From WXXI news.

This is Connections.

I'm Evan Dawson.

Our connection this hour was made in an auto repair shop owned by 46 year old John Paterson.

As told by Rattner, Ratchet and Wrench, John has owned his family run shop for years, but things have been changing.

Technicians used to get their hands dirty every morning, diagnosing problems by listening and experience.

But now John Shop is servicing vehicles with different kinds of problems.

That hybrid SUV isn't here for a valve problem or a fluid leak.

It's here for a lane assist malfunction.

The techs in the shop joke about the ghost in the machine.

The new systems that are increasingly complex and varied.

We certainly have connections to our automobiles, and it's just getting harder to afford them.

A technician shortage across the country is part of the problem.

Driving service cost.

Industry data from the National Automobile Dealers Association shows that technical programs graduate about 39,000 new technicians each year, while the industry needs almost double that just to keep pace, average new car prices are closing in on $50,000.

Used cars can average up in the high 20s.

Those are all time highs, and the share of used cars under $20,000 dropped from 55% in 2019 to just over 31% today, according to the daily automotive.com.

Our guest, we're going to talk about what's going on with the not only the technician shortage, but fill affordability options for car buyers.

What you ought to know about taking out a car loan and what is out there in the industry right now.

And the person who always knows is Brad McAreavy, president of the Rochester Automobile Dealers Association.

Welcome back to the program.

Pleasure to be here again with you, Evan.

Nice to have you.

Next to Brad is Charlie Vena, the chief lending officer with Canandaigua National Bank.

Welcome.

Thank you for being here.

Thanks for having me.

And across the table.

Hello to Kevin Parker, president of Parker Automotive with Chevy and Subaru stores out in Webster.

Welcome to the program.

Thanks for being here.

I'm honored to be here.

So, Kevin, just briefly with technicians here, how are your shops doing?

Well, actually, I'm spending a lot of my time, I had a conflict today, so I sent one of my service managers, because we're in the recruiting mode because we are short, several at our Chevrolet dealership and the Subaru dealership down to about seven technicians I could use right now.

Oh, you could use seven more right now.

Right now, between the two.

So this is a we talk a lot about the jobs of today and the jobs of the future and job stability.

This is a pretty good one to be in at times like absolutely.

In fact, with the and we'll probably talk about AI at some point.

But this is the trades, not just mechanics.

We're going to talk about autos today, but in general the computers are going to maybe do some over the air fixes, but we need, qualified, men and women who choose to be, technicians.

And they can make a very good living doing it.

Well, and I should be clear here, Brad McAreavy, this is not a new problem.

It's something that's been developing.

What's going on with this issue?

Industry wide?

Yeah, it's been an issue for quite a long time.

The I would say the biggest problem is it's increasing the challenge of recruiting people into the program and pruning into that job category is is getting more and more difficult.

Fortunately for us here in Rochester, we have a Monroe Community College, has an outstanding automotive tech training program.

It's a two year program.

They they have a General Motors specific program.

They have a Toyota specific program.

They also have what's called the Multi Manufacturer program.

And they do a phenomenal job of recruiting students and bringing them into the program and training them and working through, our members, on internships and co-opting them and so forth.

And even with those efforts, even with that level of recruitment and that level of training going on, we still, find ourselves short.

Why don't we have more people going into this line of work then?

I guess I'm confused about that.

Well, that's a complicated question.

I you know, I think personally, I don't think the trades have been given enough consideration over recent years.

I think there's been too much of an emphasis put on students going to four year schools that maybe were better suited, for the trades and program.

But I think that shifting I think mix enrollment is up.

But I think we're seeing a shift in that, and we're finding out that these jobs are starting to become much more popular.

We're seeing more students choose to go into, let's say, for example, community college environment and come out with their trades or some type of related degree.

And so fortunately, I think we're going to see that improving.

The other thing I like to say about and Kevin brought up, I, you know, those types of jobs are not likely to be taken out by AI.

Not that there aren't computer technician skills that need to be had.

They do.

It's very much a computer based job.

No, I think that's really I mean, the other day I was talking to my 14 year old.

He had heard the term undeclared.

And so he was, you know, he's already thinking about college and things like that.

And he said, you know, what's what's undeclared.

I said, buddy, when I was in college in the 1990s, I'd walk across campus and a lot of the people you'd bump into were undeclared in their freshman year.

They were at school.

They hadn't figured out what their major was going to be yet.

And he's going like, why would you ever do that?

Because it's so expensive.

Why would you just show up not knowing what you're what you're building towards?

Because that's a lot of money.

And I said, well, times were different 30 years ago.

And now, that mentality, I mean, I'm sure there's some undeclared out there.

Someone's going to email me and say, yeah, my kid's undeclared.

That's going great.

And that's fine.

But to Brad's point, you talk to 14, 15, 16, 17 year olds, you talk to college students.

They're thinking a lot about the durability of their work.

And this seems like one of the antidotes, because I do think the trades are going to get more attention.

I do think two year school is going to get more attention for exactly the reasons you're thinking of, but you're not really necessarily seeing the numbers, the problem is still getting worse, at least at the moment.

Right?

It the gap is there.

And again, we're fortunate.

I mean, in Rochester here we have a program.

Not every major metropolitan market like ours has a program.

And it's somewhat local.

I mean, you can try to recruit students from outside the area to attend the program.

The General Motors program, for example, is the only one in western and central New York.

So if you're a kid in Buffalo or Syracuse or Albany, this is the program, and you got to figure out a way to get here and go to school and be a part of that program.

