Good morning, and thank you for joining us today for the Genuine Parts Company Second Quarter 2020 Conference Call. With me today are Paul Donahue, our Chairman and Chief Executive Officer; and Carol Yancey, our Executive Vice President and Chief Financial Officer. Today's conference call and webcast are accompanied by a slide presentation that can be found on the Genuine Parts Company, Investor Relations website. Before we begin this morning, please be advised that this call may include certain non-GAAP financial measures which may be referred to during today's discussion of our results as reported under generally accepted accounting principles. A reconciliation of these measures is provided in the earnings press release issued this morning, which is also posted in the Investors section of our website. Today's call may also involve forward-looking statements regarding the company and its businesses. The company's actual results could differ materially from any forward-looking statements due to several important factors described in the company's latest SEC filings, including today's press release. The company assumes no obligation to update any forward-looking statements made during this call. Finally, please note that we've accounted for the Business Products segment, S.P. Richards, as discontinued operations for all periods presented. Now I'll turn the call over to Paul for his remarks.

Thank you, Sid, and good morning, everyone. We appreciate you joining us today for our second quarter 2020 earnings conference call. We hope you are staying safe and enjoying good health. So as we think about our quarterly performance and long-term focus, we want to highlight four key messages today. One, we are aggressively managing our company's operations through the challenges of COVID-19 by managing the short-term dynamics while staying focused on our long-term growth initiatives. This includes rigorous cost management as well as targeted investments to successfully position GPC in the recovery period and beyond. Two, we delivered strong quarterly results amid the challenging backdrop as we executed on our transformation strategy and omnichannel initiatives. Three, with the sale of our Business Products segment and our streamlined portfolio, we are now well positioned to maximize the full potential of our automotive and industrial segments. And four, we continue to strengthen our financial position by reducing our debt and generating stronger free cash flow. We significantly enhanced our liquidity this quarter and remain in excellent position to deploy capital towards high ROIC initiatives. The COVID-19 pandemic continues to impact the world in significant ways, both in our personal lives and from a business and economic perspective. We remain focused on prioritizing the health and safety of our employees and their families, our customers and our suppliers. We also want to extend another heartfelt thank you to the healthcare providers and first responders on the front lines of our fight against this outbreak for their commitment to the care and protection of our communities. We are proud of the tireless work by our associates across the global GPC family. As essential businesses, our operations have generally remained fully operational to fulfill critical customer needs, which required hard work under incredibly difficult circumstances. So a big thank you to our 50,000-plus team members for providing exceptional customer service to our partners around the globe. Working as a team, we have executed with agility through the pandemic, quickly and effectively adopting new safety protocols to ensure a safe work environment. And as mentioned last quarter, we have stepped up our communications with our global teams and our Board to preempt and prepare for developments as much as possible. Overall, our intensified approach to managing our operations has enabled us to enhance our balance sheet flexibility, achieve meaningful cost savings and advance operational excellence. During the quarter, we also took steps to advance our ESG initiatives, and we plan to highlight these many enhancements in our annual sustainability report to be issued later this year. Environmental, social and governance best practices are an important priority for GPC. Amid the ongoing effect of COVID-19, the social element of ESG has been paramount over the last several months, given the social unrest in our country and the world. At GPC, we have a long-standing corporate commitment to diversity and inclusion, and we pledge to be part of an enduring solution to ensure equality for all. In addition to our progress in these areas, we were pleased to announce the sale of our business products operations, S.P. Richards, on June 30. The sale of SPR represents the culmination of a multiyear strategy to optimize our portfolio and simplify our company. Over the last three years, we have reshaped GPC with several divestitures, including Auto Todo, EIS and now SPR and its operations in North America. All in, these divested businesses represent approximately $3 billion in annual revenues, which we have essentially exchanged for higher return investments in our automotive and industrial segments. From here, we move forward with plans to strengthen our focus on sustainable value-enhancing growth and productivity initiatives associated with our faster-growing, higher-margin core businesses. In addition, we will continue to opportunistically expand our global footprint. Our streamlined portfolio has many notable advantages, including scale and volume, the ability to leverage shared services and global branding, as well as synergies associated with common business processes, systems, suppliers, and talent. As a more simplified, service-oriented distribution company, we can better maximize the value of GPC and continue to deliver strong results and long-term value. Now moving on to our financial performance and business update. We entered the second quarter operating in a sales environment pressured by government mandates