Clean Energy and Electric Vehicles Center Stage at Legislature

Clean energy was a priority for the Walz administration during the first term, and now with Democrats in control of both chambers, the renewed focus has more momentum. To that end, during the first five weeks of the legislative session, the House and Senate passed the “carbon-free electricity by 2040” bill, which was signed by the Governor. The new law requires the state’s electric utilities generate all their electricity from carbon-free sources by 2040, moving up the previous deadline by a decade.

This legislation becoming law coincides with a new report finding that Minnesota is on track to meet its goals for reducing greenhouse gas emissions that were set back in 2007. While this is overall positive news, there are many caveats – a glaring one of which is transportation emissions which account for the largest source of greenhouse gas emissions in Minnesota. And while overall greenhouse gas emissions from transportation recently decreased, this reduction is likely attributable to the impact Covid-19 had on overall transportation demand and is not likely repeatable.

Given that electric utilities have made significant progress in decreasing emissions since 2007 and recent legislation provides even more regulations and assistance, many expect attention to turn to the transportation industry as lawmakers continue to look for ways to decrease carbon emissions. A shift in focus has already been happening as both the state and federal government are increasingly speaking out and making spending proposals to increase the use of

by Sam Richie & Shannon K. Mitchell, AASP-MN Lobbyists

electric vehicles. Vice-President Harris spent time in St. Cloud this past month promoting EVs and supporting EV infrastructure. At the state level, Governor Walz’s proposed budget includes a variety of EV proposals as well, from funding for charging stations to programs to support job training in clean economy occupations. Stay tuned as more legislation moves through the process!

Another issue that has been top of mind for many shops with employees is the paid family and medical leave legislation making its way through the Legislature. There are a variety of opinions about the proposal. Regardless of support or opposition, it’s important for members to have a basic understanding of the components included in the draft bill moving forward. The state will use onetime surplus funds to get the program up and running, meaning benefits would be available from the beginning (2025). Then employers and employees would pay a new payroll tax to keep the programming running into the future. Money paid into the state fund by employers and employees would vary depending on an employee’s salary. Employees could take anywhere from seven days to 12 weeks off for a qualifying family or medical issue, with a maximum of 24 weeks in a year.

Paid family and medical leave is a priority for the DFL, which controls both chambers of the Legislature and the Governor’s office, so it will most likely become law in some form. What is less certain is what the final version will look like. Watch for updates as the draft legislation is amended and works its way through each chamber and on to the Governor.

AASP-MN’s Uniform & Linen Supplies Program Pays 10 Percent Rebate

AASP-MN recently distributed over $79,500 to 183 members participating in the Alliance’s uniform program through Aramark. That’s an average rebate of $434.80! The rebate is equal to 10 percent of their qualifying purchases during 2022.

This is just one of many cost-savings programs the Alliance offers to its members. To find out more about the benefits/services available, check out page 22 of this issue of AASP-MN News, call the AASP-MN office at 612623-1110 or visit the AASP-MN website, aaspmn.org and start saving today!

21st Annual Race for Automotive Education Raises Over $14,000 for Student Scholarships

AASP-MN held its 21st Annual Race for Automotive Education, January 23-26, at ProKart Indoor Racing in Burnsville. The event raised over $14,000 to support the Alliance’s Automotive Education Fund and will fund scholarships for automotive students enrolled in ASEAccredited auto service and collision repair programs in Minnesota’s technical colleges.

During the four nights of racing, 40 teams (197 racers) of auto service and collision repair shops, technical school students and industry suppliers took to the track in go-karts reaching speeds of up to 40 miles per hour. Many spectator fans were also on hand to cheer on their team.

Trophies were awarded to the first place and runnerup teams each night. They were:

Monday, January 23

• First Place - Fairway Collision & Mechanical, Vadnais Heights

• Runner-Up – Collision Specialists Inc., Red Team (CSI Green came in third), Austin

Tuesday, January 24 (student night)

• First Place – DCTC Team #1, Rosemount

• Runner-Up – DCTC Team #2, Rosemount

Wednesday, January 25

• First Place - Wenzel Auto Electric, Mankato

• Runner-Up - LaMettry’s Collision, Minnetonka

Thursday, January 26

• First Place – Suburban Chevrolet, Eden Prairie

• Runner-Up – Heppner’s Team #3, St. Paul

In addition to the 40 race teams, this event was supported by:

• 1 Collision Network

• 3M

• Auto Value/Benco Equipment

• CBIZ

• Dentsmart PDR

• Finishaster

• Justice Brothers Car Care Products

• LKQ-Minnesota

• Lube-Tech & Partners

• Shop Monkey

• United Fire Group

(Pictured top-bottom): Day One First Place winner Fairway Collision & Mechanical (Vadnais Heights); Day Four First Place winner Suburban Chevrolet (Eden Prairie) & Runner-Up LaMettry’s Collision (Minnetonka)

NEW this year, we will be awarding prizes at the Annual Meeting & Leadership Conference on April 5 for the top team of the week and other notable race accomplishments!

