Mike Chung: 0:08

Welcome to Auto Care ON AIR, a candid podcast for a curious industry. I'm Mike Chung, Senior Director of Market Intelligence at the Auto Care Association, and this is Indicators, where we identify and explore data that will help you monitor and forecast industry performance. This includes global economic data, industry indicators and new data that will help you monitor and forecast industry performance. This includes global economic data, industry indicators and new data sources. I'm Mike Chung. I head up market intelligence at Auto Care Association and I'm very happy to introduce my guest for today, Todd Campau of S&P Global Mobility. Hello, Todd. Hey, Mike, thanks again for making the time to be with us and tell us a little bit about your company and what you do there.

Todd Campau: 0:54

So S&P Global Mobility. Many people in this industry know us probably by our legacy names RL Polk is what we used to be known as, and then over the years we've changed brands many times. But we provide vehicle and operation data and other metrics around the vehicles to this industry to help the channel better understand what vehicles to target and things that might be opportunities that are coming into the space. I am responsible for the aftermarket in the Americas. My title, I guess, is associate director of aftermarket solutions, so we build a lot of solutions for the marketplace and we're always interested to hear ways we can better help.

Mike Chung: 1:40

Oh, that's that's. That's really helpful. And for, as you mentioned, a lot of our listeners are within the aftermarket and they're familiar with the Auto Care Association Factbook, to which you contribute registration data, adoption of alternative propulsion vehicles, age, necessarily in the automotive aftermarket space. And, as we've talked about, what we like to do in this particular podcast is talk about data considerations for analysis, because we're in this day and age of big data, of using algorithms, machine learning, artificial intelligence. I think we have a lot of interesting things we can talk about when we consider these data and how it can be used for operational and strategic analysis. So tell us a little bit about, kind of your background, how you landed in S&P Global, perhaps.

Todd Campau: 2:36

Well, that's an interesting longitudinal story, kind of.

Todd Campau: 2:40

I been in uh the industry now for 21 years, almost 22 years and I started at um cleavite engine parts at the time, which is now part of mala aftermarket um, and that was in 2003, I believe.

Todd Campau: 2:57

Uh, I worked on the manufacturer side for the first 11 years of my career and then the past few years I guess the past 11 years now almost I've been at uh SMP global, helping more than just, obviously, just one organization and so, uh, that's really what attracted me to this role, that's how I landed in this role was some of the things I was doing with data um.

Todd Campau: 3:23

Having the opportunity to look at it in the context of other organizations was attractive to me and, you know, even at that point I had been in the industry for a while, so I had a lot of colleagues and contacts throughout the industry. So when the opportunity arose at IHS at the time I had a few colleagues who thought I'd be a good fit and they kind of connected me with the organization and I had some friends and folks that I had known for years that were working there. So I kind of discussed the opportunity with them and the chance to work with at the time. It was Mark Sang, who everybody in this industry knows, and Brian Funke were two of the people that were there that I looked forward to the opportunity to go work on product with them.

Mike Chung: 4:13

So that's kind of how I fell into this role. Gotcha, thanks for sharing that. And S&P Global Mobility. You have clients across different organization types, right? I would imagine you have private clients. You have a lot of clients in the automotive aftermarket that may be public or privately held. I would imagine that you also provide solutions and insights to governments and other organizations. Is that fair to say?

Todd Campau: 4:38

Yeah, that's one of the real interesting things of this role is we serve at S&P Global Mobility as a whole. We serve all kinds of customers across all kinds of channels. My channel really sits everywhere but the OE, so government and insurance, aftermarket, infrastructure investments. It's a smorgasbord of opportunities, of new businesses that we partner with here in Europe.

Mike Chung: 5:09

Right, and that's helpful, and I think later on we'll discuss the different types of analyses you're asked to do at a high level, if nothing else.

Mike Chung: 5:19

But in terms of the data, I'd like to dive into that a little bit because, as a purveyor of data, as an analyst of data and insightful solutions, I think there will be a lot of things that our listeners can take away. So, when I think about the fact book, I see data in there like registration data, their registration data. So, for those of you who may not be familiar, how many vehicles are on the road in the United States, and by vehicle type, whether it is light vehicles, commercial trucks and this is the type of data that can be very helpful for people in the industry, investors that are looking to get into the industry. And it also invites us tell me more, right, because some people may come to you and say, well, I'd like to know a little bit more. Can you go a little more granular for me? So I want to talk a little bit about the origins of the data. If you can, todd, tell me a little bit about how you're sourcing data, the things that you look for from a quality perspective, and we'll start there.