So, but again, it serves a very, very important need for our members and other automotive related businesses in the area.

I should ask, Kevin, does this make service more expensive?

The shortage of technicians that you have or just doesn't?

Does it affect the timeline of work getting done?

What does it affect?

It's probably the latter.

I mean, it shouldn't take more than a day or two to get in for service.

And unfortunately, sometimes because we don't have this person who's got his credentials yet to work on a, fully electric vehicle, for example, that's a specialty.

So it's becoming more of a nuisance than expense.

In fact, in some ways, the expenses have not gone up that much because the oils are better.

For example, when I got the business first back in 84, it was three months or 3000 miles or bad things were going to happen for your oil change, and every other time you would rotate them.

Today's synthetic oils do not break down.

They're going a lot longer.

7500 and sometimes 10,000, sometimes a year.

And then we're rotating the tires every time.

So they're coming to the stores less and less.

But the problems are not the engines and the transmissions.

It's the electrical part of it.

It's, these cars are very sophisticated.

They're like spaceships, electrical part, because it's complex and it takes just a different kind of training.

Yeah, well, I mean, there's so many.

There's more than a mile of wire in every single vehicle.

And so when something goes I think you had mentioned something about Elena goes, we need to narrow down where that's coming from.

The, the today's technicians are much more skilled than I think they were maybe 25, 30 years ago, because they have to be to keep up with it.

And here's the thing.

You can become a master technician this year.

You got to get recertified next year because things change.

New motors come out, new transmissions come out, new new hybrids, new electric electrical cars.

There's just a lot that they have to continue to invest in and in themselves, with not only training, but tools so that they can do the job.

But why can't I?

If I'm running a shop, why can't I have?

All right, these this crew is for this type of automobile, this make model etc.. This is can handle, you know, the hybrids with this system and this can do the all electrics with this system.

You don't have it sort of divided.

Well, when I first got in the business, that's exactly what happened.

Brad would be doing the transmission.

Charlie would be taking care of anything to do with, suspension.

But then we got to the point where we wanted a technician who came in, and the customer had many things to be addressed that could do what we call clear a ticket.

And so we've gone to that.

But yes, it's moved a little more to that, where we have 1 or 2 people that specialize in this and have the right credentials to work on it, but most of the technicians can do almost all of the work.

And when you say cars are like spaceships, you're not just talking, I presume about EVs or hybrids.

I mean, really, all automobiles are more technological than they used to be, aren't there?

Yeah.

I mean, there's so many manufacturers that are doing so many things to keep us safer if you get distracted.

And let's be honest, there's lots of things that distract us these days.

It will hold you in your lane.

Now, that used to be for the most expensive vehicles, and now it's on every vehicle that's made.

You can get all of this technology.

It breaks quicker than we can if a deer jumps out before we're hitting the brakes.

More than likely, if your car's within 2 or 3 years old, it's breaking automatically for you, quicker and faster than a human could ever do it.

Somebody smarter than me.

That would make an observation that says it's an interesting evolution of the human brain, that our cars are now designed with lane assist to let you know when you're drifting to take control.

But you can also watch video when you're driving.

You can do all these different things to distract you.

Maybe just focus on driving.

Well, you can't really watch videos, but I mean, I guess you could possibly have your friend talk to you about the fact that people have technology on their watch.

It's on their hand, it's everywhere.

So a lot of distractions, a lot of distractions.

Yeah.

Yeah.

Okay.

I mean, that's that's me yelling at clouds.

But Charlie, you're still right.

And plenty of auto loans, I presume we are.

We, we do a little over a thousand contracts every single week, and it's, it's it's a robust business and there is a lot of product on the market, as Kevin mentioned, with a lot of new technology engaged in, the product manufacturers have come out with really a terrific, terrific, product across manufacturers.

So, you know, people on average turn their car on every two years.

We write a lot of auto paper and it the whole book turns over in about 24 months.

Even with some of the extended terms that we're offering out there.

Okay.

Bread.

What's the worst car in the market?

I'm just kind.

I'm.

There is no there's no brands to say that, but no, I, I take the point.

I mean, there's there's a lot of really I mean, if you're going to go out to buy a car, you, bought a car in a while.

It is a little overwhelming.

And, the price, the average price looks like ten years ago when I thought a luxury car would be.

Or, you know, what the sort of the hybrid market was.

So the average prices, of course, have gone up.

And we're going to talk a little, a little bit about that.

But it made me wonder if what it has done to the average term of a loan.

So can you tell us a little bit about what is typical, how you advise people, how you want them to understand how a loan is structured in this way here?

Yeah, that's a great question.

Well, Brad mentioned the average cost of a of a new car today is about $50,000.

That's a major investment for people.

It is it is climbed very quickly in the last ten years.

And I would say even in the last five years, because of all the technology that Kevin mentioned, the manufacturers are just doing more so we are seeing terms expand.

It used to be, you know, five years ago, six years ago, a 60 month term was a long term.

Leasing was a very viable option back then because people were trying to get their payments down.

Now we're seeing terms extend out to 84 months, and some financing companies will even go out to 96 months.

So it can it can be a little bit daunting of a decision for a consumer because they want the vehicle they want and the payments got to be affordable.

But you have to think about what happens at the end of that financing structure.

You know what what kind of driver are you?

Are you somebody that that drives 30,000 miles a year, or are you somebody that drives 5000 miles a year?

There's a big difference, and it falls into the wear and tear on the car.

And eventually what happens at the end of this financing contract.