to prevent the spread of COVID. Broad shelter-in-place restrictions and full lockdowns in markets such as France and New Zealand significantly slowed mobility and overall economic activity. As announced in our May 6 earnings call, April sales were down 30% in automotive and 10% in industrial. And while the industrial segment remained pressured throughout the quarter and was down 12% in June, the automotive group had a strong recovery, down only 2% in June, led by returns to pre-COVID sales volumes in Europe and Australasia. Total sales for the second quarter were $3.8 billion, down 10.1%, excluding the impact of divestitures, with operating margin of 8.6%, up 40 basis points, and adjusted net income at $191 million, or $1.32 per share. We also delivered improvements in working capital and strong cash flows, which Carol will cover later. We are pleased to report a 40 basis point improvement in our segment operating profit. This was a significant accomplishment given challenging business conditions and a reflection of the strong leadership, quick decision-making, and disciplined execution demonstrated throughout GPC. This approach resulted in continued gross margin expansion and significant actions to adjust our cost structure. And we are well ahead of our original cost savings target for 2020. As we move forward, we expect our teams to maintain this cost discipline and convert many of these temporary expense reductions to permanent and sustainable savings. So now turning to a review of our business segments. The global automotive group had sales of $2.5 billion in the second quarter, down 10.1% from 2019 and representing 65% of total company revenues. As mentioned earlier, we experienced a sharp decline in sales in April, followed by a strong recovery in both May and June. In our North American operations, U.S. automotive sales were down 12%, with comp sales down 13.8%. Despite the challenging top line, we were pleased to deliver a 60 basis point improvement in net operating margin. In Canada, total sales were down approximately 13%, with comp sales down 15% and net operating margin up an impressive 400 basis points. For perspective, both regions showed similar recovery trends throughout the quarter with sales improving from 25% to 30% declines in April to mid-single-digit declines in June. For the quarter, sales to our retail customers continue to outperform through the pandemic, with positive sales growth in the U.S. and Canada. The strength in retail reflects the benefit of stimulus funds and other macro trends, as well as the positive impact of our omnichannel strategy to create an excellent in-store and online customer experience. As examples, we continue to refresh our NAPA stores, train our store associates, and build on our loyalty program, while also enhancing our digital tools to grow our DIY business. Enhanced digital capabilities, such as buy online, pickup in store, curbside pickup, ship to home, and delivery from store are driving increased traffic to our websites and record online sales in both the U.S. and Canada. We expect to benefit from this positive trend in the future through a continued expansion of our digital offerings. Commercial sales remained under pressure as lower demand from our professional shop customers led to declines in hard part categories such as brakes, chassis, ride control, and exhaust. In particular, sales to accounts such as municipalities, state governments, and fleets, which commonly distinguish our customer base from the competition, were especially hard hit. Overall, we believe the slowdown in commercial sales reflects the decline in miles driven related to COVID-19. However, we are optimistic that miles driven and other growth drivers will improve as consumers get back on the road for both work and personal travel. Our North American automotive teams have also been busy executing on several transformative initiatives to streamline their organizations. These steps included changes in management structure, further distribution center rationalization, a sales reorganization, and a continued focus on new delivery strategies and digital tools. These actions have already generated incremental cost savings and operational productivity, as evidenced by our improved operating margin in both the U.S. and Canada. We expect these efforts to continue to add value today and over the long term. So as we mentioned in our last call, we have worked closely with our independently-owned NAPA stores and auto care customers to help them benefit from the financial aid available to small businesses, the vast majority applied for and received PPP assistance. In light of their support and current business trends, we remain confident in the lasting financial stability of these key partners. In Europe, our automotive sales were down approximately 3% in the second quarter, reflecting pressure from COVID-19 and lockdowns in France and parts of the U.K. While our operations in Germany and the Benelux region held up fairly well through the peak of the pandemic, France and the U.K. drove an approximate 40% total sales decrease for this group in April. We had a sharp recovery from the lows of April with the reopening of France in May and the U.K. in June, which produced a surge in demand associated with deferred maintenance and repairs. As a result, total sales in Europe were positive in both months, with high single-digit comp sales growth in June. The improving business conditions across our operations in Europe are promising. We look forward to building on the positive sales momentum and expanding our operating margin as we execute on initiatives to drive both top and bottom line in the periods ahead. We believe our current footprint in the large and fragmented European marketplace is an important competitive advantage for us. In addition, we see growth opportunities in Europe associated with the ongoing rollout of the powerful NAPA brand. This year, we have been expanding on the five product categories introduced in 2019 with the rollout