Todd Campau: 6:28

Sure. So really, that is probably one of the stories that we don't tell enough anymore, because we've been in this business in the aftermarket, for long before I was ever with the company, I mean 20, 30 years, probably more. We've been doing vehicles in operation, for the story is, you know, basically a hundred years ago they started doing this to settle an argument between Henry Ford and Sloan who was running GM, I believe it was as to who was selling and registering more vehicles, and so we've been doing this for a very long time, but we have honed this process year in and year out over the decades, and we do get registration data from the States, but that's not the only source we get data from, and so one of the things we really do really well that we probably don't talk about enough is that we're a data aggregator, really, when you think about the role we're playing, and so the data that sits under our vehicles and operation products sits under several other products in our organization too new vehicle registrations, used vehicle registrations. We have a VIN decoder, a plate to VIN, and all these data sources come from the same wellhead, if you will. The same wellhead, if you will. And so to get to your question about data quality.

Todd Campau: 7:47

We believe that we've focused for many years on data quality. We believe that in a lot of ways we are an indicator to the state when they have a problem with their data, because we track the records coming inbound so closely that if we see a big change in registration that seems out of the norm, we go back to states on. You know, I wouldn't say it's a regular basis, but there are occurrences throughout the year where we go back to states and say, hey, we think you're missing some registrations for this or that vehicle type. Because we've been tracking it so long, we can see those trends. We also have relationships with the manufacturers, so it's not just registration data. We're understanding the new sales that they say they're selling into the marketplace. We proactively understand the vehicles that they're going to put in the marketplace with high level of coding, and that becomes the foundation for all of our data.

Todd Campau: 8:42

Now, one of the questions we do get sometimes is you know, how are you able to get that data and how are you able to use that data? Now, we do have a lot of covenants with this. Each state has its own covenant and we're very cautious about personally identifiable information, or PII, but we also are one of the trusted partners that do recall. So we do keep that data and keep all those vehicles garaged in the right place so that if we need to assist with a recall that NHTSA requires the manufacturers to do, we're one of the partners who can assist with building those lists and making sure those recalls happen.

Mike Chung: 9:20

Oh, that's fascinating, and I a hundred years, that's amazing. Oh, that's fascinating and I a hundred years, that's amazing. And then to your point about kind of those firewalls, so that it makes me think about banking, for instance, where there are certain firewalls and protocols in place to make sure that the data is used appropriately, and the fact that you're able to be have that access in the case of a recall is very valuable.

Todd Campau: 9:46

Absolutely, and that makes our data stronger because we have to keep it accurate for that and that tracks all the way through to our vehicles and operation product. We really view it as a census of the vehicles that are on the road. Sure, and that's the way we connect it. For a lot of people outside this industry is it's really a vehicle census, vehicles, vehicles in operation? It's almost synonymous with any other census you could think of, and so we can do a lot of the things that you would look to do with a census how old are the vehicles, what's the composition, where are they at? And so that's kind of the approach we take with the specific VIO product.

Mike Chung: 10:20

And if I think about it from a slicing and dicing, drilling down perspective, there are a number of variables that you could sort the data on, and I'm just thinking about that 50 states mapping things appropriately, and then that could be perhaps counterbalanced by vehicle manufacturers. There's probably some sort of nomenclature that is used. Can you talk to that a little bit?

Todd Campau: 10:47

Yeah, so we work with the manufacturers exactly on that the nomenclature, the NHTSA VIN the Highway Transportation Administration defined the VIN in 1981. And that's kind of what we work with the manufacturers around is understanding the VIN patterns. We sometimes call it for the vehicles they is. Understanding the the vin patterns we sometimes call it for the vehicles they're going to release and we have relationships with virtually all the manufacturers who sell vehicles into north america to understand what they're going to be bringing in and what they look like so that when we see it come in. Another side note is most of the DMVs use our VIN decoding capability in their registration. You know if you go in and try and register a vehicle they're pinging the attributes of the vehicle against our VIN decoder to understand that it's a station wagon or a sport utility vehicle or whatever that is.

Mike Chung: 11:40

I see, and so there's a designated nomenclature and the letters and numbers in the VIN correspond to things like make, model year, vehicle type. Does it have things like I don't know color or other attributes like that?

