114. Why Amazon Can’t Compete With a Great Auto Parts Distributor with Josh D’Agostino, President and CEO of Mighty Auto Parts

Karthik Chidambaram: Josh D'Agostino, CEO of Mighty Auto Parts. Josh, thank
you for joining me today.

Josh D'Agostino: Thank you for having me. Appreciate it.

Karthik Chidambaram: Josh, tell us about the Mighty Auto Parts business.
What is it that you guys do?

Josh D'Agostino: Yeah, it's pretty self-explanatory. We are actually a
franchise system, so we distribute Mighty branded auto parts through
franchisees, about 98 domestically in 45 states.

We have nine international distributor partners as well, and it's preventive
maintenance, auto parts, accessories, chemicals, fluids. That's what we do.

Karthik Chidambaram: And is this for a specific brand, or you do that for
all?

Josh D'Agostino: 90% of what we distribute is Mighty branded. Mighty
branded. So we don't manufacture, so we get from our suppliers and typically
they brand it for us, or we might repackage it at our distribution center.

But 90% of what we sell through our chain is Mighty branded.

Karthik Chidambaram: And how is the distribution business today, right? So
what are you seeing as some of the trends in distribution?

Josh D'Agostino: I think like everybody else, fill rate is critical. Having
the supply. Pricing is as competitive as ever. So you have to be efficient.

You have to get products to people quickly. You have to have it on the
shelf. So I think just, like most distributors, it... people want things
now. So you have to just be that much better at what you're doing. You have
to be chasing your fill rates. You have to be making sure you limit back
orders.

You have to be sure that you're getting products to the right people as fast
as possible and at a competitive price.

Karthik Chidambaram: And do you see tariffs impacting your business? And how
is that panning out?

Josh D'Agostino: Yeah, absolutely. The tariff situation was not a lot of fun
to manage. We were daily looking at what's the tariff today?

Is this auto part included? Is that auto part included? Which countries are
affected? It was very uncertain. It was very trying. When do you need to
raise pricing to cover the tariffs? When can you absorb it? When do you, if
tariffs are going to be removed, you have another problem. When would you
lower pricing to make sure you're fair to the marketplace?

So that was a daily grind for months and months in the early part of 2025
and very much a struggle to manage through the chain. The good news is in
auto parts at least, really all of our competitors had the same challenge.
So nobody really had a competitive advantage, I wouldn't ar- I would argue.

So that was the silver lining. But it's certainly required a lot of
management, and it's certainly raised prices.

Karthik Chidambaram: And how do you create a competitive advantage, right?
Like you said, because a lot of people are selling the same thing, but how
do you stay ahead of the competition, or what's the differentiator here?

Josh D'Agostino: Our differentiator, being a little bit different as a
franchise, is we are providing a service to our end user customer, and our
end user customer is a service facility, someone who is repairing vehicles.
And our differentiator is inventory stocking and management and training. So
you can get an automotive filter from dozens of companies, and in many
cases, not all cases, but in many cases they're very similar quality.

So what's the difference? The difference that we try to provide is our
distributors, our local distributors, our franchisees, are actually
providing an inventory management and stocking service. They are taking care
of inventory at the shop level so that they don't have to do it. And there's
a technician shortage.

Everyone's trying to increase car count. The last thing they need to be
doing is managing some inventory on a shelf. So we do that and try and
differentiate ourselves from others. So as I mentioned before, fill rate,
order accuracy, competitive pricing, but really that inventory management is
the differentiator for us.

Karthik Chidambaram: Is that like a vendor manage inventory? So you manage
the inventory at the-

Josh D'Agostino: Yeah, very similar. Very similar concept, absolutely.

Karthik Chidambaram: And so when it comes to auto parts speed is the key.
Let's say if my car is not working , I need it fixed now, right now, right?
So that's where, so is that how you differentiate from, let's say
marketplaces like Amazon?

