In 2016 US Auto sales increased for the seventh straight year. Unfortunately, workforce trends are not rising to meet the industry’s record sales. The turnover trends for the auto industry is an $8 billion-plus problem according to the president of ESI Trends, Ted Kraybill, featured in Automotive News’ latest on the industry’s people problem. The Florida-based consulting firm conducts the annual National Automobile Dealers Association Dealership Workforce Study.
The most recent survey of the auto industry indicates that the top three reasons for high turnover in the auto industry are:
- Desperate hiring practices
- High-risk commission pay
- Long work hours
Turnover has a direct effect on the auto industry’s fortune. The industry’s annualized turnover is trending upward, median tenure has fallen, and the one- and three- year retention rates are down. The dollar damage on dealerships is that for every 10 percentage-points increase in turnover, the dealership loses $7,500 in gross profit per employee per year. You can be sure that managers at dealerships large and small are focused on solving the turnover puzzle.
Some larger dealerships have hired consulting firms to improving hiring, training and consulting. Others have moved away from commission-based to base wages plus bonuses. Overall, as the labor market has tightened, wages have increased. Despite changes in wages, more will need to be done to get the price right for hiring and retention over time.