Vehicle technology will cause disruption — way down road

CASE (connected, autonomous, shared and electrified) vehicles are in their infancies and they have a lot of maturing to do before they become a significant part of the vehicle parc.

Mr. Hirsh predicts it will take another decade or so before electric vehicles become more commonplace and more vehicle owners transition to electrified vehicles.

Electrified vehicles account for less than 1 percent of the U.S. vehicle parc, Mr. Hirsh said, a share that probably won't change much until around 2026, when the cost of ownership of a fully electric vehicle should become equal to or better than an internal combustion engine-powered vehicle.

"Once that happens, then things change," he said.

Once electrified vehicles become affordable, adoption will happen quickly, he noted.

"Electrification will gradually have an impact and then I think there is a tipping point somewhere where it becomes truly economical for the everyday vehicle purchaser to buy an electric vehicle as opposed to an internal combustible engine (vehicle)."

Adoption of autonomous vehicles are even further away, he said, as they are still in the experimental/concept stage.

Shared-mobility operations, such as Uber Technologies Inc. and Lyft Inc., have enjoyed phenomenal growth — about $30 billion in gross revenue in the U.S. — but passenger miles through Uber and Lyft account for less than 1 percent of total vehicles miles traveled.

"Despite how much it has grown, how much we may use it for certain things, it's not a large part of the transportation network today," Mr. Hirsh said.

Looking ahead, Mr. Hirsh said CASE vehicles will have positive and negative impacts on the independent vehicle aftermarket:

Connected vehicles, by virtue of embedded technology, will have fewer under- or unperformed maintenance and repairs; however the connected technology will direct more service work to OEM dealers. But Mr. Hirsh said this will not have a significant impact on the independent aftermarket because OEM dealers don't have enough service bay capacity to handle all the vehicles — "They'd be swamped."

Autonomous/shared vehicles will be maintained better by their owners, rack up more miles driven and have more parts related to Automated Driver Assist Systems (ADAS) to replace; but their adoption will result in fewer new vehicle sales.

Electric vehicles will sport new expensive parts; but they also will have fewer parts to replace.

Mr. Hirsh said the industry question really is not: "Are these things are going to happen?" but "When?" and "What is the impact?"

"We live in an industry that doesn't change very fast because anything you start to do today has to work its way through 263 million vehicles on the road with an average age of over 12 years. It takes a while for that impact to be felt by us in the independent aftermarket," he said.

Even by 2030, the effects on the market will be muted.

"That doesn't mean they won't be felt by certain individual players, …" he said.

Mr. Hirsh predicted people will start to see fully autonomous vehicles become accessible around 2035. The first place autonomous vehicles used on a regular basis will be in commercial applications, such as over-the-road trucking, he said.

"I do believe when (the autonomous vehicle) comes, it will be extraordinarily disruptive, more so than people talk about today. What is a vehicle won't be the same. It's going to be completely different.

"Who the 'customer' is won't be the same. It will be much less individuals like us and much more fleets and companies that run these things because (autonomous vehicles) are going to still be expensive.

"And in every surrounding industry — whether I'm in the service industry or whether I'm a gasoline station or whether I sell car insurance — every single one will be turned upside down when this technology becomes viable." he said.

" No doubt about it. The issue is we got a long way to go, despite what people may tell you."

Mr. Hirsh said four main things have to be addressed before autonomous vehicles become viable:

Technology and cost. Today, the technology is still in the experimental and developmental stages.

"Today, no matter what people may tell you, the sensors for these things that have to be able to see and sense on their own aren't up to snuff. They don't do well in the dark. They don't do well in bad weather.

"And the problem is, today in the United States, we kill each other on the road. Over 30,000 of us die each year and we put up with that because of what we get in return — the benefits of being able to drive our own vehicles.

"But if one of the large OEMs produced an autonomous vehicle that killed 100 people a year, do you think we'd be as forgiving? I don't believe so," he said.

"I believe the standards and requirements for safety and reliability are going to be quite different for autonomous vehicles. And to reach that level of safety and reliability, first that technology doesn't exist today.

"Whether it's sensor technology or computing technology or communication technology, whatever it is, it's not quite there yet. Some of them are close, some could be there in two years, but even once they are, we need a while to test these things.

"Some people estimate it will be six years, five years, seven years to validate these things. That's not atypical in the automotive industry. It's a while before we validate it, despite what anyone will tell you."

Installed base. It will take a long time for autonomous vehicles to become a significant percentage of the vehicle parc.

"If everything I produce today was autonomous, it takes me 10 years to get half of the installed base. There's 260 million vehicles on the road with an average age of 12 years old. It takes a while for these things to have a huge impact," he said.

Another problem for adoption is that autonomous vehicles don't get along well with human drivers, he said.

He used the analogy of setting loose 100 autonomous vehicles in New York City traffic with its notoriously aggressive taxi drivers. He surmised that because autonomous vehicles are programmed to avoid accidents, "you'd have every one of those 100 vehicles cowering on the side of the road — not moving."

Cost also will inhibit adoption on a major scale, as autonomous technology can add $50,000 to $100,000 to the cost of a vehicle.

"Only the wealthy and fleets would be able to afford it," he said.

Liability and ethics. What happens when an autonomous vehicle has to make a choice between killing a passenger or killing someone on the road?

Today we don't allow machines to make life and death decisions, he said, and we haven't decided who should be allowed to program machines to make those decisions. There also is the unresolved issue of who wold be liable if an autonomous vehicle caused an accident — the owner or the manufacturer?

Standards and infrastructure. Autonomous vehicles need to operate with an infrastructure that enables vehicle-to-vehicle communications.

"And since a lot of the cities we live in can't afford to fill the potholes, I think it's going to be a while before they install the technology to make this work," Mr. Hirsh said.

"I think we're going to get there, but it's going to take a while. That is why our forecast for autonomous vehicles to be ubiquitous, despite what interested parties — Uber or Waymo — will tell you, ... fully autonomous vehicles are a ways out."

The good news is that the independent automotive aftermarket has time to prepare for the changes ahead, Mr. Hirsh said, but the industry cannot be complacent. The changing environment will continue to pressure those that do not leverage differentiation, innovation, M&A and/or geography to expand.

Amid all the new technology and disruption, however, there still will be a demand for the independent repair shop in the future.

"First of all the (OEM) dealers are not big enough to replace the independent aftermarket," Mr. Hirsh said. "There aren't nearly enough service bays … and they're not investing in new service bays. ...

"I do believe that independent aftermarket repair shops of five to 10 years from now will probably look different — higher scale, better training, more investment in tools, be bigger, more bays. They're not going to be Bob's single shop. There's going to be some changes.

"But I still contend 10 years from now — because by and large 10 years from now we're talking about that same installed basis today because it doesn't change over that fast — it is going to be the independent repair technician.

"I'd have to have every single dealer in the United States investing huge amounts in new service bays — which they are not doing. Just can't happen.

"It may not be the same independent repair technician that's there today, he may be replaced by the guy down the street who's a smart guy and invested in marketing and technology and training, etc., but that's who' s going to be doing the majority of these repairs 10 years from now. I'm willing to bet on that one."