So term becomes very, very important.

What is the longest term of a car loan that you've written?

84 months.

We will go out to 84 months at Canandaigua National Bank.

Okay.

And there was a visceral reaction from Kevin Parker.

Some of those numbers are they they've changed, haven't they?

Yeah.

It in I think because of the price of the new vehicles.

And remember that $50,500 average takes the premiums into consideration.

Many of the domestics have kept this price under that amount by, by a substantial amount.

But nonetheless, the reason they're going out longer terms is to make them affordable.

The problem is, as Charlie said, the average person turns their car over more frequently.

So when I you had that reaction from me, it's because, you know, Bob and Mary decided to go 72 months, but they came in at 30, 30 months to trade out a vic's are ready for something new, and they owe substantially more than the car's value because they stretched it out.

And so that's what, you know, I, I cringe only when customers decide to go that far.

We certainly don't recommend it, but sometimes to make it affordable, that's their choice okay.

And so this is a depreciating asset, isn't that right?

Charlie said.

So how should we be thinking about a depreciating asset?

Well, I think Kevin's raising an incredibly good point.

You know, we try to educate the consumer, you know, on what will happen to this car over the next 2 to 3 years.

And really, where Kevin's heading is called a concept called negative amortization.

So you can be upside down after two years of owning this car because it's been stretched to 84 months.

Yes.

The payment was attractive.

Yes, it got you the car you wanted.

But at the end of two years, if you go to trade it in or at the end of 30 months, you may owe more on that loan than the car is actually worth.

And that's where this negative amortization.

So the auto dealers, you know, want to get you into the next car for sure, and they end up rolling in some of the balance of the loan into the next loan.

Well, you can see if that happens 2 or 3 times in a row.

That can turn into a problem for the average consumer.

So that's why I say you really got to think about what happens during the term of the contract, how much you drive the vehicle and what the vehicle may be worth.

Brett.

Yeah, I think from an educational standpoint, I think the message to the consumer should be if they go to that length of term on a loan, they should plan on staying in the car longer.

The depreciation curve, if you look at or not on, maybe it's very steep in the first year or two, then it levels off and it levels off at a relatively flat declining, but relatively flat flat line.

If you can get past year four and maybe into your five, that that negative equity narrows quite a bit.

You're still could be upside down depending on your driving habits, as Charlie said, or what that particular car might be.

But if someone's going to be looking at 72 or 84 month financing, they probably need to seriously think about.

I need to probably stay in this car longer than two years or three years because that gap, of negative amortization is going to be pretty substantial.

And typically someone with that long of a loan is not driving very much.

Not necessarily.

Charlie is looking at me like, well, it goes back to affordability.

Yeah.

Then I think sometimes you got to go to 72 months to get the payment to a level of the person's budget where they can afford it.

Let me rephrase it.

Ideally, if you have that long of a loan, you would not be driving as much because you'd be thinking that this car is going to last.

Me.

Yeah, you might be one of the people that keeps their car for long periods of time.

Yeah, okay.

So that's you know, whenever I talk to somebody about or you release customer or a buyer, a retail buyer and they say, oh, I keep my cars for years, you're not a lease customer.

If you're the type of person that keeps your car for 8 or 10 years, sure, you're not a lease customer.

You're a buyer.

Buy the car, pay it off, own it, you know, and keep it as long as you want.

Okay?

I've never fully, I haven't got my head around car leases, and I want to talk about this a little bit.

First of all, are are more or fewer people leasing cars these days?

Do you know Brad, anecdotally, I think there's probably maybe a little bit more, because, again, because affordability leasing makes the car more affordable, for the average consumer, if I'm looking at a vehicle and again, until you start getting out to 72 and 84 months, that that changes the number a little bit.

But if you're looking at a vehicle and let's say you're looking at 60 month financing versus 36 month lease, chances are that lease payments probably going to be a little bit less than than the 60 month retail funding it's contract.

So leasing allows for, a person to buy a vehicle at a, at a slightly lower cost.

So New York, by the way, is a is a pretty strong leasing state.

As a, as an area of the country, we actually have very high lease penetration.

We have some dealers in this market that are extremely strong in the leasing segment.

So Charlie advised me, if I come in and I say I don't know if I should really sit here, I don't know if I should, do I lease for a shorter term?

Do I do I get a 72 or an 84 month loan?

How do you how do you help people figure that out?

You really have to compare and contrast.

So nationally leasing is down.

Brad's numbers may be more current regionally or locally.

But leasing is is dropped to about 24% of automobile deals.

Excuse me.

I'm going to fact check you watch this.

Yeah, 23.75%.

That's pretty good.

I rounded the man's got his stats down, but but locally could be a little higher.

But but to your question, people, people need to compare and contrast the fact that, banks are willing to go longer on term has allowed the payment to be close, if you will, to what a leasing product might come out to.

But then there's manufacturers.

They'll come out with certain programs, and if they come out with a very low interest rate or cost factor on a lease and a higher residual, which they may be doing, doing to move certain product in and promote a certain product, then the leasing product could be very, very, viable for somebody.

And it may be the, the term financing route.

So, so the customer should talk to their auto dealer and their bank, get terms on financing for buy, get terms on the leases, look it up relative to the car and see which is better for them.

Okay.

Do you do both over there?

We do.

Yeah.

Okay.

Do you know how your split breaks down?

We're probably under 30% but but to to Charlie's point, the manufacturer, let's say there's a lot of vehicle that's on dealers.

Lots because they take a look at that.

They may come out and make it extremely attractive.

