PHILADELPHIA ( TheStreet) -- One thing that has not changed with the economic downturn is Americans loving their cars. But they are driving vehicles longer and better maintaining them, revving up the stocks of many aftermarket service and parts providers.

Shares of The Pep Boys ( PBY), however, have remained stuck in neutral while those of competitors such as Autozone ( AZO), O'Reilly Automotive ( ORLY) and Advance Auto Parts ( AAP) have taken off over the past year.

Philadelphia-based Pep Boys reported first-quarter results June 8, including sales of $510 million that were off $8.5 million from analysts' estimates. The stock dropped 12% that day. It hasn't recovered.

In response, the company this month rolled out an advertising campaign reintroducing founders Manny, Moe and Jack. The company isn't releasing figures on the cost of the TV, radio, print and Internet offensive.

TheStreet spoke with Pep Boys Chief Executive Officer Mike Odell about the change in auto parts and service spending, as well as The Pep Boys turnaround strategy.

The retail sales number for June was pretty tepid. Are Americans still spending on their cars?

Odell: People are definitely maintaining their vehicles, because they can't easily afford to go out and get a new car. They are going to come in to see us, and it's our job to help them maintain their vehicles. They're willing to spend, but they're cautious.

Why has The Pep Boys stock underperformed its competitors? The environment should be good for all of you.

Odell: We are in the midst of a turnaround, and it's also important to note that we are a lot different than some of the other players to which we are often compared. We have a very unique business model.

It starts with parts, but that's a little less than a third of our business. Half of our business is service and the rest is our automotive superstore. A little over 20% of our business is accessory. It's about appearance, it's about performance, and it is a little bit more discretionary in nature.

However, we consider ourselves the one place that customers can go and find anything they want for their car, whether it's maintaining it or improving the look or performance. They can do it themselves or they can have our National Institute for Automotive Service Excellence -certified technicians do it for them. We're unique in that regard.

What is your marketing plan for the turnaround?

Odell: We've been on TV a lot. We've been on the radio. And we have been in newspapers getting our story out. We've really brought back the legacy of Manny, Moe and Jack. They were the founders of the company almost 90 years ago. Manny is about recommending the best products and Moe is about the great values that we provide every day, and then Jack tells the service story about what we can do in terms of installation. It's kind of a fun but honest way to tell the story. We're a fun store to shop, and customers get a big kick out of Manny, Moe and Jack.

Are you going to be doing anything different operationally during this turnaround process?

Odell: We've continued to improve our business model. It's all focused on what can we do to make lives more simple for our customers. Value is a big part of it, but also people looking for expertise. They are looking to make sure that they can maintain their vehicles, so we've improved our parts assortment. We've also continued to invest heavily in equipment and in training so we can make sure our folks are ready to take care of customers' vehicles as soon as they are done dealing with the dealers.

We also have improved our website so customers can go online and schedule an appointment. That certainly makes it easier for the customer to do business with us. And Glovebox is the most recent thing that we've added that's kind of fun. People always have a hard time keeping track of their maintenance records, and so we make it easy for them by allowing them to keep those records on our website.

A lot of retailers have been increasing their discounts because consumers have not been spending as much. Are you taking a little bit more off the price?

Odell: We've always been value oriented, and we continue to be sharp with our pricing. Discounting and promotions have always been part of our strategy and they continue to be part of our strategy. But our business is really about making sure that our customer gets the best value from us every single day.

How many stores do you have right now? What is your goal for 2010?

Odell: We've got almost 600 stores now. We've opened 25 new ones last year and we'll do another 40 this year. A few of them are our big supercenters that offer large full service plus all the accessories, but mostly we're opening new service and tire centers. They're really focused on doing it for the customer. We want to be closer to where the customer lives and works, making it more convenient for them to come see us.

Cars are becoming more complex. We are even seeing a big burst of energy for this electric car from Tesla (TSLA). Are your shops and mechanics prepared for this new complexity?

Odell: I don't have the exact dollar figures in my head, but we spend a lot of money on getting the latest equipment and keeping our employees current with their training. We're certified in all of our stores to take care of hybrid vehicles. Electric vehicles obviously are coming next, and when those become mainstream we'll be prepared to provide for customer service needs on those as well.


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Before joining, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high-net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business and a B.A. in history from Amherst College.

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