The US Auto Business Through the Aftermarket's Eyes

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1:23Go to Sinesta.com to book your stay and unlock the best rates with Sinesta Travel Pass. Here today, Rome tomorrow. Join now at Synesta.com. Terms and conditions apply. Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Lots of automotive news today. Porsche shares, this could have been a decliner, fell in Germany. The company reported deliveries fell 10 % last year. It's the steepest drop going back to 2009, global financial crisis. That's a big drop. Yeah. Weak demand for EVs, a slump in China weighing on the company.

2:04Yeah. Yeah. I mean, listen, they have struggled. They've had a bunch of challenges, safe to say. They've had to correct an overly ambitious, as you said, EV rollout that upended some of their model plans, weighed on margins. You've got tariffs in the United States. That, too, has played on them. The overall auto sector, which has surpassed China as Porsche's most important market, also have weighed on profit. We've talked about the China story, too, when it comes to the luxury market. Let's talk about the U.S. story and the auto industry and sort of a different take on it. We've got Brian Masiak with us.

2:33He's CEO of Full Speed Automotive. It's the parent company of the automotive repair and service facilities, including Grease Monkey, Speedy Oil Change, and Auto Service, and Quick Car and more. So think oil changes, tire sales and rotations, brake services, and the like. Brian joins us here in the Bloomberg Interactive Brokers Studio. Welcome. How are you?

2:50Brian Maciak:Hey, I'm doing great. I appreciate the opportunity. Yeah. So you've got a really interesting view on the country and the economy because Full Speed Automotive, through its different brands, franchise and company owned, 900 of these stores throughout the U.S., you serve millions of customers each year. How is it out there? Like, what are you seeing from your customers? Yeah. So it's very, very clear if you listen to the customer exactly what they want. They want value. They want efficiency. They don't want to be there. I mean, in all honesty, nobody wakes up in the morning and is excited to go get an oil change, right?

3:23Brian Maciak:No one wants to spend the dollars. It's a grudge purchase, right? It's a chore. And we understand that. That doesn't mean that we can't deliver a delightful service for them, right? And so when they show up, we want to treat them like they're a guest in our house. We want to open the door for them. We want to escort them into the waiting area. We want to offer them water, coffee. and we want to provide them honesty of what that service needs. Are they on time in general with the recommended rotations, with replacing tires, with oil changes, or are they letting that slip and are they driving cars longer without getting them serviced?

4:04I'm looking for any economic signals that you can send us from what you see out there.

4:09Brian Maciak:Sure, no. Our space is fairly resilient to whatever fluctuations in the economy exist. Right now, the average cost to buy a new vehicle is about$50 ,000. People are spending an average of about$700 a month on their vehicle. And so what's that? That doesn't include gas. You're talking about a car payment. Car payment alone. Yeah. Wow. And so that is forcing people to keep their cars longer. Average age of the vehicle on the road right now, and there's about 300 million of them, about 13 and a half years. They're still continuing to drive about 13 ,000 miles a year. So they're driving longer, or yeah, they're driving normal miles.

4:53Brian Maciak:They're keeping their cars longer, and that means they have to go to preventative maintenance. They have to get that car done. But they're trying to watch their pocketbook. And so they are stretching as long as possible before they need to get it into our bays and perform the oil change. How long have you started seeing that, that people are stretching out? Yeah. So, you know, there was a time when we used to see every three months on the dot. And now it's around five, six months. We might see that customer only two times a year. When did that start? Last six months? Last year? Probably about the last 12 months.

5:25Brian Maciak:Yeah, last 12 to 18 months we started to see it slip. But that's where it is right now is about five to six months we'll see that customer back. So how would you, Brian, describe the consumer? Because I think it's safe to say that when we talk about this economy, folks say, well, wait. Or, you know, when your record's on Wall Street, we've got economic growth. Like, there's a lot of metrics out there. Even though we're starting to be a little bit concerned about the job market, unemployment rate's still pretty low. So I'm just trying to understand, well, how would you describe today's consumer?

5:52Brian Maciak:Yeah, I think they're frugal. I think they're frugal, and they're very, very cautious about spending anything unnecessarily out of their pocketbook. um they're they're also in a the the customer wants efficiency they don't want to be there long they want to be quick get it in get it out and it's also not lost on us that about 70 percent of people distrust the folks that work in in my industry and we are trying our best to reverse that trend um and how we're looking to do it is infusing some technology into the customer experience we don't want you to take our word for it anymore when we come to you and say No, no, keep going.

6:30Brian Maciak:When we say, you know, you need a transmission flush or a brake flush, we want to show you visually. We want to send you a digital vehicle inspection on your phone so you can see it, and we start to build that stickiness and that trust together. Well, isn't that kind of what cars are about? I mean, I remember a few years ago, it's kind of a little embarrassing, but we had a car, and, you know, there was, I guess, a rainstorm, and there was some water runoff. and thought we could kind of go through it. It didn't look so high. It ended up frying all the electronics, and we had to just, we lost the complete car.

7:06But I'm just, isn't it today that you just basically plug in, and the car tells you what it needs to have done in a lot of ways?