And I want to kind of break down.

Why is leasing isn't for everybody?

Because if you drive 40,000 miles a year, probably not a good lease candidate.

But then again, I would argue you're probably not a good 72 or 84 month long buyer either.

The car is not going to last for more than likely, but but doing the math and making an educated decision.

But the one wild card on the lease is this if you're buying a car for $50,000 and the manufacturer says in three years, it's worth $20,000, that gets subtracted from that selling price.

And over three years it oftentimes to Brad's point is 50, 60, 70, $100 less than a 60 month conventional loan would be.

So you can say to a customer if you leased it and I bought it and we both showed back up in three years, you'll have to save $3,600 in your monthly payment.

I'm hoping that I have $3,600 in equity, and there's a pretty good chance I probably don't.

And if their pattern is trading every so often, that's where I think the leasing comes in hand.

But the customer just needs to know the facts.

You don't pay any more if you lease it.

There's no advantage to the dealership other than you have to make a decision in three years.

So inevitably you'll be put back into the market a little sooner.

So I guess, selfishly, you could say it is.

And for the manufacturer, if you bought a car today that had a $500 rebate on it the day you buy it, they have to pay the dealer back for that rebate.

But if they lease it and they put an extra $500 on the value of the vehicle at the end of the lease, the only time they have to pay, that is if at the end of the lease, the consumer decides not to buy it, turns it in the dealer doesn't buy it, and it goes to auction and brings less than that.

Then, and only then are they on the hook for that additional money.

So for them, they get to stretch out that possible.

And Brad used to work for GMAC can speak a lot more about this, but there's some advantages for the manufacturers.

Also, I got to get our first break in here, but before I do that, just briefly, can I ask Charlie if if you didn't have 72, 84 month loans, if we had 48 months or less or six months or less, do you think there'd be more leasing going on?

I do, yeah.

Yeah.

So because the payment, the payment it's interesting much more, you know, and maybe after break we can get into, you know the, the budgeting and the cost of the car and the affordability piece.

Because payment is a huge issue for people today.

And so, yes, there is a market and an opportunity on the lease side.

How much you drive a year really comes into that that play.

All right.

Let's take that first break of the hour.

We're going to come back.

You heard Charlie Vita, chief lending officer with Canandaigua National Bank, sitting next to Brad McAreavy, who's president of the Rochester Automobile Dealers Association, and Kevin Parker, president of Parker Automotive is here.

We're all coming right back after this first break of the hour, support for your public radio station comes from our members and from Bob Johnson Auto Group.

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This afternoon at four.

This is Connections.

I'm Evan Dawson.

This hour is a look at the car market right now.

And part of that, as we've been talking about, bring it back a little bit later to the shortage of technicians and what is being done about that.

But clearly the guests here feel like that is a pretty stable future for someone.

If they're looking for a job that will be available now and probably pretty durable.

No matter what happens with AI and technological change in the future, we are short technicians.

You heard Kevin Parker say they need seven right now at their shops, just to get back and back to where they need to be.

So that is part of it.

But really we're also talking about in general how the car market is doing what how banks are handling this and what the average typical loan is looking like.

It's gotten longer over the years.

So I naively asked the guys when we started our loans, like 36 months or 60, and that's it.

The answer is no.

They can go up to 84 months.

And some places you heard Charlie say 96 month car loan.

So, I'm going to get back to Charlie Vita now and just ask you to kind of take us through a little bit of what a payment looks like, because, Tom had a couple of questions, and the first one was, if you're buying a $50,000 car or pick any number, what are you actually paying over the length of that loan?

So can you take us through some of that?

Sure.

So, you know, the average price of a new car is 50,000.

So I ran I ran some numbers for you on 35,000 loan amount.

So that could assume somebody is putting $15,000 down or they bought, you know, a $38,000 vehicle because, you know, average is above and below.

So for $35,000 loan at 6.5% interest rate, a 48 month loan would be an $830 payment, and you'd have total interest costs of $4,835, 830 a month, $830 a month.

Now, an 84 month loan on the same $35,000 would be $519 per month.

Significant cash flow savings, but your interest cost jumps to $8,590 over the life of that loan.

So if you just compare the 48 month to the 84 month deal, if you will, your savings and cash flow is $311 per month.

So that that's great for a monthly budget that feels really good and perhaps helps you buy the car you want.

But your interest costs, additional interest costs is $3,755 more over the the life of that loan, between 48 and 84 months.

So we always advise people, think about your budget.

What's your monthly budget?

Absorb.

And then, you know, try to back into what is the price of the car you're buying, and then how much do you drive per year?

And what will the value of this car potentially be at the end of the term of the loan?

You don't want to end up in negative amortization.

We touched on that earlier.

You don't want to keep rolling this in deal after deal.

So you can really work with the bank, the auto dealer, and get some good education advice.

You get into the right program.

I presume there are more people who are getting into negative amortization.

Is that a fair assumption?

That is a very fair assumption.

And it's a national.

We're up as high nationally as we've seen.

Do we know what percentage?

I mean, do they clock that there is data?

I don't have that at my fingertips okay.

Yeah.

But you know no one wants to be in that spot.

The longer the loan, the more risk that you're going to end up in that spot.

Generally speaking.

Yes.

Okay.

Yeah.

Fair enough.

And so one other point on the way interest works here, every everyone's probably laughing at me because I'm probably pointing out things that are obvious.

But look, I think about a mortgage, a 30 year mortgage versus a 15.