Todd Campau: 11:58

A lot of that. You have to get into the full VIN and have what's called the build sheet, and we're doing a lot of work around getting VIN specific information that we can bring to the marketplace. But most of that, some of that, let's say, requires a build sheet. But the VIN does define year model, which is a unique thing to North America, but that actually is in the VIN the year model of the vehicle where it was manufactured. If it was a domestic or an import, there's a country code characteristic. There there's actually some ability to identify the facility that built the vehicle as well. So if it was built in Kansas or Dearborn or somewhere else and that could help with the recall, absolutely Right.

Todd Campau: 12:40

And then it does get into some engine information. It doesn't. The base of the VIN doesn't tell you the color. The one thing missing and we get this question a lot that I think should be in the VIN, that wasn't, and you know if we could go back 40 plus years maybe we could change it is transmission. The VIN will not tell you without the full 17it VIN if it's an automatic or a manual. Now that's gotten less important over the years here in the United States because almost all the vehicles are automatic, but that is one thing we can't tell without the full VIN.

Mike Chung: 13:15

And you mentioned engine type. How about propulsion? Because some of the stats we look at with you is adoption of battery electric vehicles, hybrid electric vehicles, fuel cell and so forth.

Todd Campau: 13:26

Yeah, so that's in there as part of that. I guess engine in air quotes is understanding what the propulsion system is and what the fuel type is.

Mike Chung: 13:35

So, when you take all of this data, this having a uniform identification system and knowing what all the fields stand for certainly just paves the way for accurate, meaningful analysis yeah, it's really the foundation we think of.

Todd Campau: 13:52

Everything is to be able to accurately identify those vehicles, and we have whole teams dedicated to it. I I'm just a consumer of it, but we have whole internal teams that track this day-to-day, week-to-week for years.

Mike Chung: 14:09

So thinking about, this system has been in place for 40 plus years, as you're describing it. What might the future hold in terms of could this then be expanded? What additional attributes can be added? How much flexibility is there? Because I'm thinking about if, as new technology is introduced, can that be coded into the, then can we talk about propulsion systems. Can you just kind of in your, in your crystal ball, tell us what we might expect to see, for you know, this type of data in the coming decade or so?

Todd Campau: 14:44

sure. So to my knowledge, nhtsa has not had any plans to make changes to the actual VIN standard. Um, you know, it's the big news when it comes to regulations is the question of the OBD2 port. Really nobody even talks about the VIN right now. Um, so that's one of the reasons we're starting to focus on vin specific and some of our additional tools are our vin decoding tool and we're trying to find ways to drive that to vio.

Todd Campau: 15:16

We're working on a new, some new products around the technology going in the vehicle and this that's part and parcel of it, like being able to tell organizations you know what vehicle had had I don't know blind spot monitoring or lane keeping or adaptive cruise. Those are all things that are starting to be interesting, especially as organizations in our channel start to figure out what where they should play a role in the evolving vehicle. And so we're not leaning on NHTSA to add to the VIN to help us understand that. We're actually working to build that metadata out around the vehicle ourselves, working with industry partners, manufacturers, everybody, because we really think it helps the overall industry when it comes to maintaining that vehicle and making sure it's safe and in good operating order and also, ideally, producing as few emissions as possible. Obviously too, and so we think all those new technologies that are coming in are hugely important, but we don't think that we can wait on NHTSA to define a coding standard, right, right, so we're doing it ourselves.

Mike Chung: 16:27

And if I can just go back to one other thing that kind of crosses my mind, registration data from the states, I mean at a high level. Is it pretty similar in terms of the format that it's coming to you?

Todd Campau: 16:40

No, no, each state is unique, and it seems almost every year that there is a state going through a rewrite of their process, and so the data teams that I mentioned. And again, just full disclosure. I feel almost no pain from this myself, I just hear about it, but we have team members on our vehicle coding team and on our data acquisitions team that are monitoring this and seeing this, and you know they're knee deep in it Anytime a state does a rewrite to make sure we're still getting the data we need and that everything's getting coded appropriately. That's one of the reasons. Early on in the podcast I was alluding to the fact that sometimes, even the states sometimes believe that we have better, cleaner data than they probably have because we're putting it through this cleaning process across all 50 states.

Mike Chung: 17:35

Right and I guess it sounds like all of the back end work. There's a lot of that going on that your teams are going through. Do you hear about any best practices or recommendations that they would make to states that way?

Todd Campau: 17:51

I think if states are willing, they certainly are willing to try to help with those things. It does help. Like I said, we have VIN decoders embedded in most of the states too, so it's kind of helping us keep the data clean on the inbound side as much as possible, um, and so there are teams that are working. We have, obviously we have an active government affairs team that works with federal and state governments, um, and as much as possible we'll partner with them and just you know, really the best practices are making sure you're not manually keying things in. You know, obviously make, obviously make it menu driven, make it Vindicator driven, so you're getting consistent data Right. But obviously the systems that they choose to implement, hopefully in this day and age, are doing a lot of those things for them already.

