta be involved. You really do.

Michael Smith [00:36:28]:
You gotta be involved. Exactly. Right.

Braxton Critcher [00:36:30]:
Yeah. And that, anyway, that, that's not, that's not a. You know, I think sometimes when you think about trying to be involved with legislation or your congress person, that provides another level of anxiety, but you don't, it doesn't change. You know, it's not like it's a huge time sucker on your schedule. It's a letter here and there, there. It's, it's attending some of these events that happen in your community in your state. It doesn't take a lot of time and it's really, it's so worth it. But it's one of those deals where it's a seesaw where as an owner or somebody in the industry you're like, well, where is the seesaw need to be? And you know, you'll have to figure that out for yourself.

Braxton Critcher [00:37:10]:
But it's, it is worth it. It just, you're not going to see the tangible results immediately. It's going to take little time. But you know, you got to be involved because like you said, if you don't, things are going to change in the way you don't want them to.

Michael Smith [00:37:24]:
Yeah. There's also, there's also a conversation I think everybody should consider, and that is as you brand yourself into your marketplace as an individual service provider. Right. As you sit down and think about how do I want my community to see us and to know what we're about, these kind of conversations that, and let me say, not necessarily about politics or about the economy, but when you sit down and say, look, we're here because we want to serve our community, we want to do noble things. We want to meet you in a place where we can make you safe. We want to help you steward the life of your confusing thing called a vehicle. Right. Those level conversations too, in my opinion, make a huge difference.

Braxton Critcher [00:38:06]:
But they need to be, they need to be legitimate, though genuine from the heart.

Michael Smith [00:38:11]:
Absolutely right.

Braxton Critcher [00:38:12]:
Because people see through it. People will see through that. And that can be a marketing idea, platform strategy for a shop that won't last or won't work if you don't.

Michael Smith [00:38:22]:
Actually care and do it thousand percent. That's exactly right. And that's when we, sometimes we sit down with potential clients or owners and say, hey, what do you think about this? They're like, I don't care. I fix cars. What are you asking me these questions for? And it's like, because, here's why. Because it matters to the Community, you got to care. You need to, you got to care. And what's beautiful is that once you stop people from not caring and you get them thinking about this and they really do start working, working on it.

Michael Smith [00:38:46]:
There are amazing, and I say this with, with, with grace. We have some of the most noble people in 43 years of serving the Fortune 100 I've ever met in our industry, operating very successful local businesses that are some of the best people I've ever met in my life. And it's like, look, go out there and tell your story. And they're like, well, what does it have to do with fixing cars? It's like, listen, of all times in history, we need leaders to stand up and talk about the stuff that makes a difference in the world. Stand up and be noticed locally, talk wins with your customers, make a difference in your community. And when they really start doing that, all of a sudden they start to feel better. Because I believe in, with all my heart that we're wired for this. It makes us happier as humans to be involved in that kind of conversation at that level.

Michael Smith [00:39:31]:
But as soon, all of a sudden, it starts to change the client base. And you want to talk about the most noble, loyal brand ambassador clients are going to come to you because of the meaning that you shared in the market, not because of your transactional, you know, a coupon that was stuck to the back of your mailer. It's like you want the best customers in town. Go out there and start talking about these noble things and you're going to draw a completely different customer base to you. So it's a good business proposition, too. It's not just a nice social proposition. It makes a difference in the business. You want to be a high performance business? Go make a difference in the world and tell people from your genuine heart how you do that and the people who care about that will come to you.

Braxton Critcher [00:40:09]:
Yeah.

Michael Smith [00:40:10]:
By the way, it absolutely works every time. It really, really does. If it's genuine. Exactly like you said, right? Yep.

Braxton Critcher [00:40:18]:
Well, this is good stuff, Michael, how about this? Let's, you know, like we said, we got to put a pin in the conversation and wait and see about next summer. Let's put a pin in this conversation and I want to have another one with you first or second quarter next year and kind of check in, see how things are going. Because this is really good stuff. And I think more people need to, to have these conversations and listen to this one. So if you haven't subscribed to the podcast, here's my shameless plug do that and and and share it with others because these conversations that we're having every day on this podcast are important for the industry so need to let more folks know what's happening. So thanks Michael.

Michael Smith [00:40:56]:
My pleasure. See you soon.

Braxton Critcher [00:41:02]:
Hey if you're still here, thank you so much for listening to this episode of Automotive Repair News today. If you enjoyed the show, please take a moment like share. Subscribe to the podcast. It'll help us out a big deal and help grow the show. And you know what, while you're at it, slap on a review too. If you feel like this content is helpful for the industry, don't forget to follow us on all your favorite social media platforms. We're on Facebook, TikTok, YouTube, Twitter, Instagram, LinkedIn, stay connected and be the first to know about new episodes, behind the scenes content and more. And until next time, let's make the industry better together.