You know, the first time I was thinking about buying a house, you said, you sit down and you're doing math.

And what's the term, what's the actual note?

What's the term?

And I remember thinking, well, why would a 15 year not just be double the monthly payment that the 30 years, you know, how does that work out.

And it's like, well you're paying more principal off the top here.

So when you're we want to pay more principal, we'd like to pay less interest.

No offense to Charlie and his team over there.

So is that all right with you, by the way?

I we are we are okay with people paying less interest.

Okay?

I rather them come through a healthy program.

I'm very like I'm very against prepayment penalties.

I don't understand why those are a thing.

But anyway, I do you guys have any prepayment on Carlos?

No, not on Carlos.

No.

Okay.

Prepay anytime you want okay.

That's that's a good thing.

But in general, I always thought at the beginning of if you're watching on YouTube, you can see the visual here, the beginning of a mortgage payment and a 30 year note especially is this much interest and this much principal.

And then it shifts over time and it flips also true on car payment.

Or is it a little different.

Very similar but more interest off the top.

But the amortization so much shorter than a 30 year, it's less exaggerated.

Okay.

So would you call the current state of the market healthy?

Troubled?

Unhealthy?

How do you see it?

Brad.

Yeah, I look, we went through a pretty rough period a few years ago.

I mean, I brought some some historical information.

I mean, going back to 2019 was the best new car sales, year in Monroe County for the last 20 plus years.

We keep track of those numbers.

So we had a we had our best year, 2020.

We started to go into Covid.

It dropped pretty significantly.

There was a little blip up in 2021, but then in 22 we took an even bigger fall.

Moly dude, if you remember, there's supply shortages, microprocessor chips, other types of raw materials.

The manufacturers couldn't produce cars.

We've sent sort of gotten back up to a level not equal to 2019, but we've sort of hit a bit of a stabilizing period.

And what I think has happened, Covid gave manufacturers an opportunity to reset their production levels closer to the market demand.

What I mean by that is, prior to Covid, when we were seeing them crank out cars, and Kevin can attest to this, he was a dealer.

They would crank cars out and they would push them on to dealers lots and they'd say, look, you need to move these vehicles.

They'd have cars all over the place, and then you'd see all kinds of incentive money come out, and it pretty soon it became, you know, what's the best deal out there in the market?

And how much are you going to pay me to buy this car?

Covid gave manufacturers an opportunity to step back, set their production levels closer to consumer demand.

So now you don't see there's still incentives out there, but you don't see them like you did before.

You don't see five and 6 or $7000 incentives.

You don't see these really crazy, incentive programs that have come out, in years past.

It's it's much more strategic.

It's more geared toward a model that might be running a little high in inventory.

But you just don't you just don't see it.

And so as a result, the industry has settled into what I would call, you know, it's still going to do 16 million plus cars this year.

I call that healthy.

My personal opinion, I think that's a healthy number in the auto industry.

Dealers can be successful.

Manufacturers can be successful.

Consumers have a good selection of vehicles to pick from.

I don't think there's too many times, Kevin, when you can't get a car that somebody is interested in.

So I think it's actually at a relatively healthy number right now.

Okay.

And when you and I were here, I don't know if it was maybe a year ago, there was a lot of questions that Tom writes in to ask.

If tariffs ended up having an effect on the market, any effect that you could see from tariffs.

Well, look, I mean, do I think there's some level of, of tariff cost built into vehicles right now?

There probably is.

I nobody can really define you know, what that is.

I mean the tariffs are pretty complicated to, to build into it.

I mean in terms of where the vehicles came from, where the parts came from, how it was a manufactured who manufactured it.

I mean, it's a it's a pretty complicated process.

I can't sit here and tell you that 5%, you know, of the value of the car is attributed to tariffs.

I think what also we have to understand is as more manufacturing comes back to this country and we're seeing automakers commit to manufacturing facilities in this country, that's a good thing because it brings jobs, you know, back to this country, and it brings the auto industry back to this country, which hasn't been the case for for quite a long time.

You had Dan Maloney in here back a while ago.

Indeed.

Dan is 100% you know, he's a UAW guy.

He's 100% about bringing manufacturing back to this country.

And let me just sum up what part of what Brad's saying, because you see Dan Maloney a lot, in fact, his run for office as a Democrat.

But Dan has said, look, working class dirt under your fingernails.

Democrats didn't knee jerk oppose tariffs.

They want to see any measure possible to onshore manufacturing.

Bring factories and plants here, do the work here if possible.

Now, I don't know if Dan would tell you that the tariffs have been rolled out perfectly or if this has been exact, maybe it's time for bring Dan back on here.

But, but it was an openness to ideas on how to bring more manufacturing, more the creation.

And I tell you, if you really want to get into a complicated situation right now, look at what's going on with China and their auto industry.

China is attempting to infiltrate every country in the world in terms of their auto manufacturing capabilities.

There's a strong, position that the government of China subsidizes their industry to a degree that it would force other countries not to be able to compete.

If you have manufacturing in this country and they're Chinese manufacturers coming to this country, they have such a low level of cost because they're subsidized by their their government that they would literally almost bankrupt, a manufacturer that doesn't have the benefit of those subsidies.

It is a very hot topic at the federal level right now.

There's legislation that would essentially block them.

And currently they're blocked.

Chinese out of manufacturers are not allowed to sell cars in this country right now as a manufacturer.

And it's a very, very contentious, political issue.

But, you know, one that our government, sees as not only a concern for the auto industry manufacturing, but a concern from a national safety standpoint.