The Automotive Education Fund was established in 2002 to provide financial resources to support

Minnesota Careers in Auto Repair & Service (MNCARS)

MNCARS is a nonprofit organization established in 2016 by AASP-MN. Its sole purpose is to promote careers in the automotive industry, recruit young people into the state’s college-level automotive service and collision repair programs, and, ultimately, into industry workplaces.

MNCARS is Back on the Road and Visiting Schools! If you would like to use the MNCARS materials for a school event or visit near you, or would like a representative from MNCARS to come to your area, let us know! Here is a list of our recent stops:

• Feb. 2: Anoka Tech, presentation to three classrooms of mechanical students & tour of new third-year program space

• Feb. 10: St. Paul College event with presentation from Senator Klobuchar promoting The American Apprenticeship Act

• Feb. 17: Central Middle School, White Bear Lake Area Schools

IDS624, presentations to five classes of 6th to 8th graders

• Feb. 23: Johnson Senior High School, St Paul, Opportunities Fair

• Feb. 24: Central Senior High School, St Paul, Opportunities Fair

• Feb. 27: Elk River Schools, Career Fair automotive students, enhance automotive programs and raise awareness of career opportunities in the automotive service industry. Since its inception, nearly $310,000 has been invested in student scholarships, SkillsUSA and automotive education programs throughout the state.

Take advantage of the resources in the MotorMouth toolbox at carcareers.org/motor-mouth. Get out and get active in your local community promoting industry careers!

For more information, visit aaspmn.org or call the Alliance office at (612) 623-1110.

Sponsorships Support Alliance Educational Programs & Other Activities in 2023

Recently, AASP-MN asked for program sponsorships from its Associate members and other industry vendors to help support AASP-MN’s educational programs and other activities in 2023. Sponsorships help the Alliance deliver quality programming at an affordable price to members.

To date, the following companies have made sponsorship commitments:

Platinum Sponsors

LKQ Minnesota

Lube-Tech

Gold Sponsors 3M

Auto Value / Benco CBIZ

FinishMaster

ShopMonkey

Silver Sponsors

Aramark

Axalta Coating Systems

Colonial Life Enterprise Rent-A-Car

Heartman Insurance

O’Reilly Auto Parts

PPG Automotive Refinishes

Sherwin-Williams

Suburban GM Parts

Sunbelt Business Advisors

United Fire Group

Bronze Sponsor aaa Auto Parts C.H.E.S.S.

Dentsmart PDR

Radco

If you are interested in becoming a sponsor for any Alliance educational program or event, contact the AASP-MN office at (612) 623-1110.

2023 Membership Dues Are Due!

If you have not paid your 2023 membership dues, PLEASE do so today. Your timely payment will save AASP-MN the additional cost and time incurred with re-billing and other collection efforts. We’d much rather be working on programs and initiatives to improve the automotive service industry – and your business. Thank you!

Fewer Sweet-Spot Vehicles No Problem

Three years of depressed new vehicle sales from 2020 through 2022 (and probably for the next few years) have some aftermarket analysts concerned. They fear that beginning in 2026 fewer vehicles in the repair-age sweet-spot (cars and light trucks six to 10 years old) will reduce aftermarket volume.

While this reasoning seems compelling, Lang Marketing believes that several key factors will fuel an increase, not a decrease, of aftermarket volume, despite the shrinking number of vehicles six to 10 years old on U.S. roads in the coming years.

Aftermarket Sales Drivers

Sales of some aftermarket parts, such as accessories, are concentrated in the first few years of vehicle operation, but replacement parts (parts necessary for vehicle operation) are dependent on vehicle use (and the resulting wear and tear) to create aftermarket demand.

Vehicle Repair-Age Sweet-Spot

The repair-age sweet-spot has vehicle age boundaries of six to 10 years old. Traditionally, these cars and light trucks record an above-average rate of aftermarket product use.

The six-to-10-year age range of the repair-age sweet-spot is a product of the wear and tear from the annual miles typically traveled by these vehicles and their accumulated mileage.

