Shop steward

To see Ron Pyle, the president and chief staff executive of the Automotive Service Association (ASA), address his constituency is to witness a man who has a way with words and a knack for reaching people. He is comfortable, articulate, calm and engaging, and he cares about the industry, as evidenced by all of his hard work for a number of causes.

With more than 30 years of experience in the automotive aftermarket, Pyle's journey began as a partner in a family-operated wholesale and retail automotive parts distribution business, ABC Auto Parts, with headquarters in Longview, Texas, and has taken him from president of CarParts Technologies Distribution Network to chairman and treasurer of the Automotive Aftermarket Industry Association (AAIA), and the Automotive Service Industry Association, where he was instrumental in the efforts to merge that organization with the Automotive Parts and Accessories Association to create AAIA. He also has served on the Automotive Warehouse Distributors Association (AWDA) Marketing Committee, chaired the Ford Motor Co. Independent Advisory Committee and served on the Automotive Wholesalers of Texas board of directors.

During an exclusive interview with Aftermarket Business, Pyle addressed the "main culprit" of product returns, ways to handles the industry's reputed tech shortage and the exclusive repair shop focus of ASA, along with the controversial Right to Repair proposal, in which ASA simply states that its shops are "open for business." Please visit our Web site for an even more in-depth interview.

Q What are the absolute most important (but reasonable) things that shops need from distributors today to run profitable businesses? How about from manufacturers?

The needs haven't changed much; distributors are expected to provide broad and deep inventory availability, OE-equivalent quality parts (or better), expedited delivery and competitive pricing. However, as any distributor can attest, earning shops' business has become increasingly more difficult. Parts proliferation, competitive pricing pressure and increased operational costs squeeze the bottom line. The difference between the better operators and the rest of the pack comes down to execution. Most shop owners I speak with agree that the suppliers that differentiate themselves on service usually get the bulk of the business. Manufacturers are expected to supply OE-equivalent quality replacement parts. There is a great deal of confusion among shops about what is actually in the box. Those manufacturers (and distributors) who have a product strategy that is easy to understand (and therefore easy to explain to the customer) have an advantage over their competition. Those manufacturers who stand behind their parts with strong labor and warranty coverage are also likely to be rewarded with purchase loyalty.

Q Most agree that the tech shortage that's talked about is really a shortage of qualified techs. But if there's a tech shortage of any kind, how do you explain the fact that consumers seem to be able to get their cars repaired and/or maintained with little effort?

In my opinion, there are several factors at play. We know that there is a great deal of deferred maintenance and repair, some of which is simply driven by neglect or economics. What we are also experiencing is the byproduct of better-quality vehicles and longer manufacturer-recommended service intervals. In addition, there is some overcapacity in the market. The experts all seem to agree that the number of bays – independent and dealer alike – will continue to shrink, at least for the near term. However, it is clear that the skills necessary to diagnose and repair modern vehicles are increasing in demand, and the opportunities for well-trained and qualified techs will continue to grow.

Q The returns issue is one that the industry has never gotten its arms around. Everybody is looking to blame someone else in the chain other than themselves. Who is the main culprit for the majority of the returns, and is there any sort of industry effort that can be implemented to keep them under control?

The culprit is communication. The expectations of the parties in every parts transaction have to be carefully managed. In some recent conversations with distributors and shops about the problem, it was clear that neither really had communicated their expectations. It was also interesting to note that both sides were more than willing to accommodate one another in order to control the return rate. The most obvious benefit to both sides is a reduction of the costs associated with returns. Those distributors who have implemented policies that on the surface seem difficult for shops to accept, have learned that if they are open to sharing the cost reduction with their shops, they are pleasantly surprised at how much cooperation they receive. Those distributors that are willing to fire the shops that abuse their return privileges are also rewarded for their discipline. Implementing an "industry effort" begins and ends at the local level with a simple decision not to tolerate abuse – and encouraging communication among all parties.

Q Along the same lines, the industry is over supplied, and many say shops are largely responsible for that. In fact, many say some shops practice playing one distributor against another to get what they want when they want it. From your vantage point, is there too much inventory in the system and have shops fed the problem?

There is too much inventory in the system and the problem could be addressed through increased visibility of the inventory. However, distributors have been hesitant to adopt the solutions and the collaboration that would make this possible. Some shops have taken advantage of the current system, but once again, the better shops are typically not spending their valuable time (which is their primary asset) "playing one distributor against another." The better strategy for a shop is to commit to a few suppliers, leveraging their volume to earn good service and competitive pricing.

Q Margins are important to any profitable business. How can distributors and shops work together to assure that they both get their fair share?

By definition, the margins exist at the edges. The service that differentiates a shop from its competitors will allow it to earn a greater margin. The service differentiator is often the investments the shop makes in training its techs or the equipment it needs to more efficiently diagnose and repair their customers' vehicles. The investments that the distributor makes in better service will earn that shop's business. Good shops value availability, quality and speed, and will pay for it because it translates to a better margin for them as well. Partnering with shops that "get it" from the beginning, and committing to high service levels will pay dividends for the distributor.

Q What else can shops and distributors do to work together to assure their ongoing viability?