Because even with Amazon, I can get it delivered immediately. But how do,
how does that impact?

Josh D'Agostino: Yeah. Amazon's kind of been killing our in- our business
for 15 years, and it has yet to kill our business yet to even come close to
killing our business. It is much more complicated than that.

Availability is key. Your car's not working. You need it back as fast as
possible, and what you also need is expertise. That shop may need to have a
catalog that shows which part fits on this vehicle. That is critical to make
sure I don't put the wrong product on the vehicle and cause further damage.

That's what we're pr-providing. We're providing catalog data. We're
providing product information, returns, warranties, defects. We're providing
customer service that you're not getting online. Now, can I buy something
online that I may not need right away? Janitorial sanitation products, some
lubricants or chemicals, of course I can.

And so we have to be mindful that people can order that online, and that's
things that we sell. But when it comes to those critical parts that people
really need right away or need to have on their shelf for when a vehicle
comes in and just needs a simple service, and I-- and turning that vehicle
quickly really matters that's gonna be tough for the online retailers to
really impact, I think across hundreds of thousands of part numbers.

Hundreds of thousands of part numbers.

Karthik Chidambaram: And in terms of product knowledge and the technicians
or the people at the repair facility have the product knowledge. But this is
also where AI or machine learning can play a role, right? So where, hey, you
know what? That is being trained. So let's say if I have a question, I would
ask a Perplexity or ChatGPT, "Hey, what do I need?"

Do you see that happening in the auto parts industry?

Josh D'Agostino: I do. I do. So just because you have product knowledge
doesn't mean you know which filter fits on which car, right? So I may
understand filters, I may understand batteries, I may understand brakes, but
I don't know exactly which part number goes to this vehicle.

I need data for that, and it's typically being accessed through a supp- a
distributor's catalog. Now, I do think you're gonna start seeing, I'm just
gonna ask this catalog, like in an AI-type function, what brakes go on this
car, right? And the catalog's gonna respond. I think if you go to a
Perplexity, if you go to outside sources, they're gathering data from all
over the place.

You don't know where that data is necessarily coming from, not yet today.
But if you have the same kind of AI search, AI functionality, voice command
within a catalog that you already trust has accurate data, that's going to
increase. In fact, that's something we're looking at doing. So you're going
to see sort of AI search and you're already seeing AI search where how do I
fix Some issue.

So you're already seeing people, like they were using YouTube, right? A lot
of people look up on YouTube. Now they're asking AI, "Hey, how do I fix
this?" So you're gonna see more and more technicians using that service, and
I think using kind of AI tools within a catalog from a trusted data source.

Karthik Chidambaram: And we are talking about autonomous vehicle.

Even today, we can get onto a vehicle without a driver. How would that
impact the auto parts industry? Is that gonna increase the business or
reduce the business? Or what do you see?

Josh D'Agostino: It depends if that autonomous vehicle is electric vehicle,
if it's an ICE vehicle, if it's some combination of technologies.

Electric vehicles will be, if they grow at a dramatic pace at some point in
the future, fewer parts are needed for that vehicle. And right now, most
autonomous vehicles you're seeing are electric, right? So as autonomous
vehicles grow, the number of parts they need will change, and in fact, a lot
of the core parts that we sell today, an electric vehicle doesn't need.

So you're gonna have to change with the times. You're gonna have to get more
focused on electrical products, batteries of course. A lot of these electric
vehicles that are autonomous, tons of batteries in them. Not just the main
battery, but all kinds of other batteries. So there's some expansion
opportunities on parts, but autonomous electric vehicles could be a negative
to our industry, and you'll have to diversify.

You'll have to diversify your products, diversify maybe the industries you
serve.

Karthik Chidambaram: Yeah. Get new product lines and keep changing, yeah.

Josh D'Agostino: Yeah. One thing we're doing is we're getting involved in
heavy duty. So the trucking business, the Class 6, 7, 8 vehicles. We have
very little market share in that today, but it's a $90 billion industry.

