Thereâ€™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 thatâ€™s comparatively worse than that of their parents at a similar age. Plenty of evidence exists that younger individuals arenâ€™t particularly fond of the car-buying experience.
They donâ€™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. Thatâ€™s an impressively high turnover rate that probably isnâ€™t helping turn around stagnating car sales, as it takes a while to master any profession.Â
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. Thatâ€™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 donâ€™t seem to know anything about the models theyâ€™re selling? Turnover is a big part of why that happens. Not everyone who takes the job is an automotive enthusiast and, when thatâ€™s the case, they need plenty of time to build their knowledge base. But thatâ€™s difficult when cars are only becoming more complex and dealerships canâ€™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 Many millennials feel dealers have an outdated approach to selling that doesnâ€™t always fit their values, even if the jobs have the potential to pay well.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 hagglingÂ â€” no matter which side of the table theyâ€™re on.Â Earl Stewart, owner of Earl Stewart Toyota in North Palm Beach, Florida, said younger groups despise â€śbait-and-switchâ€ť tactics and the â€śold boysâ€™ clubâ€ť mentality that persists at some dealerships.
â€śCar dealers are selling cars like it is the 1960s,â€ť Stewart told The Wall Street Journal.
However people arenâ€™t buying cars like itâ€™s the â€™60s. For some shoppers, disposable income is exceptionally low. More and more customers now walk through the dealerâ€™s doors armed with enough information to keep salespeople from bending them over the hood.
Adam Kraushaar, president of New Jerseyâ€™s Lester Glenn Auto Group, said he realized he couldnâ€™t continue to pay salespeople by using a percentage of the gross profit on new-car sales. â€śThey would starve if I kept the old pay plan,â€ť 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.Â 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 itâ€™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.