Distributors and shops should be very aggressive in promoting the value of independent auto repair to the consumer. Consumers have traditionally preferred independent repair over the new car dealer. A recent Consumers Report article supports this. But there is nothing written in stone that says that will continue. If aftermarket manufacturers, distributors and shops don't work in alignment to assure consumers that an independent repair shop can properly maintain and repair their second largest investment, the majority market share we have enjoyed from the beginning could be put in jeopardy.

Q Do your member shops care where the jobbers/distributors buy their parts? Have you seen any major changes in their buying habits, such as buying more from retailers or buying direct?

Yes, shops do care where their suppliers buy their parts and they are becoming increasingly more aware that there are major differences in parts quality, sometimes even when they are in the same box. Retailers who have chosen to sell to the commercial market are making serious inroads with independent shops. Part of the appeal for independent shops is the retailer's ability to execute a consistent commercial program across broad geography and the number of consumer referrals they can generate for their independent automotive service customers. They also enjoy significant buying power, which of course translates to competitive pricing. I have seen some multiple-location shop operations buying direct but among the independent shops we serve it is not a common practice.

Q What's the current consensus of your members on brand preference?

By and large, ASA members prefer major name brands, particularly those that have established themselves as OE suppliers or supply OE-equivalent quality products. However, there is a great deal of confusion about what is in the box, as I mentioned earlier.

Q What is ASA's official stance on the super warranties issue, and how will super warranties affect the independent repair industry? How have you made your voice known with legislators on this issue? Are you working with any other associations on this issue and what progress have you made?

We officially oppose super warranties and have been very vocal and proactive in engaging lawmakers in states, like Arizona, where they have excluded the super warranty provision from their regulation. We have partnered with the parts and manufacturer associations wherever possible and most recently partnered with eight other associations in litigation against the California Air Resources Board's (CARB's) planned clean air proposal, which includes a super warranty provision.

Q There is a wealth of available shop management and technical training in the industry, but to a large extent it is not being accessed. It appears the major reason for this is that owners and operators find it difficult to commit to the time involved to get the proper training. What's your advice to your members in balancing the need for training and operating their shops at the same time?

It is quite simply a choice. Those that "can't find the time" will most likely not be able to continue to survive in the increasingly more complex auto repair environment to come. There are any number of management and technical training resources available, as you mentioned, and much of it will come directly to your doorstep. The gap between those who choose to invest and compete and those who don't will continue to widen.

Q ASA has spoken out against Right to Repair legislation. Although there seems to be progress with shops getting the access they need, it's nowhere near 100 percent. Let's assume, for argument's sake, that the push for Right to Repair legislation ceased. How long will it take and under what circumstances will car manufacturers fully meet the independent shops' needs for access?

We haven't simply spoken out against it. We adamantly oppose Right to Repair legislation. It isn't needed and if it were enacted, it would seriously impede the progress we are currently enjoying in making OE service information available to the independent market. I don't think I would be so bold as to quantify whether or not "100 percent" of the information is available, primarily because I realize it is not a static situation. Each day, more information becomes available and each day more is released on the OE service information Web sites. You may have noticed that no one argues that it isn't available anymore. Instead, the proponents of legislation now talk about how much it costs, or whether or not the OEs will renege on their agreement to provide the information someday down the road.

In the meantime, the genie is clearly out of the bottle and shops are repairing vehicles using the information. Any continuing effort to "push" for Right to Repair legislation is, in my opinion, a real waste of valuable industry resources.

Instead, I believe any organization with a stake in the continued viability of the independent service and repair market should actively support the efforts of the National Automotive Service Task Force (NASTF) in its efforts to identify and resolve any remaining gaps in service information. NASTF is clearly working as evidenced by the recent development of the Secure Date Release Model (SDRM) that allows independent techs and locksmiths to access vehicle security information such as key codes and immobilizer resets. What is particularly striking to me is the adoption of the SDRM by several OEMs for their own dealer networks.

Q To follow up on the Right to Repair, do you think there's any danger in losing some customers to the car dealerships from some of the articles that are popping up in the consumer press with regard to shops not being able to service and/or maintain cars adequately? How is ASA combating these messages?

I absolutely do believe the current Right to Repair messages are detrimental to the independent auto repair industry. Telling consumers that independents don't have the information to repair their vehicles is simply an engraved invitation for them to return to the new car dealer. Our message is simple: ASA shops are "Open for Business."

We are pressing home that message wherever the proponents of Right to Repair are campaigning for unnecessary and costly legislation. So far, our efforts to expose the flaws with the legislation and its potentially devastating effect on the availability and cost of service information has prevented the passage of any federal or state bill.

Q It seems that there is some overlap between the Automotive Aftermarket Industry Association's newly formed Car Care Professionals Network (CCPN) and ASA. Are the two entities working together in any capacity at this time? If so, how? If not, how do you think they could work together for the benefit of independent repair? For that matter, what is your working relationship with other shop-oriented associations, such as iATN (International Automotive Technicians' Network) and ASE (Automotive Service Excellence)?

