Auto Industry Turnover – Is There a Solution?

Today’s auto industry is faced with a serious and well-documented problem. High turnover rate has been to blame for a estimated total of around $8 billion in losses annually for dealerships nationwide, and an average of $500,000 per dealership with about 70 employees.

A Shift in Culture

Some of the blame has fallen on the fact that people aren’t buying cars they way they used to. And the sales team takes a direct hit here as the culture shifts to a more passive approach to purchases of all types.

Instead of actively seeking out a knowledgeable salesman, potential buyers do preliminary research online before ever stepping onto a car lot. Add to that shift to the negative connotation associated with car salesmen and the risk inherent in commission-based compensation plans, and many good hires decide to take a less volatile job somewhere else, regardless of that job’s compensation.

However, the stats aren’t showing a loss of income for employees in these dealerships across the board. According to the NADA Dealership Workforce Study: “On average, employees in new-car dealerships earned nearly 24 percent more than the 2016 fourth-quarter median weekly earnings of $832 for the U.S. private sector workforce.”

Nevertheless, hiring a sales team that stays with the dealership seems to be more and more elusive.

Pre-Hire Process: The Solution

The real cost of bad hires offers a clear view of the stake dealerships have in the game. The cost of turnover as a process – hire, train, invest, lose the employee, burden other employees with the task of filling the void left by the bad hire, repeat – isn’t a foreign concept to managers, but the solution has been evasive.

“A 10-percentage-point increase in turnover will cost the average dealership $7,500 in gross profit per employee per year,” said Ted Kraybill, president of ESI Trends, a Largo, Fla., consulting firm that conducts the annual National Automobile Dealers Association Dealership Workforce Study.”

“How big of a problem is it for the industry? It’s half a million a year for the average dealership. It’s billions of dollars for the industry…turnover costs the average dealership more than $500,000 in gross profit annually. Multiplied by NADA’s count of roughly 16,500 dealerships in the U.S., it’s an $8 billion-plus problem, Kraybill said.

The solution to the turnover rate is hiring the employees most qualified and solidly dedicated to their job. So how can dealerships find and onboard the best possible hires? Orion Systems is the leader in pre-employment assessments. We focus on critical, work-relevant attitudes and behaviors that are rarely, if ever, revealed during pre-hire interviews.

Orion pre-hiring assessments focus on key drivers and attitudes conducive to successful workplace engagement and employee productivity. Positive work ethic, willingness to go the extra mile for customers, openness to training, respect for company property, safety consciousness, and the willingness to stick to the job instead of vacating it a few weeks after training can be discovered and noted in the email sent to the hiring manager.

Contact us today to set up a new way to hire the right employees and get the competitive edge your dealership needs in this climate of high losses due to turnover.

Call us at 1.800.824.4298 to get started!