of several new product categories including brakes, filtration, oil, and steering and suspension. We are also initiating the development of our omnichannel capabilities in Europe, which will extend the digital platforms already offered in our North American and Australasian operations. Turning to Australia and New Zealand, we are extremely proud of the exceptional performance from this team in the second quarter. Total sales were up 4.4%, driven by an approximate 2% core sales increase. With these sales and continued cost savings, this team produced a 300 basis point improvement in net profit margin. Our team achieved these results despite aggressive steps by the Australian and New Zealand government to prevent the spread of COVID-19, which generally restricted mobility and related demand for auto parts. In fact, these operations have recovered to pre-COVID sales volumes, driven by strong double-digit retail sales growth and solid commercial sales growth in both May and June. In Australia and New Zealand, retail online sales continue to grow at greater than 300% from the pre-COVID levels. And through our investment in Sparesbox and other digital capabilities, we are prepared for additional online growth in the future. The execution of key initiatives such as the rollout of the NAPA brand across our trade offering, new NAPA store openings in Australia and New Zealand, and optimized global sourcing have been important growth drivers for our commercial business. So as I said before, we are very pleased with our performance in Australasia and expect to further build on this positive momentum. Turning now to our global Industrial Parts Group. Total sales were $1.3 billion, down 10.2% excluding the EIS divestiture. Comp sales in North America were down 16.7%, offset by the addition of Inenco in Australasia as well as other acquisitions, which contributed 7% to sales in the quarter. Despite the challenging industrial climate, this group produced a flat operating margin relative to 2019 and is up slightly for the first six months in 2020. Looking further at Motion Industries, the slowdown in sales beginning in mid-March continued throughout the quarter, with mid-teen declines in each month. While we operated in a difficult environment, we had anticipated a lagged recovery in industries such as equipment and machinery, iron and steel, pulp and paper, and automotive. That played out accordingly with declines in almost every product category and in every industry sector. Still, we saw positive trends in the second quarter. First, more of our customers are reopening their plants and returning to work, which we expect will improve demand for our core industrial categories including power transmission, hydraulics, and conveyance, among others. Second, our customers are beginning to release CapEx orders that were on hold for the past several months. Third, leading industrial indicators, such as the Purchasing Managers Index and industrial production, pointed to improved industrial activity in June, which we expect to benefit our business in the months ahead. Additionally, the Motion team has been executing on several strategic and transformative initiatives, including the restructuring of their sales organization to optimize their customer coverage and provide for effective remote selling. This team also enhanced our omnichannel capabilities in the quarter with the rollout of a new Motion Industries website, which is expected to drive incremental sales with both existing and new customers. And as in our other businesses, there has been significant focus on aligning Motion's cost structure to drive meaningful savings and more productive operations. In Australasia, our Inenco team is performing well, with positive total sales growth in June, driven by strong sales in the mining sector. In addition, this team continues to focus on ongoing initiatives to reduce their cost structure. Effective in August, Inenco will further integrate with our North American operations and assume the name MI Asia Pac. The team will utilize Motion's branding and new website and proprietary technology platform to enhance their digital capabilities and drive incremental volume. Our Industrial Parts Group sells to thousands of customers, representing a diverse cross-section of industry sectors. We continue to expand our products and services in several key areas, including robotics and automation solutions and have plans to bolster our offering through a small bolt-on acquisition before the end of 2020. So we move forward confident about capitalizing on these additional growth opportunities for our industrial operations in the quarters ahead. So that's our business update. And now we'd like to make a few comments on our strategic planning for the future. We are excited about the recent actions to reshape our portfolio and focus solely on our automotive and industrial business segments. Both of these businesses have market-leading positions and brands in large and fragmented end markets, strong long-term industry fundamentals, and steady 2% to 3% industry growth with consolidation opportunities. As we execute on our near-term initiatives, we have also accelerated our strategic planning process to build on our momentum, optimize our readiness for next year, and improve our post-COVID recovery rate. Our strategic growth framework is intended to build out our global branding strategy and further leverage the NAPA and MI brands, capture more wallet share with existing customers and acquire new customers, introduce new products and services, innovate and expand on our digital offering, expand our global geographic footprint, acquire strategic businesses that complement our existing operations, and continuously enhance operational excellence and productivity. We expect to use this framework to focus our teams on driving profitable growth and delivering higher levels of free cash flow and ROIC over time. So with that, I'll hand it over to Carol to give you a deeper look at our financials for the quarter.