Sweet-Spot Age Boundaries

However, these factors are in flux. Cars and light trucks are being driven fewer miles per year, rolling up odometer miles at a slower pace than in the past. Accordingly, accumulated mileage by vehicle age is changing.

Due to these factors and the increased durability of original equipment parts in new vehicles, the age boundaries of the repair-age sweet-spot will move higher in the next few years.

Fewer Sweet-Spot Vehicles

The consequences of plunging new vehicle sales during 2020 through 2022 (down about 20 percent compared to 2016 through 2019) are working their way through the vehicle population and heading to the repairage sweet-spot.

In a few years, there will be a significant reduction of vehicles six to 10 years old.

During 2021, there were over 81 million vehicles six to 10 years old on U.S. roads. By 2028, the repair-age sweet-spot population will shrink by over 10 million, down more than 12 percent in this critical vehicle age range.

Not All Miles Are Equal in Vehicle Wear

As vehicles age, they generally require more repairs (parts and purchased service) per mile than newer cars and light trucks. Accordingly, not all miles are equal in creating vehicle wear and tear, which leads to aftermarket product use.

If a consumer with a four-year-old vehicle does not replace it with a new model, he will drive his aging vehicle for several more years at about the same annual miles he would have driven a new model.

Mileage Shift to Older Vehicles

These additional miles on older vehicles, rather than newer ones, boost aftermarket parts and purchased service per vehicle mile.

This example will be repeated millions of times over the next several years, increasing the aftermarket parts and purchased service volume per vehicle mile traveled by the aging VIO.

Shifting Sweet-Spot

As a result of low new vehicle sales (2020 through 2022 and probably beyond) there will be an upward shift in the boundaries of the repair-age sweet-spot, reflecting changes in the age mix of vehicles and their annual miles and accumulated mileage.

Strong Aftermarket Outlook for Many Products

While some aftermarket products, such as accessories, could suffer reductions in annual volume from the decline of new vehicle sales, replacement parts (and the purchased service required for diagnosis and installation) will benefit from a VIO in which older cars and light trucks are driven more miles annually and accumulate higher mileage.

Six Major Takeaways

• Approximately 20 percent fewer new cars and light trucks were sold from 2020 through 2022 compared to the previous three years. Lang Marketing expects that this lower sales trend will continue for several more years.

• Some analysts fear that new vehicle sales and the impending drop in cars and light trucks in the repairage sweet-spot (vehicles six to 10 years old) will reduce aftermarket volume starting in 2026.

• Lower new vehicle sales will work their way through the vehicle population, and in a few years, the number of cars and light trucks in the so-called repair-age sweetspot (vehicles six to 10 years old) will fall by about 12 percent.

• During their first four years in operation, cars and light trucks average thousands of miles more per year than the typical vehicle in operation. Lower new vehicle sales mean that mileage will be shifted to older vehicle age groups.

• As vehicles age, they generally require more repairs (parts and purchased service) per mile than newer cars and light trucks. Accordingly, all miles are not equal in creating vehicle wear and tear that leads to aftermarket product use.

• As new vehicle sales decline, mileage is shifted to older vehicles, and wear and tear on these older vehicles increases per mile. Replacement parts volume (and the purchased service required for diagnosis and installation) will benefit from older cars and light trucks being driven more miles annually and accumulating higher mileage. Accordingly, a drop beginning in 2026 in the number of vehicles in the repair-age-sweet spot will not reduce aftermarket volume (parts and purchased service).

VIO Count Does Not Determine Aftermarket Sales

The number of vehicles in operation (VIO) does not necessarily determine aftermarket sales. More often, the key drivers of aftermarket sales are the types of vehicles in operation and their use (mileage), not the VIO count.

The VIO in the U.S. has been relatively flat over the past three years (2020 through 2022), and Lang Marketing projects that this VIO plateau will continue through 2024. Nevertheless, there will be significant car and light truck aftermarket product growth during these years.

10 Million Vehicles Not Sold Through 2024

Beginning in 2020, the new vehicle market dialed down. The onslaught of COVID-19 and resulting interruptions in the flow of components for vehicle production reduced the supply and sales of new cars and light trucks in the U.S.

Higher vehicle prices and soaring interest rates have added to the new vehicle market’s woes.

Accordingly, about seven million fewer vehicles were sold in the U.S. over the past three years (2020 through 2022) compared to the annual average of the red-hot new vehicle market between 2015 and 2019.