Kevin, anything you want to add about tariffs and the effects you've seen there?

Well, some manufacturers obviously are exclusively built, overseas.

So they saw a little bit more.

But many of the manufacturers just absorbed it themselves for quite some time.

But eventually, to Brad's point, I've never read anything.

And I keep up on the auto industry that you can say it's X percentage, but certain manufacturers, are less affected than others because they have a good footprint here.

But I did want to bring up one other thing, and I don't know if I'm getting ahead of myself here, Evan or not, but you talked about the text at the beginning of this break, and I wanted to go back to that.

Not only do I tell you that I think this is a jaw.

I know this is a job that we're going to not be replaced by, by AI.

We need men and women to do it.

But the appeal to the to the younger people trying to consider this profession as this, as you get better at your job and you invest in your training, you invest in tools so you can do things.

If a job pays an hour.

But Brad is really good at what he's doing and he can do it in 45 minutes.

He still gets paid that hour.

That's called a flat rate.

Technicians.

And so many of our technicians are working 40 hours a week, maybe a little more, but they're actually turning, as we call it, 50, 55 hours a week.

But they've actually only worked 40.

So the more skilled you get at this position, the income can continually go up.

And we pay these men and women, once they get through different types of training and are really, really good wage.

And when they get even better at it, they're turning more hours, by, because that's what the job pays is they're an average pay for a tech.

You know, it just depends on the skill level because we kind of put them in ABCd categories.

You know, some of the technicians, if you're a diesel technician, you know, you could be making 60, $70 an hour, and some even more, depending on what, what skill levels.

And then obviously the entry ones are going to be a little bit lower.

But Brad go ahead.

Yeah.

I was just going to say, to, to that question, the auto industry has published average repair time timetables.

There's the industry has studied and, there's Allstate and Chilton's and other.

These are what are called average guidebooks for the repair.

So when you bring your car into a dealership, you need a transmission repair.

The the book, the guide book, which has studied thousands of repairs.

It says that job is going to take 4.5 hours, okay.

And that's what the customer is going to pay for the repair on that.

It's based on an average, to Kevin's point, a really good technician is better than average, and they might be able to do a 4.5 hour repair in four hours or three and a half.

The not as good technician, it might take five, right?

He's only going to get paid for four and a half.

He or she, because they haven't gotten their skill set to the level where they can produce better than the book.

So to the point the average is it's a published guide in the guide book by the repair.

And it's it's every every dealer in the country has it.

And and we frankly, we use it for warranty repair and other types of repair jobs.

So Evan, can I can I raise a point on this?

You know, I'm listening to both Kevin and Brad on this topic, and we're hearing the cost of the tech, and we're hearing the shortage of tech talent.

Well, this leads right into the cost of car repairs.

So you know, that's also going to be a consideration whether it's a new car, a used car.

Does your car have a warranty?

Does it not, because, you know, the average bill, you know, Kevin would know, better than me.

But the average bill, when you bring your car in for basic repair or advanced repair, is going to be lofty because of the talent needed to repair this more advanced.

You know, spaceship level car, right?

Yeah.

Some of our costs have gone up.

Oil obviously is expensive right now.

And so we've actually had to raise the oil changes prices.

The good news is, as I said earlier, it's a synthetic oil.

So they're going longer.

But it's not uncommon to be over $100 for an oil change.

Some of the places that have, advertisement.

Maybe some some, not dealership ones for less.

It's not a synthetic oil.

And the manufacturer is requiring you to put that in your vehicle because it'll just perform much better.

Okay, I've got one more question for Kevin.

Then what we're gonna do is we're going to take our last break of the hour.

And I've got some questions of yours via email and connections@wxxi.org, which will take care.

And this is going to sound like a softball.

And I hate softball questions.

But ask Kevin anyway.

All right I feel like with the way the specialized tech is, is changing the auto industry.

It used to be that I mean, cars, cars of course were different.

But, you know, maybe you like your dealer and maybe you took your car for service at the dealer.

Maybe maybe you had that relationship, a contract where you go to the dealer, but maybe you like your mom and pop shop down the street and you didn't want to go to the dealer.

Just do an oil change or just to check out a funny noise.

And you trusted the mom and pop shop, but now it's like everything is so specialized.

Everything is so tech, and if you're not going to the dealer, can the mom and pop shops still do all of that stuff across the board, across a much more complex set of automobiles from different making models and technology.

And, you know, we joke about lane assist, but that's that's one of dozens, if not hundreds, do you?

I mean, you almost feel like you have to get back to the dealer for that.

Well, to state this question, that's okay.

No, no, I'm going to I'm going to be fair and tell you that there are some shops that have made the investment into the tools and the scan tools that can read them, that can do that.

But we don't just have technicians, we have factory trained technicians.

The tools and the diagnostic equipment they give us is by the men and women who made these vehicles.

So to say that it's the same level.

I would argue that your dealers probably not.

Probably they're going to have a more skilled technician and they're going to have the backing of whatever manufacturer they're driving, whether it's a Subaru, a Chevy, or any other brand for that matter.

Because many times our technicians run into it.

We're talking to what they call tech lines.

The manufacturers advance people to help us, and sometimes they actually send a representative out to the dealership to assist in this particular case.

And the other part of this, I would mention is that if you do not use your local dealer for your maintenance and gosh forbid, your car out of warranty, and now they're trying to say, oh, this shouldn't have happened, the manufacturer is going to want to know, where were these repairs done, what type of records do we have?

And they'll even test the oil to save you.