Thank you, Paul. As mentioned previously, many of our comments this morning will focus on adjusted results from continuing operations, which excludes the goodwill impairment charge and transaction, restructuring, and other costs and income. Total GPC sales were $3.8 billion in the second quarter, down 14.2% from 2019 or a decline of 10.1% excluding divestitures. We're pleased to report our 11th consecutive increase in quarterly gross margin, which improved to 33.8% on a reported basis, or an adjusted 34.1% compared to 33.3% last year, up 80 basis points. The improvement primarily reflects the favorable impact of divestitures as well as acquisitions of higher gross margin businesses. These items, as well as strategic category management initiatives including pricing and global sourcing actions and favorable product mix shifts, were partially offset by a decrease in supplier incentives due to lower purchasing volumes. The pricing environment remained stable in the second quarter from relatively high levels of inflation in 2019, which were primarily associated with tariffs in our automotive business. So with supplier price increases of 0.2% for automotive, and 0.5% for industrial thus far in 2020, the total impact of inflation on our second-quarter sales was approximately 1% for both segments. Based on the current pricing trends, we expect only minor price inflation through the balance of the year. Our selling, administrative and other expenses were $971 million in the second quarter on an adjusted basis or down 13.8% from last year. This represents 25.4% of sales, which is up slightly from 25.3% last year. The decrease in operating expenses were due primarily to the positive impact of our cost actions implemented thus far in 2020. As mentioned on our last call, our teams continue to execute on initiatives related to our $100 million cost savings plan that was announced in 2019. We're pleased to report that we're well ahead of schedule with this plan, having achieved another $40 million in cost savings in the second quarter for a total of $70 million in expense reductions through the six months. In addition, our teams have been executing on a number of additional initiatives to adjust our cost structure for the changes in business conditions related to COVID-19. These initiatives contributed more than $150 million in incremental savings in the second quarter. So in total, we generated approximately $200 million in cost savings during the second quarter driven by reduced headcount and facility rationalization as well as the deferral of merit pay increases, management pay reductions, furloughs, and reduced travel related to the pandemic. These savings include approximately $40 million in government subsidies received by our international operations. Looking ahead to the third and fourth quarters, we're on track to show further progress towards our $100 million savings plan, and we expect to exceed this target for the full year. However, we also look for the accelerated cost savings related to COVID-19 to pull back as business conditions improve, sales volumes increase, and government subsidies are reduced. That said, while the sales environment remains uncertain, our focus through the second half of 2020 will be to grow our business while continuing to aggressively manage expenses and optimize our cost structure. During the quarter, we reported several adjustments to account for a goodwill impairment charge in our European business, restructuring, transaction and COVID-19-related costs, and a gain from insurance proceeds related to a facility fire. These adjustments were $556 million in total, with $13 million accounted for in cost of goods sold and $543 million accounted for as operating and nonoperating expenses. In particular, the noncash goodwill impairment charge of $507 million resulted from the ongoing market volatility and the uncertainty in Europe caused by the COVID-19 pandemic. We remain confident in our growth strategy and the long-term industry fundamentals in Europe. With these adjustments in mind, total operating and nonoperating expenses were an adjusted $1.05 billion for the second quarter reflecting a decrease of 12.3% from last year, comprising 27.5% of sales. Our total segment profit in the second quarter was $328 million, down 10% on a 14% sales decrease. Excluding divestitures, our total segment profit declined 6% on a 10% sales decrease, and our segment profit margin was 8.6% compared to 8.2% last year for an increase of 40 basis points. Our tax rate for the second quarter was 24.1% on an adjusted basis and down slightly from the 24.8% in the prior period. Our net income from continuing operations in the second quarter reflected a loss of $364 million, with earnings per share a loss of $2.52. Adjusted net income was $191 million or $1.32 per share, which compares to $215 million and $1.47 per share in 2019 or a 10% decline. So now let's discuss our second quarter results by segment. Our automotive