Pep Boys 2007 Annual Report Download - page 56

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We are subject to environmental laws and may be subject to environmental liabilities that could have a
material adverse effect on us in the future.
We are subject to various federal, state and local laws and governmental regulations relating to the
operation of our business, including those governing the handling, storage and disposal of hazardous
substances contained in the products we sell and use in our service bays, the recycling of batteries, tires
and used lubricants, and the ownership and operation of real property. As a result of investigations
undertaken in connection with a number of our store acquisitions and financings, we are aware that soil
or groundwater may be contaminated at some of our properties. Any failure by us to comply with
environmental laws and regulations could have a material adverse effect on us.
Risks Related to Our Industry
Our industry is highly competitive, and price competition in some categories of the automotive
aftermarket or a loss of trust in our participation in the ‘‘do-it-for-me’’ market, could cause a material decline
in our revenues and earnings.
The automotive aftermarket retail and service industry is highly competitive and subjects us to a
wide variety of competitors. We compete primarily with the following types of businesses in each
category of the automotive aftermarket:
Do-It-Yourself
Retail
• automotive parts and accessories stores;
• automobile dealers that supply manufacturer replacement parts and accessories; and
• mass merchandisers and wholesale clubs that sell automotive products and select non-automotive
merchandise that appeals to automotive ‘‘Do-It-Yourself’’ customers, such as generators, power
tools and canopies.
Do-It-For-Me
Service Labor
• regional and local full service automotive repair shops;
• automobile dealers that provide repair and maintenance services;
• national and regional (including franchised) tire retailers that provide additional automotive
repair and maintenance services; and
• national and regional (including franchised) specialized automotive (such as oil change, brake
and transmission) repair facilities that provide additional automotive repair and maintenance
services.
Installed Merchandise/Commercial
• mass merchandisers, wholesalers and jobbers (some of which are associated with national parts
distributors or associations).
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