So I just changed it three months ago, but it shows.

Otherwise they could decline.

And even in a void your warranty and or not assist you at all.

If you've been loyal to the dealer and you're outside of that area.

Oftentimes I've heard them say, this customer has been loyal to this manufacturer and this dealership.

We're going to assist that X percentage of the bill or cover it all.

Okay.

I appreciate the a straightforward answer on that question, Kevin, even though that was the easiest one to be our he's the president of Parker Automotive.

Charlie Vita, chief lending officer with Canandaigua National Bank.

Brad McAreavy is here from the Rochester Automobile Dealers Association.

Your questions via email.

On the other side of this last break, support for your public radio station comes from our members and from Excel.

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We're finding out what it means for one of the world's most valuable companies to face an espionage investigation.

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This is Connections.

I'm Evan Dawson.

Tim writes to say, for people in the people in the market for a vehicle need to look at the total cost of ownership.

Theoretically, lease versus buy comes down to how much wear and tear you put on your vehicle.

If you take good care of things and are a conscious driver.

If, if you buy.

You can benefit from no payments if you hold on to your car for a long time with a lease, you are signing up for another monthly payment at the end of your lease.

That's from Tim Charlie.

You want to evaluate that one?

I think he's making great points there.

You know, we talked a little bit about lease versus by comparison.

What kind of driver are you driving?

30,000 miles a year or 5000 miles a year.

These are a few items to think about.

Plus the overall his point on the overall cost of the vehicle, something we didn't touch on is the cost of ensuring the vehicle, along with maintenance, along with just the actual interest, cost and the cost of of the payment all come together and insurance has gone up significantly.

So I always tell people, start with a budget.

Think about the full cost of the vehicle and really back into what you're paying monthly.

And there are so much selection.

Kevin can help us walk through for people that there is an affordable vehicle out there for somebody.

Okay.

Did you want to add to that email there?

No, I think he's he's obviously stating a fairly obvious situation.

If you do a 36 month lease versus a 60 or 72 month retail financing, you get to the end of your lease.

Yeah, there's going to be if you want to keep that vehicle, you're going to have to either buy or finance the remaining balance, of that lease.

So, that's just that's just how it works.

You haven't you haven't bought the whole vehicle at that point.

Okay.

Kevin Parker.

Well, Charlie brought up something, and I'm almost embarrassed because he's my older brother.

But my brother lives in Michigan, and his lease was up, and he was looking for another vehicle.

So he called me up and said I always wanted a truck.

And it was coming from a car probably getting 30 miles a gallon, and he got this truck with a Hemi and his payment went down.

And I was like, brother.

So real quickly I went online and did some comparison, just the fuel economy alone, not to mention the insurance cost.

I said, brother, I'm in the business.

40 you don't call me and I hope you're happy.

He had the look on his face like up real good.

He didn't think about the full cost of ownership.

And he.

This is a guy that's college educated, and I would have thought he would have done the full math, but unfortunately, he bought that payment and it was the only thing he was thinking about.

Yeah.

Well, Charlie, I'm thinking about.

So one of my best friends growing up.

His dad was a mechanic.

And his dad, probably to this day.

We'll we'll tell you anything in your life.

If you can pay for it straight out with one check the first time, do it.

He hates interest payments.

He hates having monthly bills that just feel like they're forever.

And one of the things he told us, well, when I remember I was 17 years old, we were getting ready to, graduation was around the corner.

He said, you got a lot to learn.

It's like, but here's one of the things that will make your life better.

The fewer months that you have a car payment in your life, have fewer months where you have a payment versus ones where you actually have to make a payment.

It's like that means you've bought the car.

That means you've driven it forever.

Now he drove it in a way that I thought, that is not a safe car anymore.

I mean, like, he's going to drive this thing forever because he doesn't want a car payment, but I think there's something to the idea of figuring out, and I think that goes to Tim's email.

You're on a lease, but when your license now you got a new payment on the other side, right?

What do you make of this idea of if you can write the check all in one shot at the first first opportunity, how do you figure out if that's the right move?

I'm a big fan of, no car payment, if possible, but I also am a realist that it's pretty hard for most people to do that.

You know, you you start with your budget.

You know, for the average person, they should really sit down.

What is my budget?

What can I really afford monthly?

Include what, you know, talk to your insurance agent.

What would it cost me to insure this car before you buy it and understand what your payment on your insurance is going to be?

Do I do I live two miles from work, or do I live 30 miles from work?

Well, you know, we all know the price of gas right now, so you should think about that and come into what is my what do I think the cost of owning this vehicle is?

And then what could I truly put down as a down payment?

It is, in my opinion, our opinion.

It's always better to put a little more money down if you can keep that term shorter within your budget, you know, if you've got a flex on on a payment term, that's okay.

But are you really stretching to get that?

You know, extra little thing or the add on or whatever the case might be, when you could pick a more affordable option and make sure you're setting yourself up for long term success.

All right.

We're going to fly here.

I'm going to try to get as many questions as I can here.

Let's see here, Jeff Kelly just wanted to know, is it not smart to buy out an electric vehicle after a lease is up, given that the batteries will likely begin to degrade, what does battery replacement look like in an aging electric vehicle?

Kevin, you want hit that one?

Yeah.

Most of the manufacturers have given a ten year, guarantee on those batteries.

But to their point, we've already noticed that in colder climates, the batteries don't do as well.

They're not in the summer.

They're going to get a little longer range.

In the winter.

They're using a little more power to take care of things like defroster and heated seats or whatever.