revenue for the second quarter was $2.5 billion, down 10% from the prior year. Segment profit of $219 million was down 4.3%, with profit margin at 8.8% compared to an 8.2% margin in the second quarter of 2019. The improvement in margin primarily reflects solid operating results in our U.S., Canadian, and Australasian businesses. As Paul discussed earlier, this was driven by significant cost reductions and the benefit of government subsidies in our international businesses. Our industrial sales were $1.3 billion in the quarter, a 21% decrease from Q2 of 2019. Excluding the EIS divestiture, industrial sales were down approximately 10%. Segment profit of $109 million was down 20% from a year ago or down 10%, excluding EIS, and the profit margin was flat at 8.2%. So despite the challenging sales environment throughout the quarter, our industrial teams have done an outstanding job of aligning their cost structure with the demand environment and they continue to operate well. To complete our review of the segments, we're pleased that our July sales results reflect improving business conditions and positive momentum across the automotive and industrial businesses relative to the second quarter. For the month of July, we expect our total sales to be flat with the prior year, representing an approximate 6% sales increase for the automotive segment and a 12% sales decrease in the industrial segment. So while these sales trends are encouraging, we continue to operate in an environment of significant uncertainty and cannot reasonably forecast the full impact of COVID-19 in the coming months. As a result, we believe it is prudent to not reestablish our formal financial guidance at this time. So now let's turn our comments to the balance sheet. Our accounts receivable of $1.8 billion was down 29.7% from the prior year, due in part to the sales decrease for the quarter. In addition, during the second quarter, the company entered into an agreement to sell receivables to a financial institution resulting in a $500 million decline in accounts receivable from last year and serving to further strengthen our cash position. We remain pleased with the quality of our receivables and are confident in our collection trends, which we continue to closely monitor in light of the current business conditions. Our inventory at June 30 was $3.4 billion, down slightly from June of last year due to effective inventory management and reduced purchasing volume, offset by the impact of acquisitions. Accounts payable of $3.7 billion is down 3.5% from last year due to the change in inventory and lower purchasing volumes for the quarter. At June 30, our AP-to-inventory ratio was 112%, which has improved from 110% at March 31. Our total debt of $3.2 billion is down 17% from $3.9 billion in 2019 and has improved 11% from $3.6 billion last quarter. The cash from the sale of accounts receivable as well as the proceeds from the sale of S.P. Richards were used to pay down debt and strengthen our cash position. At June 30, we remain in compliance with our debt covenants with total debt to a trailing 12-month EBITDA as defined in our credit agreement at 3.2x compared to 3.4x at March 31. In addition, during the second quarter, we entered into new international credit agreements, which were made available to us increasing our total available credit capacity to $4.8 billion from $4.4 billion at March 31. As a result of these actions, we entered July with approximately $2.6 billion in available liquidity, which is significantly improved from our $1.1 billion liquidity position at March 31. Thus far, in 2020, we have generated $921 million in cash from operations, which is up significantly from 2019. Our free cash flow is also strong. While we modified our near-term capital deployment strategy in early April to preserve cash during the COVID-19 crisis, we remain committed to several key priorities for cash, which we believe serves to maximize shareholder value. These priorities are evident in the $4.3 billion in capital deployed across four key areas over the last three years. They include the reinvestment in our businesses through capital expenditures, M&A growth net of divestitures, share repurchases, and the dividend. For 2020, we reduced our initial $300 million in planned capital expenditures to approximately $150 million to $200 million and we have suspended plans for further share repurchases and acquisitions other than small bolt-ons. We are prepared to adjust these plans as business conditions improve and as we gain confidence in a sustained recovery. Likewise, we will continue to support the dividend, which we have increased for 64 consecutive years. So that's our financial update for the second quarter. And while the quarter presented many challenges, our teams did amazing work, especially on the cost structure and balance sheet side. We thank them for that, and we enter the second half of 2020 well positioned for the future. Paul, I'll turn it back over to you.