Mike Chung: 18:40

Right and I would imagine, from state to state the systems they have, there may be some legacy considerations and your group is able to have a process to kind of systematize everything, so kind of moving from the data collection, if you will. I see you on stage, I see you give presentations on trends. Maybe we can turn for a little bit to trends that you're seeing in the aftermarket. And there are of course, so many that we can talk about. But one is something I mentioned earlier alternative propulsion, vehicle adoption, and you and I have talked a bit about battery, electric vehicles. We talked a little bit about policy, talked a little bit about hydrogen. Is there anything that kind of comes top of mind that's kind of interesting to you that you think our listeners might kind of find interesting here in terms of what you're seeing recently?

Todd Campau: 19:29

Yeah, well, I think it's been really interesting the past year, I would say, to watch the news cycle. You know, I've spoke on EVs for a lot of years at Apex now and some of the listeners maybe have suffered through those conversations and some of the listeners maybe have suffered through those conversations. But I think it was interesting to see the way the new cycle changed so so negative, so quickly. Really, when electric vehicle sales are not they've been down over prior months occasionally, but really they've plateaued. But if you read the new cycle you're like, oh my gosh, nobody wants an electric vehicle, they're not selling. Like, what's happening? The sky is falling, sky is not falling.

Todd Campau: 20:09

You know I've been telegraphing for a long time that I thought it would be there would be challenges to EV adoption. Yeah, you know, a long time I've I've even come out and said that I thought that we as S&P Global are somewhat aggressive occasionally in our projections because we were basing them on what we were seeing. Manufacturers say that you know they were going to be electric by this year or that year. Um, but it still goes back to. You know, years ago my original position was it's really hard to push something to grow faster than it wants to grow organically, and I think we're kind of dealing with that with EVs. We've had a lot of early adopters that have jumped in. Um, and they were. They want EVs to be successful, whether they just like them, whether they're a part of the EV economy, you know, whatever it might be, whether they're green and they want to make sure they think this is the green solution. A lot of the early adopters jumped right on, and now getting that next wave of adopters was always going to be a challenge. I think we're dealing with that. Obviously there's economic considerations. Right now, too, prices of vehicles are high for ICE vehicles, and then EVs are even higher. Vehicles are high for ICE vehicles, and then EVs are even higher. You know, podcast number three on Auto Care On Air, I think, was one where Stacy was talking about EVs, and there was a lot of good stuff in there.

Todd Campau: 21:44

So I think the story, though, for the aftermarket, as I'm thinking towards this year's round of presentations, is what is this going to do to part proliferation? Because you are seeing more evs on the road, if you're, if you're looking at the roads you're driving, you're seeing more, most likely, than you did a year ago. The volume in vio is growing slowly. New vehicle sales are pretty stable, similar to where they were last year probably, and so you're going to see more of them. The one fascinating thing about a vehicle fleet of 286 Sales are pretty stable, similar to where they were last year probably, and so you're going to see more of them. The one fascinating thing about a vehicle fleet of 286 plus million is how long it takes change to happen, and I think we're dealing with that with EVs.

Todd Campau: 22:15

For the aftermarket, though, what concerns me, what I see as an opportunity, let's say, rather than a concern, is there could be a future where there's several million EVs, several million ICE, several million hybrid.

Todd Campau: 22:38

When you start to think about part proliferation, I think that's where the aftermarket. You know, we've talked about part proliferation since I've been in this industry, and I think we need to go to the next level on being efficient, because now you're talking about four or five powertrains that you could be having to know how to service, having to carry parts, for there will be, hopefully there will be, some consistency across some of the part types, but these are very different propulsion types when you get into plug-in hybrid, hybrid, electric, diesel, gas and maybe hydrogen we talked a little bit about that earlier today, you and I. If hydrogen comes in, that's yet another one, and our shops are going to be asked to maintain all of them. So for me, that's what I'm looking at when I look forward is what does that mean to the industry and how do we mitigate that from being a challenge to being an opportunity?

Mike Chung: 23:29

Fascinating and you touched on something interesting there. Hydrogen Seems like a promising technology, but it could be an infrastructure issue as well in the uh the maintenance and repair ramifications.