I recall when CCPN was formed, AAIA proclaimed that "finally shops have a seat at the aftermarket table." What an amazing statement. ASA has been serving shops for many years, and I believe it is important to note that shops are the only constituency we represent. Our organization is governed by shop owners, and our mission is focused entirely on shops. I think we all need to realize that there is only one table we need to be focused on, and consumers own it, and it is our responsibility to differentiate our value proposition from that of the new car dealer in order to earn the consumers' business. If we don't recognize this as priority No. 1, we won't execute well.

While ASA is not working with CCPN at this time, our collaboration with every other organization involved in the automotive service and repair industry is well documented. Our relationships with distributors, manufacturers and information providers are critical to the health of our members and our association. There are many opportunities to improve the image and professionalism of our industry and we strive to do our part on behalf of our members every day and have done so for more than 50 years.

In my opinion, the Car Care Professional's Network was created to convince legislators that AAIA represents independent shops. The membership rolls of CCPN were populated with the shop customer lists of several well-respected distributor organizations that support Right to Repair legislation. Many of those same shops are ASA members and some have been very vocal about being included without their expressed permission.

Q Shops continue to be the brunt of criticism and jokes. For instance, millions of people tune in to NPR's Car Talk every week, and its hosts run hot and cold on independent repair. Of course, they have an audience to entertain, and shops are an easy target. With that as a backdrop, what, in your opinion, will it take to bolster the image of the independent repair shop?

It will take every association and company that benefits from the business that is generated in the independent bays working together, in alignment, to improve the image of our industry. If we want to change the perceptions of our industry, we can't be sending mixed messages to the consumer, the government or our own members.

Q Related to the last question, please discuss attracting the right type of people to the repair business. Certainly a lot of young people who look at the possibility of being a technician don't like what they see when it comes to how they would be compensated. Good technicians are worth their weight in gold but often don't get paid adequately and/or receive decent benefits. Shop owners, of course, say they are paying what they can afford. Quite a dilemma. Your answer to it?

There is no pat answer to the dilemma you describe. I do believe that market forces will prevail and the industry will adjust accordingly. As consumers demand more from their ownership experience, they will reward those who respond with competent service. Everyone won't make the cut, but those who do will most likely earn the greater margins and will be capable of paying their employees what they deserve.

Q What is the fate of the one-man shop? Moreover, what is your vision for the aftermarket — manufacturers, distributors and shops – over the next five years?

The next five years will be very interesting because of the choices that shops will need to make to remain viable. One-man shops, if there are any, will be very specialized, in my opinion. Specialization by make and by system, represent two of the most likely business models for independents. Generalists will have to make some tough decisions, because broad investments in tools and equipment may be prohibitive. On the other hand, there is some indication that on-board diagnostic strategies may evolve to the point that information might be retrieved over the Internet through common computer interfaces.

Manufacturers will continue to have challenges with parts proliferation and globalization. All makes-all models product strategies will become more difficult for manufacturers to maintain, and, of course, this impacts distributors as well.

Distributors will need to differentiate themselves from one another, and it will be very important to eliminate redundant or duplicate services that are not perceived as valuable by the shop customer.

I think the aftermarket will continue to consolidate at all levels. I also believe the consumer will determine what constitutes value and if the aftermarket makes good choices, in alignment, with each function's best interest in mind, the industry can remain healthy and prosperous.

Q Last fall, ASA announced the creation of a new event, Automotive Service and Repair Week or ASRW. What is the significance of this new event and what are the association's expectations?

Automotive Service and Repair Week came about as a result of increased demand from exhibitors and ASA members for a more comprehensive event targeting shop owners and technicians. ASA has sponsored NACE (International Autobody Congress and Exposition) for 25 years and CARS (Congress of Automotive Repair and Service) for many years, as well. Now the two events will be co-located at the Mandalay Bay Convention Center during what we popularly refer to as "Industry Week" in Las Vegas.

ASRW will actually be an umbrella for CARS, NACE and any other automotive service and repair event that would benefit from a venue that is focused on shops. The auto glass industry is already on-board with this concept and we hope others will join as well.

NACE will continue pretty much as usual, but with many collision repair shops now including mechanical repairs in their processes, the proximity of CARS will be very helpful. CARS will experience the greatest change. Moving from smaller venues and limited exhibit space into the Mandalay Bay Convention Center will allow more vendors the opportunity to interact with the best shops in the country. We expect a larger attendance at CARS than in the past, because for the first time, the event can be marketed to the entire independent service and repair community, not just ASA members.

We will take advantage of some synergies that the co-location strategy provides. For example, both events can benefit from the keynote speaker, one of the most popular features of our NACE program over the years, and some educational tracks will appeal to all attendees, regardless of their business model. Some specific programs traditionally offered at CARS and NACE will be retained by popular demand, including the Automotive Service Professional's Reception, co-hosted by iATN and ASA.

We believe that independent automotive service and repair professionals of all types deserve a venue of their own, where they are the primary focus of the event. ASRW will provide that venue, and ASA is proud to co-locate our two major industry shows, CARS and NACE, under the ASRW umbrella, and we extend an invitation to other associations, groups or companies to join us this Nov. 5-8.