Thank you, Carol. We made significant progress in several important areas during the quarter. Our people, portfolio positioning and operational excellence initiatives are driving results and increased confidence at GPC today. To recap the key messages outlined at the beginning of our call, our teams operated well through the challenges of COVID-19, and we continue to prioritize the safety and well-being of our GPC associates and customers while executing on our growth initiatives with speed and agility. Our second quarter financial performance benefited from improving sales trends in automotive, continued gross margin expansion, and transformative cost actions. All of these efforts, coupled with our strong balance sheet, put us in an excellent position to continue to deliver operating margin expansion and strong free cash flow. And finally, with the steps taken to simplify and optimize our portfolio, we move forward as a more streamlined organization, focused on our automotive and industrial operations and with a well-defined strategic growth framework intended to maximize growth and value creation for all stakeholders. So despite the economic uncertainty, future impact of COVID-19, and pace of recovery, GPC is well positioned and prepared for the various scenarios that may evolve over the near term. We look forward to executing our strategic plans into 2021 and updating you on our progress. Thank you for your interest in GPC. And with that, we'll turn it back to the operator for your questions.

Our first question is from Bret Jordan with Jefferies.

This is Mark Jordan on for Bret. It looks like the U.S. automotive business has improved from the lows, but it looks like it maybe remains pressured. And I may have missed it in the prepared remarks, but did you provide the July sales trends for the U.S.?

Mark, this is Paul. We discussed this earlier, but I'll mention it again. Our sales in U.S. automotive are currently positive for the month of July, although we haven't finalized the numbers yet.

Okay. And can you talk about maybe the gap between DIY and DIFM? And maybe when we can expect to see some more improvements in the DIFM segment? I know you mentioned it seems like some of the public sector customers are pressured.

Yes. So as we look at the quarter, Mark, our DIY business was down in April, low single digit and then turned to a positive trend in both May and June. Actually, we're up low double digits in both months, and we're seeing that even strengthen further in July. DIFM was down, I think, close to 25% in the month of April. And was down mid- to high-double digits in above May and June. We are seeing a little bit of a bounce back as we go into July, but it's still trending down a bit. And so as we look at it, Mark, as miles driven begin to bounce back and they will, DIFM is going to bounce back with it. We still firmly believe that our market-leading position in the commercial segment is the place to be, and it best positions NAPA for long-term sustained growth.

Okay. Great. And then can you just talk about maybe some regional trends in the U.S. during the quarter? What regions were strongest and what were weakest?

Yes, of course. In the last couple of quarters, the strongest regions were the mountain states, particularly Colorado, Montana, and Wyoming, which were less affected by COVID at that time. The Midwest also performed relatively well compared to other areas. Meanwhile, the Northeastern United States and the Eastern seaboard faced the toughest challenges. On a positive note, we experienced strong growth in Australia, even though New Zealand was under strict lockdown for most of eight weeks. Additionally, there was a notable recovery in Europe, despite full lockdowns in both France and the U.K. for part of the quarter.

Our next question is from Michael Montani with Evercore.

Just wanted to ask if I could, on the commercial side. Paul, if you can just remind us the breakdown of the business there between, kind of, NAPA AutoCare now versus the municipal state business and then the core garages, just for a sense of the mix there. And then for some incremental color about how you saw those three parts of the commercial segment evolving across the course of the quarter and into July. And then I had a follow-up.

Yes. The NAPA AutoCare program has approximately 17,000 to 18,000 members and is a crucial part of our commercial business, particularly in the major account segment. This includes fleets and government sectors. As I mentioned earlier, our municipality fleet and government business has faced the most challenges. However, AutoCare performed better than the fleet sector. AutoCare represents nearly 20% of our total U.S. automotive business and that segment has faced some pressure. We're pleased to note that we collaborated with our AutoCare centers, as well as many of our independent NAPA jobbers, to help them secure PPP funding. We've worked closely with them, ensuring that their businesses remain financially healthy. As driving patterns start to improve, we are confident that this segment will also recover.

Great. I wanted to follow up on the jobber performance during the quarter. Can you provide an update on how many jobbers you have now compared to a year ago? Additionally, how have their trends compared to some of the U.S. trends you mentioned?