Todd Campau: 23:44

but tell us a little bit about your thoughts regarding infrastructure, whether for battery, electric, for hydrogen or otherwise so they all kind of have a similar challenge, outside of, obviously, gas and diesel, which we've been doing again a hundred years. Um, I think the infrastructure is, any way you slice it, it's. It's not an easy picture, right Cause if you need to build hydrogen, you want to build green hydrogen, and that takes time and a lot of money. If you want to build a EV infrastructure, that's also a lot of money, a lot of time and a lot of power generation. That we don't have right now on a grid that is already not necessarily been modernized enough as it is. Let's say, it was not that long ago. I remember when the Eastern Seaboard had a brownout in probably 2007 or 2008.

Mike Chung: 24:44

Sounds about right.

Todd Campau: 24:47

If we put millions more EVs on, does that start to happen more frequently? That's a serious consideration for EVs, but we know hydrogen is also not easy and not cheap right now. So I've been interested to watch the policy over the past year or so, even with the inflation reduction act is probably the most recent one, uh, in that it was more agnostic than maybe it was even reported on, because it basically had carve outs for hydrogen, for electric, for e-fuels basically anything that was zero or near zero emissions fuels basically anything that was zero or near zero emissions. So I think we may see a lot of paths run down to try to make our fleet greener. All of them have that drawback, though, of how do you distribute the power, how do you store the power and how do you change over a fleet of 288 million vehicles or 86 million vehicles.

Todd Campau: 25:44

One of the guys I like to follow on LinkedIn is Arne Franz. He's the CEO of Amala, and I think even before I was on that bandwagon, he was on the bandwagon of the fact that it's going to take diversity in propulsion types to get the fleet to a position of being green as fast as possible, and I think he's totally right. So we need to continue exploring new fuels. We need to wrestle with hydrogen power generation and vehicles. We need some electric vehicles for some use cases. Especially here in the US We've got a lot of different use cases. Electric vehicle doesn't work for all of them right now use cases.

Mike Chung: 26:22

Sure, electric vehicle doesn't work for all of them right now. As you're talking, it made me think of some of the stats that you come to in stage presentations like Apex, and having to do with the CAFE standard. Right, and not to necessarily get into a lot of political discussion, but you mentioned policy and tell us your thoughts regarding the cafe standard, perhaps the efficiency of just setting a standard and letting the market come to its own solution.

Todd Campau: 26:50

Yeah, I'm actually a big proponent of that. I do think there's a role government needs to play because there are levers the government can pull to try to help problems like infrastructure be addressed more rapidly. But I think it has to be agnostic because otherwise need to let. The way I say it is let smart people be smart and do what they. Just tell them what you want and let them.

Todd Campau: 27:42

The government does have a history of setting aspirational standards and then moving the goalposts when it's clear we're not going to meet them. You know the 54 and a half mile per gallon. Trump did kill that when he was one of the first things he did when he came into office in 2016. The goal was to be a 54 and a half by I believe it was 2025 and he killed that, for that's the new vehicle corporate annual fuel economy standard and he killed that at that point and I was like it kind of was a mercy killing because we weren't going to make it, the manufacturers were not going to get there.

Todd Campau: 28:20

But that's kind of the role of government too. Like I think if they're enabling all technologies to green our fleet, then that's great, and if they're setting aspirational goals, that's fine, but realism does end up, you know, winning the day in the end. When, when it's clear we're not going to make something, uh, we adjust. So I think that they're playing a good role. I don't always agree with all the ways they do it, and that's fine, but there's definitely a role for them to play and, um, you know, setting aspirational targets.

Mike Chung: 28:55

Right, and I think I like the idea of not necessarily getting tunneled into one mandated solution, because I think sometimes you get unintended consequences or you learn the limits of a particulars or cobalt, graphite and so forth for batteries, and then that becomes quite complicated from a sourcing perspective and a policy perspective Right.

Todd Campau: 29:29

Yeah, and again referencing back to episode three of auto care on air, I think the conversation was great around the fact that, also when it comes to lithium, a great majority of the lithium currently being mined is controlled by China, and so you're right, I try not to make it a political discussion, but geopolitics does come into play, I mean, and so that's definitely consideration too when you're talking about needing lots and lots of material that maybe a government that you don't trust as much as you would hope has major control of Right.

Mark Bogdanski: 30:07

Hi, I'm Mark Bogdanski, vice President of Trade Shows and Community Engagement at the Auto Care Association, and I'm thrilled to invite you to join me in Las Vegas at Apex, the Aftermarket's premiere show, this November 5th to the 7th. I guarantee you will have an amazing week full of unmatched networking opportunities, access to unparalleled educational sessions, including our enhanced EV stage, our new ADOS and sustainability stages, and our Aftermarket shop training. You'll also see a show floor with over 2,700 companies featuring the latest products, services and experiences. This truly is the aftermarket's homecoming and you do not want to miss it. Register now at apexshowcom and I hope to see you there.

