U.S. automotive dealerships are hiring more younger workers and women, and remain relatively high-paying employers compared to other private sector industries.
Those are the results of the National Automobile Dealers Association (NADA) second annual industry report on car and truck dealership employee compensation, benefits, retention, and turnover. The 2013 Dealership Workforce Study was produced in partnership with DeltaTrends, and is based on data from 290,000 car and truck payroll records from more than 2,240 dealerships.
“This is by far the most comprehensive and timely study on the dealership workforce ever produced, and serves as a tremendous resource to help dealers step up their game to gain an edge on the competition,” says NADA chairman David Westcott.
According to the 2012 data, on average dealership employees earn 27 percent more than the average weekly earnings of all U.S. private sector employees.
In terms of new hires, the number of females hired by dealerships increased by two points to 19 percent in 2012. The number of Generation Y employees (those born after the early 1980s) also increased, and now stands at 23 percent of the dealership workforce, which is roughly equivalent to the estimated ratio of employed Gen Y workers in the total U.S. workforce.
"The most surprising trend to me was the significant increase in the number of younger employees hired by dealerships in 2012," says Ted Kraybill, president and founder of DeltaTrends. "That number jumped from 30 percent to 41 percent of all new hires."
According to Kraybill, dealerships are likely pulling a significant number of new hires from the unemployed population, versus hiring employees away from other dealerships. "So it's not a coincidence that the percent of new hires that are Generation Y is equivalent to the government estimates of the unemployed Gen Y workforce," he says.
As for the increase in women in the workforce, Kraybill says that the percentage of new female hires went from 17 percent in 2011 to 19 percent in 2012, resulting in a one point rise in the total number of active females employed at dealerships.
Women are overrepresented in office and administrative positions, where they make up 92 percent of the workforce. The production position with the most women is finance and insurance (F&I) manager at 19 percent. Women account for 15 percent of service advisors, 9 percent of sales consultants, 7 percent of both parts managers and parts consultants, and 6 percent of service managers. Just 1 percent of technicians are female.
Overall, F&I managers had the highest income growth (8.4 percent), followed by service managers (8 percent) and sales consultants (7.8 percent). Kraybill says that parts positions did not see the same level of compensation increases as their service counterparts, with parts managers seeing an increase of just 1.7 percent on average. Service advisors and technicians saw increases of roughly 3 percent, while parts consultants only increased by 2 percent compared to 2011.
"There's also a big difference between luxury and non-luxury brands," Kraybill says. "Service advisors at luxury dealerships are paid 37 percent more than at other dealerships, and for technicians the differential is 26 percent. When you look at the breakdown of growth by luxury vs. non-luxury, parts managers in mass market stores actually saw a slight decrease in their average compensation year over year."
Total dealership turnover in 2012 dropped to 35 percent (down one point from 2011), and is lower than the U.S. Bureau of Labor Statistics estimate of average private sector turnover (41 percent). The turnover for service technicians and advisors was virtually unchanged, at 24 percent and 36 percent, respectively. The parts department still has the lowest turnover at 15 percent. "Parts managers actually have a lower rate of turnover than general managers at 9 percent," Kraybill says. Sales consultants have the highest turnover at 62 percent.
According to Kraybill, the biggest challenges dealers face from a human resources perspective are trying to create staffing models that reduce total work hours for employees, and shifting the focus from individual sales incentives to team-based awards, as well as drawing more women into dealerships.
"What we're seeing with younger employees is that they are not tolerating the longer hours typical of a dealership," Kraybill says. "That's mainly on the sales side, but we see it in the service advisor segment as well. For instance, if service advisors are scheduled to work 40 to 45 hours per week, turnover for Gen Y is 33 percent. Over 50 hours, and that figure jumps to 55 percent turnover."
That means dealers looking to expand evening and weekend hours for customer convenience (which is a growing trend) will have to carefully balance how they distribute those expanded hours to the service and parts department, or else risk losing more employees over time.
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