RM: When we look at overall keys-to-keys and cycle times, we don't see a ton of disruption right now. We are not seeing a lot. If you look at Enterprise's Length of Rental data, if you look at our keys-to-keys data, cycle times continue to gradually improve from where they were during kind of the peak of supply chain disruption in 2022 and 2023. So, I think what we expect is that we're going to be coming into a season of potential disruption. If I were to make a recommendation to shops, it's really starting to think about what your parts supply chain looks like for your actual business. How do you start to build in some contingencies if there are some significant delays, if there are back orders? What does your repair strategy look like? Are you preparing techs to, are you upping their training regimen to be able to repair some of these newer materials in case you're not able to get a part for three weeks?... I think that's a very real possibility we could be entering into; I don't know if it's to the same degree that we saw during COVID, but I think that could be a measure of that that's to come. 

GH: I'd agree with Ryan's assessment that we're going to see a disruption in both OE and likely aftermarket. As we see the rise in diesel prices topping $6 a gallon, I think you're going to look at suppliers wanting to do more milk runs that make sense, that squeeze every efficiency out of a gallon of diesel. The interesting thing, when we saw a bunch of back orders during the first six months of COVID, we had some of our customers, both repairs and insurance carriers say, “Hey, we can't find this part.” And, you know, it was interesting because the shop was used to calling my guy at the dealer, right? That dealer was calling that parts distribution center, and they said that we don't have it. We're [PartsTrader] putting it out on a nationwide search. So, we're hitting every dealer and their parts department that may have it on the shelf and we were able to get a lot of vehicles repaired doing just that. I was in Puerto Rico in the spring of last year. We were touring a big body shop, and we found a GMC pickup that could not be returned to the customer. I looked at the layer of dust and I'm like, this has got to be out. They said, yeah, this is one of our key customers and policyholders and we can't get the delivery back. He's out of rent-a-car. I said, well, what are you missing? He said it's a seatbelt sensor. So, we put it out. He goes, you know, it's been back ordered for a couple of months and it was because he was going to that PDC in the southeast. We actually found it at a GMC dealer in Denver, Colorado; had it [shipped] overnight to the body shop and the customer got their car back that next day. 

Q: You both mentioned we're going to see a disruption coming up. Is it mainly the fact of the rising cost of diesel and the transportation challenges that's going to pose or are there other issues... are there any part shortages or other factors that are also adding to this? 

RM: So, I think the transportation cost, the logistics cost, is a big part of it. But I think there's also a variable that's at play in terms of where manufacturing is going to be taking place. How are the geographic centers of manufacturing changing as a result of this tariff policy? You've seen billions of dollars of investments taking place in domestic manufacturing centers for many of the major OEMs, and I think that's all good for the domestic economy here in the United States. But what that does is you start to create pockets where there's no overlap that's created between the old center of manufacturing and the new one. If you used to make a bumper cover in Mexico City and now you make it in Birmingham, Alabama, hopefully you can shut down Mexico City on Tuesday and, on Wednesday, Birmingham is able to provide the same bumper cover with no delays. That's not always the case. Additionally, moving that manufacturing domestically adds an additional cost to those parts because of the higher labor costs here. I think you're probably going to see additional changes in terms of where parts are being manufactured because of the most recent tariff news associated with Canada. It affects a smaller portion of parts, notably than some of the other centers of manufacturing. 

GH: I think that the biggest thing to watch in my mind is what's going to happen between these trade discussions with Canada and the United States. For 27 states, their biggest export partner is Canada, and we see a lot of manufacturing done along the border between Canada and the U.S., and that's going to potentially suffer. Then, you go back to a previous tariff decision and lawsuit that Detroit Axle filed against the International Trade Commission. The administration had eliminated the de minimis exemption for goods under $800, and Detroit Axle said, “This is killing us; this is killing our business.” They went all the way up to the U.S. Court of International Trade. They ruled in favor of the administration, and you see that in response, Detroit Axle shut down the retail store in the Detroit area and they've laid off over 100 people. So, that's one of those unintended consequences that we just have to kind of look at and see if we can see anything trend-wise that'll happen over the next six months or so. 

Q: Are there any specific parts that are more at risk of potentially going through inventory availability difficulties than others? 

GH: I think one of the first things, because of the size, is stamping. If you're stamping sheet metal in Mexico, for example, and then you move it to Birmingham, as in Ryan's example, you've got to literally physically move that stamp. They're not going to invest in a second stamping mold for each of these parts; it would be far too expensive. 

RM: Yeah, and I would agree with that. I mean, there's definitely a lot more kind of just the logistics involved with some of those larger stamping operations. I think the other aspect that you could look to potentially be plastic parts. I only say that just because plastic parts were a little bit more reliant on global suppliers for raw materials as opposed to sheet metal. The auto industry typically prefers domestic sheet metal because of the more rigid quality control standards we have here in the United States, but plastic is not that way. Most of that raw material comes from China. 

Q: How long do you think it will take to feel the tariff and economical affects? 