Yes, the performance has been very consistent with our NAPA jobbers. While there are some outliers across the country, the trends we're observing with our NAPA jobber base indicate that larger, well-funded entrepreneurs are expanding by acquiring more stores and performing well. We have about 3,000 independent owners operating our 5,000 independent stores. We work closely with these larger owners to help them secure PPP funding, and most have successfully done so and are in good financial shape. As we move past the pandemic and cars return to the road, our jobbers are well-positioned to thrive.

Okay. The last one I have is just around the pricing environment in the market. And there was some good commentary already there from Carol. But just wanted to understand how rational is the space, both in the U.S. and then also in Europe, where you're rolling out the private label offer?

Yes, I can share my perspective, and perhaps Carol would like to contribute as well. Traditionally, in the U.S. and North America, the pricing environment has remained quite stable. We typically do not experience significant fluctuations just because we discount products in a particular month. Over the years, we have observed a consistent pricing environment in North America, and the situation is similar in Europe. There are a few major competitors, including one that reported this morning, and the pricing environment there is also strong. Carol, do you have anything to add?

Yes, Mike, just a reminder that the inflation we've experienced was primarily due to tariffs from a year or 18 months ago, which we have now anniversaried. As we enter the second half, we currently do not anticipate significant price increases or inflation, although there is a lot of uncertainty. You’ve seen our 11th consecutive quarter of gross margin increases, which we are achieving through our strategic category management efforts. This includes global tenders, global sourcing, and pricing initiatives, all contributing to our sustained gross margin improvement.

Our next question is from Christopher Horvers with JPMorgan.

It's Christian filling in for Chris. You mentioned that sales in municipalities set you apart from your competitors. Considering O'Reilly's positive comments on the DIY segment recently, what would you say accounts for the remaining difference compared to your competitors? Is it more related to the geographic mix, given that you have additional stores in the Northeast which was particularly affected? Or is it primarily a market share concern?

We don't think this is a market share issue. They had strong results, and we congratulate them. To us, this indicates the growth opportunities we have in the aftermarket, even during this pandemic, and it looks promising for the future. This quarter has shown a surge in DIY, boosted by stimulus funds and people having more free time. We believe the optimal area in the automotive aftermarket remains in the commercial segment, which we expect to perform well over the long term. Looking at our competition, particularly the big four, they account for about 35% to 40% of the industry. Our business model differs significantly, with 80% in the DIFM segment and only 20% in DIY. In July, we are starting to see our DIFM business recover, and we are confident that as driving increases, our DIFM business will continue to improve.

That makes sense and is very helpful. Could you also provide details on the $150 million in additional savings from initiatives, including the reduced headcounts and management pay cuts for the rest of the group?

Yes. So the $100 million of cost savings that we introduced last year, Q4, and we mentioned that we were on track for that, we achieved $40 million in Q2 giving us $70 million year-to-date. We'll actually be ahead of plan on that. And those are permanent cost savings, probably 75% to 80% payroll-related, related to our BRP and some other facility consolidations and we're looking at other areas as well. The incremental in Q2 cost savings that we talked about really related to mitigating the impact of COVID-19. We put those in place, and we were pleased to see the results in the quarter. Many of those are temporary, about 60% to 65% is payroll-related. We had government subsidies in there, some freight. Of course, travel and entertainment, rent. We're working hard to see what we can make permanent. But as we said before, many of those are temporary. So delaying merit increases, some of the voluntary and involuntary furloughs, things like that. But knowing we're also looking at further structural changes. So we hope to have some of those permanent. But we do expect those to pull back in the second half. But no, we're going to be ahead of plan on the $100 million cost savings that is permanent.

Our next question is from Daniel Imbro with Stephens Inc.

Paul, I don't want to dwell on this, but as we consider the DIFM recovery for the industry and for your company, you mentioned that the increase in miles driven is the primary factor. There's a lot of uncertainty surrounding this, but based on your experience, do you expect to see a complete return to the original miles driven? Or do you anticipate some residual effects from remote work and reduced commuting? What is your perspective on what a 'normal' situation might look like in 2021?