Slow New Vehicle Recovery

The new vehicle market recorded 2.4 million fewer sales in 2020 than the previous year. By 2022, the new vehicle market had declined by another million cars and light trucks.

Downward pressure on new vehicle production and sales will continue for the next two years. Lang Marketing projects that sales in 2023 and 2024 will fall about 12 percent below the yearly new vehicle average recorded between 2015 and 2019 (17.2 million).

Flat VIO in the U.S.

After three years of struggling new vehicle sales, the number of vehicles in operation (VIO) was flat in 2022 compared to the two previous years. The VIO will likely continue at that plateau through 2024, according to Lang Marketing’s projections.

Aftermarket Impact of No VIO Growth

Contrary to expectations, the lack of VIO growth between 2020 and 2024 will not be a death sentence for aftermarket sales. In fact, aftermarket product volume boomed during 2021 and 2022, recovering from the onslaught of COVID-19, despite the flat VIO.

Lang Marketing expects this trend to continue through 2024, with aftermarket growth at least as strong during 2023 and 20224 as in the five years of VIO expansion from 2015 through 2019.

Three Types of Vehicles and Their Use

The types of vehicles on the road and their use (mileage) are much more important to aftermarket product growth than increases in the size of the VIO.

Three types of vehicles (and their use) are key to generating aftermarket product volume: older vehicles, light trucks and foreign vehicles.

Older Vehicles

Older vehicles consume more aftermarket products per mile than newer ones.

The average age of vehicles in the U.S. climbed by about 1.5 years from 2012 to 2022, and the number of older vehicles, especially those at least 12 years of age, increased significantly.

Much of the aftermarket product growth during the past few years (when the VIO was flat) has resulted from an older mix of vehicles using more products per mile than in past years.

Light Trucks

Light trucks average significantly more aftermarket product volume per vehicle than passenger cars.

This is due to consumers purchasing more accessories for light trucks than passenger cars, the higher prices of many components for light trucks compared to cars, and other high-priced parts that are unique to light trucks.

Light Truck VIO Majority

Over the past 20 years, light trucks have significantly increased their share of new vehicle sales, and, accordingly, they now represent a VIO majority.

This light truck surge has helped to increase the volume of aftermarket products, independent of VIO growth.

Foreign Nameplate Vehicles

Foreign nameplates generally average higher annual repair and maintenance use for two reasons: foreign nameplates have above-average rates of Do-It-For-Me repair (which has higher product costs at user-price than Do-It-Yourself repair), and their replacement parts generally are more expensive than those for domestic nameplates (greater use of OE brands, etc.).

All Three Systems: Topping Off Fuel Tank for Wheel Alignment – Vehicle manufacturers’ service procedures may require the fuel tank to be topped off prior to performing wheel alignments. When utilizing labor time from CCC, Mitchell or Audatex Qapter, the labor and fuel cost to fill up the fuel tank is NOT INCLUDED. Always consult with the vehicle manufacturer and vehicle owner for correct fuel type used in their vehicle.

All Three Systems: Steering Gear Initialization/ Re-learning NOT INCLUDED – OEM repair procedures for replacement steering gear assemblies may require programming or re-learning as per the OEM repair procedures. Additional labor for this diagnostic step, using a scan tool, is NOT INCLUDED in all three estimating systems.

CCC/MOTOR: Estimate Work Time Premise Pages G9

Audatex DBRM 4-2 Labor Exclusions Pages 43/44

Mitchell CEG Labor General Information > Additions to Labor Times

All Three Systems: Seam Sealer for Bolt-on Door Hinges – OEMs commonly require seam sealer application to door hinge areas. The labor to remove and/or reapply seam sealer is NOT INCLUDED on bolton parts. Material costs to perform the operation are also NOT INCLUDED. Always reference labor footnotes for vehicle-specific labor notes. Cavity wax may also be required and is also considered NOT INCLUDED.

Honda Water Shield/Vapor Barrier Adhesive – Honda/ Acura repairs that require installation of a vapor barrier may need to apply “putty-like adhesive that reattaches the plastic cover (rain protector) under the door panel to the door.” Honda part number 08712-0003 is available from your Honda/Acura parts dealer. Reference Honda Bulletin 99-030, “Honda Recommended Materials,” for a list of approved products used in Honda/Acura repairs. Labor to apply adhesive may vary depending on the information provider. Material cost is NEVER included. Submit a DEG Inquiry on vehicle-specific chapters to confirm labor application and labor times for vapor barriers when in question.