GH: There are a lot of unknowns. We really must watch what happens with Canada. If the threat – the administration said that they wanted to ban purchases of Bombardier jets out of Canada – there are a lot of jobs in Kansas that rely on that. As a retaliation, [Canadian Prime Minister] Mark Carney has said, “We're going to put tariffs on a ton of American goods in addition to what we already have.” In response to that, it's like this tennis game back and forth, the [Trump] administration said, well, then we'll put a tariff on Canadian-produced automobiles. Well, that's the RAV4, the Civic, the CRV, the Pacifica, the Silverado, and Sierra. That's some high-volume popular American cars, and the threat is to put a full 50% tariff on the vehicle. I doubt that would happen, but I don't have a good track record predicting what the administration will ultimately do. 

RM: I think probably the nearer-term impact that we see is from pricing. I think that's something that will be reflected, or we've already seen some of it because of the tariff policy, more with some manufacturers than others. But I think the actual disruption piece, the availability challenges, are probably something that's more six months-plus. Because really what you're looking for is when do these manufacturing sites come online for these companies? I think that's really more of a 2027 piece of the roadmap there. 

Q: So how are shops dealing with the short-term financial parts challenges? 

GH: From my perspective, if they're using PartsTrader, they're getting just about eight quotes back per part. That includes delivery days in that quote. So, they can make pretty informed decisions. They see what their profit is going to be. They see it, the insurance company that receives that, and they see the delivery days and part type in the case of aftermarket and recycled. 

RM: I think the other thing to keep in mind is that shops need to just be very aware of how some of these increased prices will affect these borderline total loss vehicles and understand we're already in an ecosystem where we see higher total loss frequency and that is cutting into some of the shop volume that they would normally be seeing. If I'm a shop, I'm thinking very seriously about “How do I handle these borderline total losses?” We're talking about economic borderline total losses. We're not talking about anything structural or stuff like that; nothing safety-related. If the customer really wants to keep their car, how do I make sure that can happen safely and cost effectively? And just knowing that I've got these, I have parts that are going to be more expensive. So, what other decisions do I have to make on this repair to ensure that I'm able to keep this job in my repair ecosystem? 

Q: Looking ahead at some of these potential changes that we've been discussing, how can shops start trying to prepare or plan for potential long-term effects we've discussed? 

RM: I think as part of that, it's expanding your supply chain footprint. To me, it's growing the relationships you have with different suppliers. I know having managed shops, you get kind of single-threaded sometimes through the suppliers that you work with all the time. And you almost get this tunnel vision to where like, oh, well, if my dealer doesn't have it, aftermarket vendor A, recycled vendor A, if they don't have it, then I'm out of luck. To me, that really just sets yourself up for these delays that you actually have more control over than you think. Greg gave the example of finding this seat belt sensor in Denver for a shop in Puerto Rico. I mean, that's a great example. These parts exist. They are out there. It's just a matter of having a process to find and acquire those parts. Now is the time to start putting some of those things in place and building some of those relationships, not just with different OEM providers with different dealers, but alternate providers, too. 

GH: When a shop writes an estimate with, say, 10 parts needing to be replaced and they upload the estimate to the PartsTrader marketplace for quote, all 10 parts would be seen by recyclers, even if there was no Hollander interchange number. Other parts systems have key disadvantages. The shop must select that is a part they want to find a recycled part for in the compare box. If the shop estimator doesn’t think there is an alternative, he may elect just to keep the part as new OEM. Additionally, in most other parts systems, the OEM part that is selected to find an alternative must have a Hollander Interchange number associated with it to search the recyclers inventory system. So, if there's something that doesn't carry a Hollander number, you may be able to find it [in PartsTrader].

Q: If you were talking to a shop today, what would you tell them are kind of the most important parts trends that you're observing right now, that this is what you need to be watching out for the most? 

GH: I think it really is paying attention to when the part can be delivered. You've scheduled your job, so you need to make sure that your parts at your optimal selection are going to be there. That's why we track those median delivery days to sort of give people a heads-up on anything that could potentially be a delay by part type overall and just being presented with a lot of options versus contacting your guy for recycled parts or the one aftermarket vendor or your one new OE dealer parts department. It's just getting more selection. 

RM: I kind of alluded to this at the beginning, part of this is also the ability of technicians to repair damaged parts and to understand the trend in the automotive industry has been toward lighter weight substrates, which are more difficult to repair [because they] have patterns of damage that may not be conducive to repair. But I think we must make sure that we haven't gotten into a pattern of, “Well, if it's aluminum and it's damaged, we replace it.” So, part of that is making sure the technicians have the training, have the appropriate tools, have the appropriate clean room set up to be able to repair those materials and the understanding, doing a full analysis of the pattern of damage to decide, “Hey, is this something that actually needs to be repaired? Is it absolutely necessary that we replace this?” Because there are other benefits to repairing more parts as well. And that's improved profitability, even if the part's available next day... And I think we're seeing that reflected in our industry data, where we've seen the percentage of parts being repaired increase by multiple percentage points year over year, which is not something we've seen in the last 20 years. So that's a market shift by the MSOs, I believe, because of this focus on profitability and efficiency. I think shops that embrace that are going to be even more insulated from any coming disruptions.