With dealership inventory low during the pandemic and semiconductor shortage, selling cars came fairly easily to sales employees.
Rather than work to convince a potential customer why he or she should buy a vehicle from their dealership and not from a competitor, sales reps often won a sale simply because the vehicle was available. And the sale typically has happened according to the dealership’s terms with new-vehicle transactions, for instance, commonly at sticker price or above.
But that is about to change, experts say.
Supply constraints that have suppressed vehicle inventories for the better part of two years appear to be easing, meaning dealerships soon may have more vehicles on the ground.
More choices will mean heightened competition, so some dealerships are working to introduce newer employees to — and refresh longer-term employees on — the fundamentals of selling before the scarce market turns and the job of sales associate gets harder.
“New hires to the industry have no idea how hard this job actually is,” said Adam Robinson, CEO of Hireology, a recruitment technology company that works with dealerships. “They’re going to find out.” He spoke with Automotive News in October at Hireology’s Elevate conference in Chicago.
From navigating objections to presenting options, dealerships should consider training employees on the skills they’ll need to succeed in a changing market, dealership training and talent consultants told Automotive News.
A renewed emphasis on the basics also can be an employee retention tool, they say — particularly for those newer employees hired during the pandemic and inventory shortage who don’t know a time when vehicles were plentiful and, going forward, will likely have to sell more vehicles to earn the same paychecks.
“It’s almost like telling tales of yore,” said Daniel Govaer, general manager of Mercedes-Benz of Easton and Infiniti of Easton in Columbus, Ohio. “We’re telling them what things used to be like, and they’re looking at us like, ‘That doesn’t sound great.’
“It’s like fable to them,” Govaer added, “so we’re working on letting them know that these things evolve. There’s peaks and valleys, and good organizations can be successful in both.”
Robinson described the market in the last couple of years as geared toward order-taking, not selling. That environment — limited inventory and high prices typically not negotiated, combined with existing dealership compensation plans — has led a lot of sales employees to make a lot of money, he told Automotive News late last year.
Average dealership employee earnings topped $100,000 for the first time in 2021, while average dealership turnover dropped to 34 percent, according to the National Automobile Dealers Association’s annual Dealership Workforce Study. That turnover rate is the lowest in the 11-year history of the NADA study.
But as inventory increases, commissions likely will come down and turnover will go back up, Robinson said.
“It will be difficult for those new to the industry to readjust to an environment where they’re competing to sell a vehicle with other dealerships in their market because they just haven’t had to do it,” he said. “Anyone who’s joined the industry net new over the last two years has not had the comeuppance that someone joining the industry five years ago had in their first two years.”
Training will be key to overcome that, he said. The fundamentals remain true — catering to the buyer’s experience, demonstrating product knowledge, offering consultation, providing technology demonstrations.
At Mercedes-Benz of Easton, team members huddle every morning, walk the lot more frequently to take stock of inventory and role-play phone calls. Govaer said training also focuses on boosting employees’ product knowledge, with weekly digital quizzes.
The dealership this year will roll out a new retention plan for sales consultants, including a retention bonus that awards a dollar amount based on each vehicle an employee sold per year, with accrual beginning in their second year of service, Govaer said. That is one way to retain people hired since the pandemic, he said. So far, none of the store’s sales reps who started since the pandemic has left the job.
One area of focus is to refresh employees on how to interact with consumers via phone calls and online lead inquiries. That means providing options early in the conversation and asking questions about customers’ lifestyles, whether they have time to wait and if they would be open to another color, said Jen Suzuki, president and founder of eDealer Solutions, a dealership training company in Denver.
“You have a lot of competition out there, so trying to connect with people on more of a human level versus a transactional level, that to me is where we’re headed for the foreseeable future,” Suzuki said. “We will never go back from that.”
David Kain, president of dealership training company Kain Automotive in Louisville, Ky., said newer employees may not be as familiar with talking about vehicle selection because consumers during the past few years generally had to buy what the dealership had available.
Customers will become more discerning when they have more choices, Kain said, so sales reps will need to know how to overcome objections about things such as payments and trade-in values.
Auto retail historically has been “a grass-is-greener type of environment,” Kain said, meaning a dealership risks losing employees to another store that might appear to be a better fit. He said he advises dealership leaders to teach newer hires what they must do to maintain their compensation levels.
“A lot of it is just making them aware that, ‘Hey, there will be a lot of temptation to maybe not work as hard and just go where the grass is greener, but we appreciate you and we’re going to keep developing you,’ ” he said. “We need to make our employees feel wanted and necessary and we’re going to keep working to enhance their life and livelihoods.”
At five-store Central Valley Automotive Group in Modesto, Calif., leaders are working to increase employee awareness of market pricing, including what neighboring dealerships are selling similar models for, said partner Brent Gardner.
Leaders also are revamping word tracks — the sales scripts followed by dealership employees — in the trade-in appraisal process to navigate situations in which customers might expect to receive a higher amount for their trade-in than current values would suggest, he said.
“Through COVID and the unexpected crazy business that we saw, I think there was a little laziness. And so it got too easy, especially on the new-car side, to sell cars,” Gardner said. “My concern was bad habits forming again, which we always have in this industry.”
To combat that, Gardner said, the group is focusing on its processes and also promoting why consumers should buy from Central Valley Automotive Group rather than another dealership. He said it’s “resetting new expectations for people” and reiterating the importance of not skipping steps.
Dealership leaders should examine the imbalances and gaps in their processes and skill sets, said Fleming Ford, founder and president of Culture Ignited, a coaching and consulting firm that works with dealerships. As part of teaching new skills, she said, managers should consider a focus on agility, empathy, asking questions and emotional intelligence.
Helping employees become emotionally capable to deal with what can be a high-pressure environment is an important step, Ford said.
“Emotionally, people are going to say, ‘I don’t like this job anymore. This isn’t for me,’ and we’re back to competing with people offering $20 per hour up and down in your market,” she said.
If dealership managers can emphasize training and how they’ll help their teams grow, Ford said, “people will see that there’s more than a paycheck to be offered.”