But I think it's untested.

I mean, I think the reason that people are leasing them right now, which is probably 90 high 90% of people that are in electric vehicles, are leasing them for this exact reason.

We don't know what the future will be with them, but I don't know if it's good or bad to say to buy one or not, because we've not even been out there ten years yet to see what happens.

I do know they're getting better and better every year, and the range is getting longer.

That's interesting.

Anything to add there, Brad?

No, I think again, they're it's a little bit up in the air right now.

But the the battery technology I mean we move into this next generation of battery which are either solid state batteries.

They're going to charge faster.

They're going to they're have longer ranges.

It's going to do a lot, you know, for range anxiety, which is a big issue with are people that are looking to buy an EV.

The life of the battery is, is still somewhat, unknown at this point.

I think ten years is is kind of the minimum.

You'll see some degradation in the battery.

What does it cost to replace a battery?

It's pretty expensive.

I mean, Kevin, 15,000 at least to replace the you know, you're talking about the entire undercarriage of the car for the most part.

So it's a pretty expensive replacement.

The solid state also takes only two elements where the traditional batteries we're using today takes four, so it's better to get it's a little less expensive for them to make those as well.

Yeah.

Here is an email from a town supervisor who is also a mechanic, which maybe we need more of those.

This is in Bloomfield.

This is Tim.

He says there's an automotive master technician and a factory Ford master.

Check my skills.

At 61 years rival the last seven new hires.

Cars are too complicated.

Has been my experience lately.

The techs coming into the dealers and shops just don't cut the mustard.

I see a large volume of cars that come back to my shop because the dealership techs can't fix them.

Cars are too high tech these days that are outpacing the skills and experience level of these younger techs.

That's from Tim out in Bloomfield.

What would you say to that, Kevin?

I mean, there's no question when you're starting off, if he can remember back when he did it, it was probably and know how long he's been doing it, a carburetors or whatever.

But the technology, definitely has advanced.

But, I mean, you don't have a first or second year technician doing, the more sophisticated work.

I think what I'm really hearing him say is you're having technicians doing work they're not qualified for.

That would be my take on that.

I'm making an assumption.

Okay.

Not happening where you are.

Well, try not to.

I'm not going to say we're infallible.

Yeah.

I think, you know, that all comes down to training and continuing education, you know, on behalf of technicians, if there was an eight tech or a master tech working on that vehicle, and it sounds like he's one, you know, you probably see a different outcome, on that, I would hope, but it's a challenge.

And and again, it goes back to as a, as a Ford dealer, depending on where he's taking his vehicles, they, they may or may not have master technicians in the shop.

And for those types of repairs, you need somebody who's pretty, pretty well trained.

I got to keep it tight.

Go ahead.

Charlie, Brett, if I might, or.

Kevin, are you seeing dealerships or do you send people regularly back back to MCC's program?

To up their skills as NCC is not a continuing education program.

It's done through the manufacturers mainly for it's up to the manufacturers.

We send them to places every year.

Yeah, but it's a, it's a it's a process down to our last two minutes.

So Christine real briefly and this is probably not a brief question.

Why is the cost of labor at the mechanic's over $100 an hour?

That seems exorbitant to me.

Okay, I, I don't know how to answer that.

I mean, there's a there's a lot of expenses that go into running a dealership, not just what you pay your technicians, but the lifts, the facilities, the tools that there's just an awful lot it goes into it, for sure.

So, I mean, it's it's gone up like everything else, but it's it's all a part of it.

Yeah.

And I'll go ahead and just say, I mean that's built into the cost of labor.

But as you dig back into that, I mean, the cost of buying the equipment and the repairs and the knowledge and all those types of things, that all goes into that.

Yeah.

And so it's it's expensive last minute.

There's a federal law that you said you're a big fan of.

Explain what's going on.

Well, oftentimes you see an advertisement and you want it to the dealership and you didn't qualify because you didn't have all the things that were needed.

So this big numbers pop and you can get this car for X and you go in and they're like, well, not you.

Yeah.

So the new law says that you have to publish a price that everyone qualifies for now for financing.

And that's based on your own credit.

So they'll say well qualified buyers sometimes.

But the price, at least through some transparency, is saying this is the price that everyone qualifies.

Now you're starting to see.

You may qualify for if you're already in a lease, an extra this if you are a firefighter, you know there may be other things.

A Costco member.

There's lots of other things, but they can't include it in the price that they advertise that.

One is for everyone, and I'm very happy they're doing that, because I think it's just going to get some more transparency in the automobile dealerships, which unfortunately sometimes aren't always there.

Well, and there's nothing that makes people more cynical than when they feel like they've been duped.

Yeah.

And then they start thinking, well, that's the whole industry, right?

As opposed to like a bad actor.

So good change in the law, you're saying?

Yes, indeed.

Kevin, thank you for making the time to tell people where they'll find you.

Kevin.

Oh, we're out.

Ted Parker Chevrolet, Subaru in Webster, New York.

Parker automotive.

Great to have you, Kevin.

Thank you very much.

Thank you.

Charlie Vita, chief lending officer with Kennedy National Bank.

I know where we'll find you.

We have plenty of locations, and we are all local auto dealers on our platform.

When you go in to buy a car at your your auto dealer, we're we're usually on the list.

Thank you for being here.

Thank you for having me.

Brad McAreavy always available, usually available on short notice.

President of the Rochester Automobile Dealers Association.

Your generous with your time.

Thank you.

Always a pleasure, Evan.

Great having you and from all of us have Connections.

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