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R. L. Polk & Co.’s Ask the Industry Looks at the Impact of Hybrid Vehicles

Last week, as part of a speech on his Advanced Energy Initiative, President Bush called for increased spending on scientific R&D and incentives for makers and consumers of alternative sources of energy in order to reduce the United States’ dependency on foreign sources of energy. The most promising breakthrough in alternative energy, the president said, is the hybrid vehicle. As interest in hybrid vehicles grows, it also raises many questions both for consumers and the technicians who must eventually repair these cars.

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Last week, as part of a speech on his Advanced Energy Initiative, President Bush called for increased spending on scientific R&D and incentives for makers and consumers of alternative sources of energy in order to reduce the United States’ dependency on foreign sources of energy. The most promising breakthrough in alternative energy, the president said, is the hybrid vehicle.

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As interest in hybrid vehicles grows, it also raises many questions both for consumers and the technicians who must eventually repair these cars. For this week’s Ask the Industry, we asked:

What will be the short- and long-term impact of hybrid vehicles to aftermarket suppliers and independent repair shops?

Bill Haas, ASA’s vice president of education and training:

Addressing the training and education issues: “Hybrids are another opportunity for independent service and repair providers. A shop might consider expanding into servicing hybrids — marketing specifically to the owners of those vehicles or it could become a niche market for some. There will be an opportunity to set their businesses apart from the others, as many are not preparing today for the vehicles of tomorrow, whether it is hybrids or any of the other alternative powertrains that are being developed. It is apparent automakers are committed to hybrid vehicle production and sales, thus creating a huge need for training technicians.”

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Bob McKenna, president and CEO, Motor & Equipment Manufacturers Association:

“First and foremost, the aftermarket will always play an important role in maintaining America’s freedom of mobility and getting people and products where they have to be in a timely manner. Although hybrid-powered vehicle acceptance will rise over the next decade, the vast majority of vehicles on the road will continue to be powered solely by internal combustion-only engines. Certainly, many of the 225 million vehicles on U.S. roads today will require replacement parts, accessories and services for maintenance and repairs, regardless of changes in automotive technology over the next 10 years.

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“However, we do have to realize as an industry that it is inevitable that hybrid vehicles will gain acceptance and should establish a healthy market share over time, assuming the automakers can provide vehicles that consumers want at an affordable price. By 2010, MEMA estimates there will be approximately 750,000 hybrid-powered vehicles on the road.

“Hybrid technology, wherein the traditional gasoline-powered internal combustion engine is supplemented with an electric motor to gain fuel economy and reduce emissions, will impact the aftermarket – but this impact will not be negative. Hybrid vehicles still need an internal combustion engine and all the parts today’s vehicles need – brakes, filters, hoses, etc. Hybrids will in fact add to the aftermarket opportunities for parts as more batteries will be needed as well as components for the electric motor.

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“Repair shops and technicians may need to invest in diagnostic tools and equipment for the new vehicles. Technicians will also have to learn the hybrid drive system as well as how this system impacts the other systems they already know how to diagnose and repair. If the independent aftermarket fails to receive this knowledge and disseminate it through training, they run the risk of losing even more market share to the OE service channel. Clearly, this is an area where collaboration between all channel partners is vital as the requirements for training technicians, countermen and sales personnel will be enormous. Proper ways to service these vehicles will need to be established, including the types of parts that should be stocked to service them.

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“Again, the good news for the aftermarket is that our industry as we have known it is not going to disappear or change radically overnight. We still have time to prepare for changes.

“I believe the aftermarket should view the acceptance of hybrids as an opportunity. There will be new products that need to be replaced or repaired as well as those parts that have already needed replacing. Conceivably the money saved on increased fuel efficiency may even help reduce unperformed maintenance, increase the sales of accessories and may result in increased aftermarket opportunities as consumers are more willing to put more miles on their vehicles.”

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Bob Redding, the Automotive Service Association’s (ASA) Washington, D.C., representative:

“Our biggest concern with the long-term impact of hybrid vehicles is related to the super warranty. ASA held a forum on this issue at our Congress of Automotive Repair and Service (CARS) meeting during Industry Week in Las Vegas last fall. Incentives for hybrid purchases are notable but not at the expense of thousands of small business persons. Super warranties are unfair to independent repairers unless we have the option to repair that vehicle. As for short-term impact, training and education are the key issues.”

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Joe Stephens, Owner, Stephens Automotive, Palantine, IL:

“[Maybe you’ll talk to somebody else and get just a ton of information, but] for me, I don’t have a whole lot of information on hybrids. I’ve got three older guys in my shop who have been mechanics for more than 30 years. We sat down and discussed this very issue.

“Most of the time, because hybrids are so new, anyone who has a hybrid is taking it to the dealership.”

“We have done basic service on about eight hybrid vehicles to date – minor tune-ups and brake services. We are waiting to see what more an independent shop is able to do with these cars. There will be a need for new test equipment and knowledge of these vehicles. I suspect it will be a few more years down the road.

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“I’m not sure, for instance, if my scan tool will work on a hybrid vehicle. I’m sure it would be completely different information. So right there, if someone is going to work on a hybrid vehicle intelligently, they are going to need to be able diagnose and read trouble codes on a completely different animal.

Summary by Amy Antenora, editor:

Since the first hybrid vehicle hit the streets in 1999, sales have more than doubled every year. Today, there are approximately 330,000 hybrids on U.S. roads and analysts say hybrids could make up approximately 15 percent of total registered vehicles within the next ten years. Today, with concerns over dependence on foreign energy sources, new emissions requirements and the spike in gas prices following hurricanes Katrina and Rita, more and more consumers are considering buying hybrids.

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Having been on the market less than a decade, the majority of hybrid vehicles are still being serviced at the dealerships. Independent repair shops rarely see them in their bays and when they do, it’s likely only for the most basic maintenance. However, knowing that many of these vehicles will be coming out of warranty in the next few years, there will be great opportunities for the aftermarket and independent repair shops, but there will also be a steep learning curve to overcome.

According to recent research from ASA, when asked about hybrid vehicle service and repair, 42 percent of ASA members said hybrid vehicle service and repair issues had an impact on both their businesses and the industry. When asked about hybrid vehicle technical training, 47 percent of ASA members said hybrid vehicle service and repair issues had an impact on both their businesses and the industry.

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The full impact of hybrid vehicles on the independent aftermarket remains to be seen. While the associations seem to have a good grasp on the potential and the pitfalls of hybrid vehicle technology, this knowledge is only slowly trickling down to the technician, as shop owner Joe Stephens pointed out.

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