Mike Chung: 30:53

And shifting gears here a little bit. One of the other stats we watch is average each vehicle's scrappage rate, and I don't know how much you're able to comment on trends that you're seeing in either of these avenues, but can you comment on what you may expect to see with regard to average age of vehicles in the years to come?

Todd Campau: 31:14

So I think average age is. I do expect it's going to keep climbing but it's going to slow down again at a slower rate than it has over the past few years. I do think we're going to see some softer new vehicle sales years still for probably the next four or five, maybe more, and that always contributes to average age growth. But really, for me, the story in the average age it's an interesting metric that cuts, catches people its attention, but it really is. When you dive into the distribution of vehicles, um, and just the fact that vehicles are being in active service longer, um, we're pushing. We're not quite there, but 16 plus year old vehicles are pushing towards 100 hundred million, like when you think about that, that's a lot of vehicles that are over 16 out of the 286 million.

Todd Campau: 32:06

It's like 85 to 90. It's a lot and we expect it to continue to grow a little bit through the rest of the 2020s, but it could reach pretty close to a hundred million by 2030.

Mike Chung: 32:17

Incredible Because some of the trends presentations I gave that four to 11 year sweet spot, if you will those have grown robustly from a five year CAGR standpoint over the past few years. So we've been enjoying, if you will, this sort of golden period where that sweet spot four to 11 years has been growing robustly and the zero to three years has shrunk a little bit, partly due to pandemic related. So it'll be interesting to see that the vehicles move from age bracket to age bracket, absolutely.

Todd Campau: 32:50

It really is. You know, that's one of the things I talked earlier about, the fact that this really is a vehicle census, and so you follow those bubbles, kind of like you do on a census. You follow those bubbles of low sales years and high sales years and you watch the impact over time. And then my hope is that organizations in this space especially are taking advantage of that and understanding the ways to adjust their mixes based on those changes over time. But I do think you know we've been saying the sweet spot is that four to 11 range. There's either, I think, potential for either a secondary sweet spot or just a longer sweet spot, but the key is the mix is not always going to be the same.

Mike Chung: 33:34

Right, yeah, and, as you're saying, perhaps lengthening that four to 11, because if well over a third of our vehicles are going to be 16 plus and people are relying on them for day-to-day transportation, that could be a considerable boon, if you will, for the aftermarket and especially as vehicle quality increases over time and driving patterns have perhaps changed from household to household, those could be things to watch for.

Todd Campau: 34:01

Well, yeah, when you think about quality changes over time, the vehicles that are now pushing past 16, 18, 20 are those early 2000 vehicles, and if I were to point to a time where overall quality was probably starting to increase, that's probably when it was starting to increase the most. You know, the nineties were not necessarily a decade where all the manufacturers were doing well on quality, but I think the early 2000s as a whole they were starting to get that quality picture together a lot better than they had historically, and so I think we're seeing some of that. But then there's also, I think there's a huge socioeconomic portion to this too, as vehicle prices continue to increase, residual value continues to stay high and vehicles are maintaining value a lot longer because there are households that have to keep those vehicles on the road and we're going to see opportunities to keep repairing those over time.

Mike Chung: 35:00

Right. And when we consider the economic climate, whether it's disposable income gains being countered by inflation, vehicle insurance increasing significantly over the past several years, price of gasoline has a mind of its own, and then cost of vehicle and especially if you're a distressed consumer with lower credit, your loan rate is going to be considerably higher. We do see data for that and interest rates are fairly high right now. That and interest rates are fairly high right now. So what you're saying makes sense in terms of people holding on their vehicles longer, maintaining them longer, average age pushing up residual value, staying high.

Todd Campau: 35:43

Yeah, and I think the one other factor I think you've summarized it really well, but the one other factor is alternative propulsion.

Mike Chung: 35:53

Tell me more.

