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

Matt Posky
by Matt Posky
old mans game car dealerships cant 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 Many millennials feel dealers have an outdated approach to selling that doesn’t always fit their values, even if the jobs have the potential to pay well.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)]

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  • Pwrwrench Pwrwrench on Aug 24, 2018

    I thought it was a requirement, chiseled in stone somewhere, that any salesperson know absolutely nothing about what they are selling. On another note concerning things Arthur Dailey and others mentioned, I know of quite a number of people that work a full time day job and then do something like uber or park cars, at night. All that to get the purchasing power one would have from a part time job 40 years ago. So there's lots of great jobs out there, so great that many people have 2 or 3.

  • AtoB AtoB on Aug 26, 2018

    "I’m not looking to hire perfect people. I only want three things. 1. You need to have a clue 2. You need to give a rats butt about the work 3. You need to show up It’s amazing how hard it is to get all three, especially the last one. Attendance is the number one reason I fail people on probation." @ BRN The real question is what are you offering? In my experience when I come across employers screaming "employee shortage" I usually find: Low compensation (low pay, no benefits, etc) Poor advertising Overly stringent qualifications No on the job training, must hit the ground running. Bad management. How much are you offering vs the cost of living for your area? Do you offer benefits or do you expect your employees to depend on social services for those? Are you targeting your "help wanted" ads where you target employees will see it? Do you treat your employees like cheap rented mules?

    • AtoB AtoB on Aug 26, 2018

      Forgot to add to the list: Doesn't actually want to increase headcount but existing headcount is complaining about being overloaded. This is when employers make ludicrously low ball offers to applicants who rightly say FU. Then the employer can go back to his headcount and say "I tried but there's a shortage, now get back to work!" Of course if there really WERE a shortage such employers would lose their existing workforce; that is assuming recruiters are actively poaching and there's no "gentlemen agreements" between employers to refrain from such practices.

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