Old Man's Game: Car Dealerships Can't Hold Onto Younger Employees

There’s a popular notion that young people are ruining the automotive industry. It probably has something to do with the steady climb of average transaction prices and a median income for millennials that’s comparatively worse than that of their parents at a similar age. Plenty of evidence exists that younger individuals aren’t particularly fond of the car-buying experience.

They don’t seem particularly fond of the car selling experience, either. Millennials account for nearly 60 percent of dealer hires but shops lose over half of them every year, according to a study by the management firm Hireology. That’s an impressively high turnover rate that probably isn’t helping turn around stagnating car sales, as it takes a while to master any profession.

Nissan Motor Co. said it witnessed a 100 percent turnover for its sales staff at its dealerships over the last year, meaning some positions went vacant more than once in a 12-month period. That’s pretty bad, and it puts those shops at a huge disadvantage. New hires need time to acclimate themselves to the job and the vehicles.

Have you ever noticed that a lot of salespeople don’t seem to know anything about the models they’re selling? Turnover is a big part of why that happens. Not everyone who takes the job is an automotive enthusiast and, when that’s the case, they need plenty of time to build their knowledge base. But that’s difficult when cars are only becoming more complex and dealerships can’t hold onto their staff.

Hireology theorized that one of the biggest contributing factors to the employee retention problem is the additional debt younger generations tend to carry. Slapped with sky-high tuition costs, millennials often carry hefty student loans, making a steady income more of a necessity. But dealership pay is frequently commission-based.

There is also a bit of culture shock. Many millennials feel dealers have an outdated approach to selling that doesn’t always fit their values, even if the jobs have the potential to pay well. They are less inclined to be agreeable with the hard sell and haggling — no matter which side of the table they’re on. Earl Stewart, owner of Earl Stewart Toyota in North Palm Beach, Florida, said younger groups despise “bait-and-switch” tactics and the “old boys’ club” mentality that persists at some dealerships.

“Car dealers are selling cars like it is the 1960s,” Stewart told The Wall Street Journal.

However people aren’t buying cars like it’s the ’60s. For some shoppers, disposable income is exceptionally low. More and more customers now walk through the dealer’s doors armed with enough information to keep salespeople from bending them over the hood.

Adam Kraushaar, president of New Jersey’s Lester Glenn Auto Group, said he realized he couldn’t continue to pay salespeople by using a percentage of the gross profit on new-car sales. “They would starve if I kept the old pay plan,” Kraushaar asserted.

Other dealerships have decided to remunerate employees by how many vehicles they sell a month, rather than on a traditional profit-based commission. Online training courses are popping up to help new staff familiarize themselves with the vehicles and the process. Some shops claim these changes make a big difference, but it’s by no means the industry standard. Still, while some dealerships try everything under the sun to incentivize their salespeople to stay, the retention problem remains a serious issue.

[Image: Alden Jewell/ Flickr ( CC BY 2.0)]