What the new normal looks like is uncertain at this stage. However, as we review the automotive aftermarket, the average age of vehicles has risen to 11.9 years, and gasoline prices have decreased by 20% year-over-year. We anticipate that people will be hesitant to travel by airplane for business or vacation, leading to increased utilization of their vehicles. Eventually, we expect to return to the miles-driven figures we've experienced in recent years, although this may take some time. In the meantime, we are enjoying a significant uptick in our retail business, similar to our competitors, and we are pleased with the growth we are witnessing outside the U.S. Our operations in Australia and New Zealand had an exceptional quarter, and we have seen a strong recovery in Europe as they reopen their markets. Overall, the fundamentals are strong, and we remain very optimistic about the automotive aftermarket.

Got it. That's helpful. That dovetails nicely, next question was going to be on Europe. I think the result is a lot better than feared there, and you mentioned a nice snap back into June. I think you said high single-digit organic growth. Can you parse out what you think is driving that level of growth? Is it just how shut down France was? There's a catch-up spend? Or are you gaining incremental market share in those markets? Kind of what's driving that higher level of growth? Because that's still a pretty heavy DIFM market. So I was surprised by that level of bounce back.

Yes, it's heavily focused on the DIY segment, as you pointed out, with 95% being DIY. A significant portion of the recovery is due to pent-up demand. However, we are encouraged that the surge we experienced in June has continued into July. When we entered the European market over two years ago, our strategy was to launch private label products. We are currently in the midst of launching NAPA across all our markets. We have also expanded into the Netherlands, which is a promising market for us, and into Germany as well. We've enhanced our management team and have improved payment terms by leveraging our relationships with major global suppliers. We are on track to achieve the cost savings we committed to three years ago. Additionally, it's exciting that we are in the early stages of developing our online and omnichannel strategy for Europe, which we believe will positively impact our future growth. We remain very optimistic about our position in this fragmented market.

Got it. That's helpful. And then last one for me, moving to the industrial side. I think, Paul, you mentioned June trends, leading indicators got better. But Carol, during your remarks, I think you said we're still down 12% in July. So can you maybe help me reconcile those two things? It feels like you're more optimistic on the outlook, but near term, things are still pretty pressured. So when do you expect to see those indicators come through? And yes, what's kind of the outlook there for that segment?

Yes, I appreciate the question on industrial, Daniel. It's a really important segment for us. We have a strong business at Motion as well as MI Asia Pacific. Before moving to the U.S., I want to mention that our operations in Australia, New Zealand, and Southeast Asia are performing quite well, surpassing our numbers here in the U.S., even despite the shutdown in New Zealand. We're seeing significant strength in the mining sector in that region. In the U.S., we are observing an improved trend in July compared to Q2; while we are still down, we are seeing improvements. We expect to see factories begin reopening, and some of our major customers are starting to release capital expenditure orders that were previously on hold. Leading indicators like PMI and industrial production are showing positive movements. Although the industrial segment has lagged behind the automotive recovery, which we anticipated, we believe there will be continued improvement in our numbers throughout Q3 and Q4 as factories keep reopening.

And our final question will be coming from Matt McClintock with Raymond James.

Yes. This is Mitch Ingles, filling in for Matt. So my first question was on your digital investments. Your Sparesbox acquisition last year seems even more timely today, given the leading digital interface and CRM capabilities for the Australian automotive aftermarket. Have you been able to implement these attributes to your other auto regional businesses? Or more broadly speaking, what do you see as a driving force for your digital investments going forward?

Thank you for the question, Mitch. I appreciate you bringing up our digital initiatives. The acquisition of Sparesbox has proven to be excellent and very timely considering the pandemic's impact. In our Australian operations, we have observed a 300% increase. We are leveraging the skills we gained from Sparesbox, and they are collaborating with our digital team in North America. We also plan to work with our teams in Europe to apply that expertise in the European market. I want to highlight a few initiatives we've launched, such as curbside pickup, shipping to home, and buy online pickup in store, which are similar to what many businesses are implementing globally. Additionally, we've significantly enhanced our search capabilities across all our businesses and introduced new apps for product recommendations. These factors are contributing to strong growth. As I mentioned earlier, we've also improved our online initiatives at Motion. We are very satisfied with our digital team and remain optimistic about this segment as we progress.

We have reached the end of our question-and-answer session. I would now like to turn the call back to management for closing remarks.

We'd like to thank you for your participation in today's conference call. We thank you for your interest and support of Genuine Parts Company, and we look forward to updating you on our third quarter results. Thank you.

Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.