7:13Brian Maciak:No. Yes, you can do those diagnostic. It doesn't hit every single code. Okay. And sometimes the customer just doesn't want to pay that extra$50,$70 for that diagnostic. They're requiring on our 16-point inspection visually, and we don't want them to just simply take our word for it. We want to show them in a video so that there is no ambiguity whatsoever. So what do you show them? It's so funny. A couple years ago, my uncle had this Prius for years. He drove for years, then it went to my cousin, his son. And he showed me this video a couple years ago, and it was like the car had just been beat up.

7:52It parked on the streets of New York for years. It was a complete beater. And he showed me this video. was like, check this out. And it was a video from a mechanic that was showing all the places where the rats had shoot up inside of the car. This is very what happens in New York City, especially in the winter. Like, it's really gross, but it's a very New York City thing. And what I was struck by the video was it was because it was basically like the mechanic was offering this as proof of this happening. It wasn't like, hey, check this out. This is crazy. So he went inside the car and showed it?

8:21He's like, this is why we are replacing this. This is why we're doing this. It's this like environment where there's a real lack of trust because I think there's a power dynamic imbalance when it comes to the customer and when it comes to the person who's working on your car. Customer doesn't know anything. You have Google and chat GPT. The person working on the car seems to have all the power and I think that's a hard thing for me as a customer to come to terms with especially when that check comes.

8:44Brian Maciak:You got it right. So we want to go through our 16, 17 point inspection. We want to tell you, hey, your tires look good. We want to show you. We want to show you the measurement that You're fine. You don't if anyone tells you you need new tires, you don't and then we want to show you some things that This needs to be replaced, but maybe not right now So maybe it's 30 60 days from now and that gives our marketing team then an opportunity To reach out back out to that customer in a month or two and say it's about that time bring it back in Here's a coupon to do so it sounds like it's also labor-intensive Like you do need a lot of folks in order to the cars come in do the evaluation walk us through that you do Yeah, okay So cars are becoming much, much more technologically advanced and difficult.

9:23Brian Maciak:And that's good and bad. I remember the days when my dad would change his oil in the parking lot. My dad taught all of us how to do it. Not change our oil, but we had to learn how to check it. We had to keep track of our mileage. We had to do a lot of stuff. You can't get rid of the oil now, so you actually need to go somewhere. I know. That's right. So we have shifted from a do-it-yourself to a do-it-for-me, right? Yeah. But we need skilled labor in order to do that. And we have really good relationships with trade schools. And trade school enrollment is increasing. We also have found partnering with the military, folks that are getting out of the military and needing jobs.

9:59Brian Maciak:I mean, these are people that are well-trained. They show up on time. They're loyal, very, very good workers. And they stay with you for a while. Can you find them? Because there was this Wall Street Journal story just the last few days, the$160 ,000 mechanic job that Ford cannot fill. It's sort of turned into this lore as an illustration of the trade skills gap in this country. Can you find everybody you need? Not everybody. There's definitely, there's always a race for the, you know, those master mechanics. No question about it. But do you need master mechanics? We don't. Okay. And so Ford would be different, right?

10:32Brian Maciak:They're doing heavy engine work, transmission work, and we don't do that. We focus on quick lube and then some ancillary services that you really don't have to drop off the car. You can still stay in the waiting room 20-30 minutes and you're on your way Can someone who has no experience but has drive and motivation come in learn what they need to do there? Do they need some sort of training ahead of time? Yeah, so certainly you can take a newbie for sure Not every employer is going to do that We have a really robust training program where we won't let you work on a car until we you pass the certifications But for the right candidate, we'll absolutely put them through it Franchise versus company owned like close to a thousand total.

11:08What's the breakdown of franchises?

11:09Brian Maciak:So we have 300 company-owned, and then the remainder are franchisees and licensees. And you're owned by MidOcean Partners, private equity firm, acquired just about five, six years ago. That's right, five years ago. What's the plan? What's the next iteration of this? So right now, we're doing well from a cash flow standpoint. At some point, they may want to do a transaction. I'm sure they will, right? But right now, we're just focused on the growth, growing top line, and then growing our rooftops largely on the franchise side. Why have so many different brands? Why not put it all under one brand name?

11:43Brian Maciak:Yeah, that's a fantastic question. And my initial thought was, yeah, let's just all convert it to one national brand. But what we have found is in some pockets, in some regions, Michigan being one of them, they really want to go to their small regional brand that they've gone to all the time. There's name cachet there. And for us to change, it would be a silly business decision. So, So, you know, it costs a little more on the marketing side, right, for sure. But that's what the customer wants, and that's what we want to deliver. Where we think we can convert the name, we will. EVs don't need new – they need new tires, they need new brakes, but they don't need the lubrication services that you guys do.

12:20Right, yeah. Is it a concern?

12:21Brian Maciak:It's not. You know, I think a few more years ago, we all – well, I don't want to say about all, but some of us thought, oh, my goodness, if this is going to take over, the quick loop space is going to dry up pretty quickly. and it really hasn't transferred to that, right? Hybrids are important. Hybrids are selling, but hybrids need oil changes. Right. Where we're trying to even see those EVs are, we offer a diversified menu of services. So they still need the brakes. They still need a lot of the other ancillary services. So we still see them. All right. Good stuff. Really fascinating. Stay in touch.

12:59Brian Maciak:I appreciate it. Thank you. Yeah, we appreciate it too. Brian Maciak, he's Chief Executive Officer of Full Speed Automotive right here in our Bloomberg Interactive Brokers studio.

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