Automotive News used the percentage increase and data from last year’s study covering 2020 to calculate the estimated average annual earnings of dealership employees in 2021. Last year’s study, which was obtained by automotive news, showed average weekly earnings for all positions across all dealerships at $1,554 in 2020.
Applying the 27% increase to this and annualizing it yields an estimated revenue of about $103,000 for the typical dealership employee in 2021, Automotive News valued. This is the first time that the average earnings of dealership employees have crossed the $100,000 threshold.
With inventory constraints dating back to mid-2020 but worsening in 2021 due to shortages of microchips, dealers gained vehicle pricing power and saw profits climb to record highs in the year last. Selling new vehicles at list price or higher has become commonplace, resulting in large gains in gross profit per vehicle, upon which salespersons’ commissions are often based.
The new version of the study is based on 2021 data collected from participating dealerships and their payroll records. NADA declined to share the number of dealerships that participated in the study and the number of payroll records reviewed. For last year’s study covering 2020, 1,905 dealers participated.
The drop in revenue and the increase in compensation were directly linked, said Ted Kraybill, president of ESi-Q, a research company that is conducting the study for NADA.
Sales consultant positions in particular have seen less turnover, Kraybill said. These employees were less likely to leave or change jobs at the dealership as often in 2021 because they were making a lot of money. The turnover rate for sales advisors ended up being about the same as for service advisors, he said.
“Even though they might not be happy with some things about their job, like the hours and all the time they put in and everything, there is a time when your pay kind of trumps the others. negative aspects that would normally cause a trade adviser to leave,” Kraybill said.
He noted that the median salary of dealership employees in 2021 was lower than the average figure.
The NADA study covering 2020 showed that the number of employees at the dealership suffered a 10% reduction that year during the onset of the coronavirus pandemic. NADA reported that the average number of dealership employees at year-end for 2021 increased only slightly to 74 employees from 71 at the end of the previous year.
Participating dealerships have made a conscious effort to be efficient and keep staffing levels down to avoid a financial shock to employees if and when vehicle markets normalize, Kraybill said.
“All that means is they’ve done a good job of trying to keep their headcount as low as possible and not start overstaffing because the dealership is making more money,” he said. said Kraybill. “They try to keep their costs as close as possible to a normal type of market.”
Retention on the service side is now a major focus for dealerships given the continued shortage of service technicians and service advisors in the industry, Kraybill said.
Hiring the younger generation
The rate of new hires gleaned from younger generations remained relatively stable in 2021, NADA said on its website.
The percentage of Gen Z employees hired by new car dealerships in 2021 remained unchanged at 29%, according to the study. Millennials, also known as millennials, made up 44% of all new hires, up two percentage points from 2020.
There’s still a clear difference in the number of Gen Z employees in the automotive retail workforce right now versus the rate at which they’re being hired, Kraybill said. At the end of 2021, Gen Z employees made up 14% of the dealership’s total workforce.
However, the workforce “continues to shift to younger generations,” especially now that a greater portion of potential Gen Z hires are of legal full-time working age, Kraybill said.