Justin Jude: I mean, right now, we’re seeing the car part growing in North America. We’re seeing that it growing in an aging, all leading to great improvements and the need for alternative parts utilization whether that’s mechanical or collision, whether that’s used or remanufactured. So we see great trends in the car park for North America.
Nick Zarcone: And just to be clear, our sweet spot on the closing side, we’ve always indicated is kind of 3 to 10 years. After 10 years, people tend not to get their cars repaired just because the overall value of the car and sometimes people lop off their collision coverage. But the parc inside that 3- to 10-year age bracket is still very strong. What we are seeing is on total losses that is shifting towards very old cars, cars north of 10 years old, which generally would end up in the collision base anyways. So we think the dynamics of the car park are trending just fine for our collision base business.
Operator: [Operator Instructions] We have next question from Bret Jordan with Jefferies.
Bret Jordan: Just a follow-up on that last topic. I guess, as your internal math as the class of ’21, class of 2020, the pandemic, new vehicle sales impact starts to swing into that 3- to 10-year old sweet spot. And have you done the math here over the next couple organic growth?
Rick Galloway: No, we don’t see that part as a headwind for organic growth. I mean the complexity of the vehicles, the value of the parts and the number of parts work to offset some of that, Bret. So we don’t see that as a negative trend for us at all going further out.
Justin Jude: And Brett, I would say being in the industry for 25 years, 10 years ago insurance carriers would not typically ride aftermarket or alternative parts in the first 0 to 3 years. That has changed quite a bit in the last 10 years where we can get a product pulled up in aftermarket world relatively quickly, 6 to 9 months, and we see nearly all carriers riding current model year for aftermarket or recycled to try to drive that APU. So we don’t see that as an impact to us.
Bret Jordan: Okay. And I guess since I got back in line, I get my 2 questions. On European SKU rationalization, I think you’re talking about taking 35% or reducing your overlap by 35%. What’s what do you see that impact being to margin in that? I guess, more products from fewer suppliers. How do you see maybe the bucket, how many basis points you think you can get out of that initiative?
Justin Jude: Yes. We haven’t quantified the overall margin improvement. We know it’s there. We haven’t publicized it, I should say. In that, I would say when that 35% reduction, that’s in lieu of us actually adding more private label. So we’re going to be adding more SKUs to the mix to get more private label as Nick talked about. That is growing. We’re expanding that in other countries and we still plan on reducing the net number of SKUs and with private label that typically comes at the higher margins. But the other comment you made it would be less suppliers which would create some operational efficiencies from an SG&A standpoint in the warehouses and the distribution centers as well as some margin lift with fewer suppliers.
Rick Galloway: And Bret, I mean this is kind of the catalyst, one of the bigger projects that we’ve got over in Europe. This is one of the things that will help us significantly when we think about logistics without borders. So as far as the opportunity here, we think the opportunity one of the reasons we’re highlighting it is we think the opportunity going forward over the next couple of years, this is a really major contributing factor for us that we’ll talk about a little bit more in September 10th when we do our Investor Day. Andy will kind of lay it out in a little bit more detail on there.
Operator: Thank you. As a reminder, everyone, it appears that we have no further questions. So I will hand back over to the management team for closing.
Justin Jude : Yes. Operator, this is Justin. Just before Nick closes us out, I want to give, I guess, the investors and really all of our employees that I feel super excited about the future of LKQ. I mean, if you look at the segments for which we operate in such as North America, as I mentioned earlier, the car parc is growing, it’s aging, all great things that lead to alternative parts utilization, whether that’s in the collision world or in a mechanical world. We’ve seen inflationary cost pressure on the insurance carriers. Carriers are all trying to drive more alternative parts utilization to combat some of the losses. We see the number of parts per estimate increasing and will continue to increase. We see part pricing increasing and continue to increase.
The complexity of vehicles really leads to our services business, which allows us to do things like technical repairs or calibration. We’re also very excited about the Uni-Select acquisition that’s going to bring us tremendous synergies. And if you jump over to Europe, it’s a core segment for LKQ. We have a great management team over there, we’re the market leader today with the best margins, that market is still highly fragmented which leads to an opportunity for further consolidation. The team has a clear roadmap on accelerating margin enhancement with extending the, and accelerating the integration a lot of what Rick talked about with the SKU rationalization will lead towards that. And then we’re getting the Bumper to Bumper benefits on the procurement side because of scale and size that we have with our European procurement teams.