Todd Campau: 35:53

I think there's also a cohort of people that may want to get into electric vehicles, but they just haven't believed yet in the technology. You know that the market's ready yet. We do surveys each year and that's one of the things that we're tracking is do you think the market's ready, are you willing to buy an EV? Yet? And the metrics kind of it's come down the past few years, but it's still relatively you know it's it's above half the population definitely considering buying an ev. But I think a lot of those consumers right now are like oh, you know, they're hearing the news cycle now and they're like I don't want to buy. I'd like to buy an ev, but I don't feel comfortable buying it now, but I'm not going to buy anything else, I'm going to wait and see, sure. And so I think you have that factor too of wait and see. And now you're hearing obviously there's more noise around hydrogen, plug-in hybrids, hybrids, lots of things that are creating that curiosity as to where the what the future is going to look like, and so I think some consumers are staying on the sideline. But again, going back to this being a census of all the vehicles on the road for all the households in the US, north America. We could expand it to Canada, mexico too, if we wanted to. There's a ripple effect If that first owner that typically is buying a new car keeps their vehicle that's one less used vehicle for the used vehicle buyer not to buy, and it, you know, in a vehicle population where vehicles probably are held by four or five people throughout the vehicle's lifetime, we're elongating that period too. And so, you know, I think it is kind of a perfect storm right now.

Todd Campau: 37:33

And this goes back to your average age questioning, and I think that is driving average age up as well. All the factors you mentioned, um, one of the questions and this is just a freebie, I told you we'd go off script at least once, um, but one of the things that, um, I often get asked is do you think average age has? Is it always just going to go up? It's gone up forever, seemingly. Will it continue to always go up?

Todd Campau: 37:59

And I think the answer is probably no. Uh, I can't put my finger on when it's going to happen, because obviously I think we need to get into a place where there's more clarity about what the future of the vehicle population looks like, but I think at that time, I think there's a lot of people on the sidelines. If interest rates come down, you know. If EV infrastructure grows, you know. If something comes out of left field like solid state, you know that's the big news. If solid state comes and everybody wants EVs, then I think we could see the plateau of average age actually start to come down. I think there's potential for it, but right now we're in the perfect storm of not seeing decrease. We'd almost need the perfect clarity, so to speak, to see it.

Mike Chung: 38:48

I think so are there any other indicators, as we kind of start wrapping things up here, that you're kind of keeping an eye on as you consider consumer trends, the vehicle census, trends that perhaps our listeners might be interested in hearing?

Todd Campau: 39:05

I think we've been trying to think through a lot more about the overall picture of vehicles For this channel. We've been telling for years what are the vehicles, how old are they, what are their characteristics? We have introduced Vehicle Miles Traveled product which we've talked about in the past as well, you and I where we're trying to give visibility into where the odometers are on the vehicles as a statistical indicator of not only age in years, but age in use and also how frequently vehicles are being driven. So an annual mileage number that's just the tip of the iceberg we want to begin to get into.

Todd Campau: 39:47

How are vehicles failing? When are they failing? Where are they failing? So that you can then extend it into being more predictive about opportunities that are going to come in the vehicle fleet, and part of that is beginning to look more at the technology coming onto the vehicle too. So we're not only telling you that it's a 2015 F-150, but we can tell you if it's got lane keeping and blind spot monitoring and ABS and it had the 20 inch wheels instead of the 18s and it's driving this many miles and those typically fail at this rate for wheel ends. We think that's a place that is really valuable, and so really we're. That's kind of the path we're undergoing right now. We've have a legacy product of vio that is really strong about the census of the vehicle fleet, but how can we begin to help our customers in this channel?

Mike Chung: 40:43

take that and make it actionable at the part level so when you say these are failure rates for x model, x make and model in here we're talking historical data, or are you also talking about predictive what can happen in the future?

Todd Campau: 40:58

so there are obvious, and then obviously there are a few products in in the space um as well that are doing some of this.

Todd Campau: 41:04

But but really, when we think about a lot of these things, we think about how we can triangulate, predicting what's going to happen, and I'm sure there could be some contributing factor of what's happened in the past. There always is. That's how you build a future forecast is looking back and understanding the past and then combining it with other attributes. Obviously, we also you know we do the channel forecast through another part of S&P Global, and they have a lot of economic data and that also contributes to behavior. So when you can stitch all the pieces together and start to build a picture of what you think is going to happen, based on a confluence of all the factors that you have available to you, that's where we would like to get that's fascinating and so, as you move towards that product, just thinking from a data quality, uh perspective, just maybe really reiterate for us some of those things that you'll be looking out for yeah, I think really, um, the data quality again.

