By on June 29, 2020

Having already pulverized the dead horse of waning auto sales into a fine paste, we’ll now turn our focus on how it’s impacting employment among automotive retailers — squashing another pony.

Much of the information up until this point has been anecdotal and conditional to the North American response to COVID-19. Furloughs were rampant as the pandemic progressed and new safety rules seemed poised to cripple sales moving forward. There was an obvious general plight confronting automotive retailers, but we couldn’t nail down what that meant in terms of job losses.

We still don’t, frankly. But it is starting to become obvious that there isn’t much reason to be exceptionally optimistic. AutoNation recently announced that around half of the 7,000 workers it furloughed in April won’t be coming back. Despite some retailers claiming not to need such drastic cuts, plenty are following AutoNation’s model. With fewer customers and sweeping restrictions on how showrooms can be operated, there’s little reason for there to be all hands on deck. But just how many will be forced to abandon ship this year? 

Enough to make you squirm, according to most analysts. We’ve begun hearing economists toss around the always unsettling term “unprecedented” when discussing the economic fallout of the coronavirus response.

This has hindered reliable predictions as everyone scrapes through history to cobble together the closest approximation of what’s going on using bits and pieces of other economic disasters. Employment data suggests the U.S. is sitting on a joblessness rate of 13.3 percent, however, and the information issued by automotive retail outlets is no more heartening.

Automotive News spoke with Alan Haig, president of Haig Partners, a dealer advisory firm in Fort Lauderdale, FL, this week to get a sense of what things are like on the ground. He said several dealers have told him they found themselves making permanent cuts — roughly 10 to 15 percent of their staff.

“Probably their weakest performers — and they’re finding that they’re able to do a lot of business with fewer people,” Haig explained.

While that bodes well for the commission rates of whoever’s staying behind to draw paychecks, there’s little reason to think this will be a temporary setback. Many retailers are attempting to shift to an increasingly digital business model that requires fewer staff to wait for walk-ins. Car sales are assumed to be uncharacteristically weak this year and new regulations have forced loads of dealerships to change the way they do business. A number of stores don’t even have a full complement of vehicles, thanks to production stops.

National Automobile Dealers Association (NADA) Chairman Rhett Ricart has said the Paycheck Protection Program (PPP) has been important in the retention of jobs. Yet PPP existed to help businesses maintain staff through the worst of COVID-19; state governments are now starting to talk about a second wave and extended lockdowns. It also doesn’t address the thousands of new jobs that have evaporated.

From Automotive News:

Hireology CEO Adam Robinson predicts dealership jobs will shrink by 5 to 10 percent post-pandemic. That would translate to as many as 110,000 dealership jobs going away for good, based on the National Automobile Dealers Association’s count of 1.1 million people employed by franchised dealerships in 2019.

Dealers “are realizing that the staffing footprint they need can be less than it used to be,” Robinson said. “The number of employees per dealership is lagging the sales rebound. Dealers, by and large, have permanently re-architected the way they sell cars.”

Hireology claims it started seeing thousands of dealership job listings disappear in mid-March. It estimates over 25,000 open positions were eliminated across the franchised dealership landscape in the first months of the pandemic lockdowns, suggesting they represented about 20 percent of the total openings. Most of those were said to be direct sales jobs.

Lots of automotive retailers are making permanent cuts as they attempt to navigate 2020:

Lithia Motors Inc., the nation’s third-largest new- vehicle retailer as ranked by Automotive News, furloughed more than 5,100 employees in March. Lithia said in April it would bring back roughly half of them, thereby eliminating about 18 percent of its work force.

Asbury Automotive Group Inc., the nation’s seventh-largest new-vehicle retailer, furloughed 2,300 employees. Half of them, or 14 percent of Asbury’s work force, have returned, a company spokeswoman said, while the other half were terminated.

CarMax, the nation’s largest used- vehicle retailer, had recalled 85 percent of 15,500 furloughed employees, CEO Bill Nash said June 19.

Overall, it’s been a mixed bag, with some dealerships cutting well over half their staff as others manage to cling on to the majority of employees. It’s still a net loss, however, and the sizable uptick in sales we enjoyed last month isn’t expected to continue through the remainder of the year. We predict storefronts located in states in which secondary lockdowns are enacted or safety protocols are extreme will suffer the worst, though all will likely suffer, considering supply lines are likely to remain wonky for a prolonged period while customers remain cagey with their cash.

[Image: LM Photos/Shutterstock]

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9 Comments on “Automotive Retail Jobs Are In Rough Shape...”

  • avatar
    SCE to AUX

    During my 1 hour stop at my Kia dealer for a quick recall procedure last Friday, I wandered through the showroom and service waiting room.

    Very anecdotal, but I counted 2 other people there for service and nobody buying, with lots of empty sales desks. Normally, I’d expect a lot more activity near the end of the month/quarter.

  • avatar

    These cuts of 5-15% seem like many may be taking the opportunity to clean house and get rid of the worst of their employees. So I wouldn’t be so sure that it is due to an intended permanent change in the way they do business. Its still slower than one would normally suspect so many may increase their staffing in a few months, but likely with new hires instead of bringing back the proven under performers.

    • 0 avatar

      I tend to agree with Scoutdude’s assessment. A lot of my clients who have otherwise fairly healthy operations are using this as an opportunity to fine tune their staffing and cull the weakest members of their team.

      I have been trying to hire for two technical and one sales position, and the vast majority of the candidates I’ve spoken with have clearly been let go due to performance.

    • 0 avatar

      In Silicon Valley layoffs were always part of life. Google is especially famous for that, and Amazon even worse. Brutal, if you are not that young.

  • avatar

    The automotive sales force is nice enough and I hate to see jobs at this level lost. But I cannot think of a time I needed a salesman when purchasing a car. My last new purchase (Toyota 2009) was 95% on line negotiation for the specific model/color/trim I wanted. Walked in, did a walk around and signed the papers. Fleet buyers don’t sit down with a salesman.

    I no longer stop and wander a sales lot just to look at newer models because I feel like chum in the water.

    Maybe dealers should just have one example of each model/trim for demo purposes in case you need to drive the car but if I really wanted to get a feel for a car I would rent it a few days.

  • avatar
    Menar Fromarz

    I see a lot of hollowed our firms trying to put on a Potemkin face. I call them “ghost ships”. So many firms that used to have good customer service are now reliant on a web platform and algorithms to endure. If they did a million in sales before with 20 employees, now they get by with one or two and a chimp. And I’m sure they will be really loathe to ever hire in number again.

    • 0 avatar

      As long as the one or two who remain have people skills and the chimp doesn’t bite, I guess you’re right. But people will eventually gravitate back to firms with good customer service. A lot of those potemkin firms won’t survive that long, especially one that has only a million in sales for 20 employees. A million doesn’t go that far anymore.

  • avatar
    Jeff S

    Agree with Volvo the guy that lives across the street is a credit manager for one of the larger dealer conglomerates told me that more of their sales are going to the internet. Just give me a model to demo and not the sales person. Might just buy my next new vehicle that way. I just bought a 2008 Ford Ranger thru an individual used car dealer in a small town that advertises on Craigslist and does internet sales. I went in person to try the truck and it needs cosmetic work but I ended up saving thousands on a mechanically sound vehicle that just needs a paint job and a new rear bumper. Didn’t take more than 15 minutes to go thru the paperwork and I was finished.

  • avatar

    Those damn leftists .


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