You don't need a big market share to have a good impact on your company. So
we're looking at diversifying into fleet business, and we've already done
some of that. Heavy duty, and we're doing that now. Car wash and appearance
products. All these vehicles are gonna get washed, right? So we're
diversifying to hedge some of these technology changes that are slow to
develop right now but could accelerate in the future and probably will.

Karthik Chidambaram: And this business is very regional, right? Because you
are in Atlanta, so you mostly work with customers in the Atlanta region. Is
that how it works?

Josh D'Agostino: No, we're a national brand. We're in 45 states. So we, our
headquarters in Atlanta. And our distribution center is near Memphis,
Tennessee. But we service really, 80% of the population is registered
vehicles are really serviced or can be serviced by one of our franchise
distributors.

So we have plenty of room to grow- ... new products, get deeper in our
current products. There's thousands and thousands of shops we're not doing
business with so we certainly have plenty of room to grow. But no we are
servicing really the country.

Karthik Chidambaram: So what are you looking forward to in the coming years,
with Mighty Auto Parts?

Josh D'Agostino: So I mentioned already our product diversification. There
are really three areas that we are just dabbling in, and heavy duty is one
of them. Car appearance, so car wash detail accessories, and then our
performance chemical line. So many vehicles have different types of
chemicals in them. Those chemicals expire e- effectively or get, get used to
a point they need to be replaced, just like oil changes, right?

So power steering fluid and transmission fluid and brake fluid, all these
things need to be changed at some point in time. That is a growing business,
and we have a pretty good business there. But those three categories we are
gonna be very focused on for the next five years to really dramatically grow
our business at a much greater pace than what we've been growing at.

We-- And we grow at a nice pace, but this is gonna accelerate.

Karthik Chidambaram: And how do you keep yourself updated, right? So with
what's going on in the industry, what are you reading?

Josh D'Agostino: Yeah. So I think we're members of three different primary
members of three different associations. This one, the National Association
of Wholesaler Distributors, the Auto Care Association, and the International
Franchise Association.

So we get three different perspectives or a, a general distribution
perspective. We get an automotive perspective, and we get the franchising
perspective. So I read things in the franchising industry. I certainly read
things from the Auto Care Association. We have banking partners that provide
economic outlets, outlooks.

MDM here through the NAW is also a great source. Attending these shows. My
team is also well-versed. Our suppliers, our manufacturer suppliers, they're
always providing data. Parts that are coming into popularity, parts that are
going out of popularity. So we're always getting data also from our
suppliers at a more street level, part specific, what's happening here.

So yeah we read, we attend different shows- ... and kinda compare notes.

Karthik Chidambaram: Yeah. And talking about data, right? Because that's a
common problem in the auto parts industry. So how are you ensuring that your
data is always accurate and,

Josh D'Agostino: Yeah, it's a very good question. Data is hard to find, hard
to get.

We typically buy vehicle registration data every year or if not twice a
year. So we know which vehicles are registered in what zip codes. We know
which vehicles are growing in what we call VIO, vehicles in operation. We
know which ones are growing, we know which ones are declining. We rely on
many of our manufacturer partners for product data that we feed into our
catalog.

So we have a brake manufacturer, and they tell us what their brakes fit. And
so we trust them, and we add that data to our catalog. We kinda have a
standard aces and pies data in the in the industry. We also do research
ourselves. So filtration, for example, we handle ourselves. We have someone
on our staff who is constantly looking at filters to see does this filter
from twenty twenty-four fit the twenty five-five model, or is there a new
filter?

Some of that requires going and buying the new filter and taking a look at
it to see if our filters match. So there's some manual work to it, but most
of it is data transfer from suppliers and manufacturers to us and then into
our system.

Karthik Chidambaram: Josh, thank you so much for joining me today. Great
chatting with you.

Josh D'Agostino: Yeah. Thank you very much. Appreciate it.