Todd Campau: 42:11

Obviously we love it when we can identify a very specific individual vehicle and then tie all the data sets across that individual vehicle. But, um, I think it's a combination of that love, that very high level of data quality and cleansing and people monitoring that and also finding sources and partners that are doing that themselves that you can quickly integrate. But then also, I mean, when you get into forecasts, having a quality foundation is critical. But some of what people look to our organization for as well is we have a huge bunch of people that know this industry from before a vehicle is built to, the vehicle is leaves the fleet via scrappage or whatever, and so part of it becomes. How do you quantify and apply that knowledge, that institutional knowledge that we have in all these analysts, to that data and then create something? And so I think data quality on the foundational data, the actual data, is critical.

Todd Campau: 43:17

But then when you get into leveraging machine learning we haven't even talked about artificial intelligence or anything like that, but leveraging machine learning and data science then you can.

Todd Campau: 43:30

So in my past I have a computer science background, so in my past I have a computer science background.

Todd Campau: 43:41

It's almost like you tune the process, knowing that you don't have every answer at that point, but building a quality foundation of quality data that is at the lowest level possible, then collecting those analysts, insights and making them actionable to a machine.

Todd Campau: 43:53

And making them actionable to a machine and then directing the machine with expertise from people that know the business, you come out the other end with, I think, a quality product that you can stand behind, because one of the nice things about being a forecaster is that you're expected to be wrong, like you're not gonna get 100% right every time, but if you can build a methodology that people can be confident in and my personal philosophy has always been being very upfront with the assumptions that we make, how we apply them and, obviously, the risk profile that's associated with those assumptions Um and that's what everybody in this industry does anyways when they make their forecasts is they've got to say we believe this is going to happen or that's going to happen, and then we got to quantify it.

Todd Campau: 44:39

And so I think quality is critical when it comes to managing your core data, but then having the flexibility to build scenarios is equally as important. It's just important to let people know where that line is of factual data versus forecast data, and how? How you arrive at the answers you arrive at.

Mike Chung: 45:09

Really helpful. So two last questions. One is kind of advice for the future generations. As you think about recent college graduates and they're entering an analytical field or the automotive field, what types of things might you guide them on?

Todd Campau: 45:26

I think it's critical to be curious. I've always encouraged people that are coming up behind me younger people in automotive and other places is to be curious, to challenge the status quo. Not just to challenge the status quo, but one of the things I hated when I came on early is anytime somebody said, well, that's just the way, we've always done it. And I'm like, why, ask that question, why? And they may be able to point back to something where like, okay, that makes a lot of sense, but that you might just find that they made a assumption 20 years ago that they're still choosing to live by and the data and the technology is passed by them and there's many better ways they could do that. And so I encourage curiosity to the next generation, I think, and I also would say I think artificial intelligence is getting all. It's soaking up all the cycles on news right now, whether it's chat, gpt, just artificial intelligence.

Todd Campau: 46:34

I think the one thing that I would encourage everyone with artificial intelligence is to remember it's only going to be as smart as what you pointed at, so it's not going to be a silver bullet, that rich foundational data that I was mentioning earlier that we think is critically important to everything we do.

Todd Campau: 46:52

If you're pointing it at a source like that, then you're going to get be able to get a lot out of artificial intelligence. But if you're just going in and asking it to do something based on whatever it can find on the internet, it could be a garbage in garbage out situation. And so I encourage people not to be afraid of artificial intelligence but to have the right context around it and find ways to leverage it in day-to-day tasks, in processes you know, in products they're building out even intelligence up to be successful, and that takes at least for now, that still takes a smart individual to leverage that tool in their tool belt. So those probably be the two things is be curious and look at the tools that are available to you and use them, but always run it through pastoral sanity chip.

Mike Chung: 47:54

Really helpful advice. So my last question to you is this, and as we're closing up fall leadership days here, really glad you could come and participate. Um, what was the best meal that you had here while you're in town?

Todd Campau: 48:06

Wow, that's a good question. I don't know we we did. We just did Chick-fil-A. That's always a good time. I think we went to a speakeasy and then an Irish pub on the first night down I think it was James Joyce, maybe down on the inner Harbor, and I'm a I'm a shepherd pie fan, so I had some really good shepherd's pie there.

Mike Chung: 48:32

Okay, good, and it's. It's encouraging to hear that you still remember it after several places of having some good beverages.

Mike Chung: 48:38

So, todd, always a pleasure to see you. Thanks so much for sharing your insights and your knowledge here on this podcast. Thanks for tuning in to another episode of Auto Care On Air. Make sure to subscribe to our podcast so that you never miss an episode. Don't forget to leave us a rating and review. It helps others discover our show. Auto Care On Air is proud to be a production of the Auto Care Association, dedicated to advancing the auto care industry and supporting professionals like you. To learn more about the association and its initiatives, visit autocareorg.