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4 Reasons for High Employee Turnover Rate and Low Retention in the Auto Industry

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Employee turnover is expensive. It was costing American businesses $1 trillion a year before the COVID-19 pandemic, and the U.S. economy is currently in the middle of a labor shortage — making every competent employee all the more valuable.

Published on:
June 12, 2021
Illustrations by:
Written by:
Andre Riley
Employee turnover in the auto industry

Employee turnover is expensive. It was costing American businesses $1 trillion a year before the COVID-19 pandemic, and the U.S. economy is currently in the middle of a labor shortage — making every competent employee all the more valuable.

Retention is even more concerning for automotive dealerships. The turnover rate for the industry has been approaching 50 percent for a few years now, and the shortage of qualified auto technicians that was a problem before the pandemic shows no signs of improving in the near future.

Historically, salespeople have the worst retention rates for auto dealerships, but other positions and roles are just as vulnerable to turnover. Replacing departed employees may require an expensive and time-consuming job search, pull existing employees from their current responsibilities to train new hires, and leave you shorthanded and less productive in the short term.

And after all that, there’s no guarantee that the new hire sticks around long enough to make the investment worthwhile. The whole process starts again when the next employee departs.

The reasons behind the high and costly turnover at auto dealerships vary. Understanding some of these reasons can give you insight into developing strategies to address the problem at your business. Here are four causes of the high employee turnover rate in the automobile industry, along with some ideas to improve retention:

1. Dealership Culture

Auto dealerships are far removed from the happy/mellow/empathetic end of the workplace spectrum that you might see in, say, a yoga studio. Salespeople are often in cutthroat competition with each other to close deals, and that singular focus also may cause them to not show much respect to support staff and other departments. When it feels like employees in the automotive dealership industry are pitted against each other, that won’t help in reducing the turnover rate.

A culture of competition might be tough to undo, but setting team and dealership goals and contests can do wonders for encouraging collaboration and camaraderie. Overarching goals can also help different teams work together and better understand each other instead of being so siloed.

2. Unengaged Employees

In any industry—not just automotive—an employee who is going through the motions and doesn’t feel inspired by their job is more likely to leave, which obviously doesn’t help your turnover rate. Although all industries struggle with unengaged employees, dealerships can be especially susceptible, particularly with salespeople who become discouraged when sales aren’t going their way.

Managers and supervisors are crucial to engaging and re-engaging disinterested employees—but even their best efforts might not be enough. Gamification offers a method for getting employees excited about their jobs, even on the slowest of days. By connecting everyday tasks to fun goals and measurable achievements, people look forward to the possibilities of each day instead of the end of their shifts.

3. Sales Is Tough

The life of a salesperson at an auto dealership isn’t easy. Lousy hours, a seeming lack of work-life balance, and the pressure of earning commissions can drive salespeople from the business or, worse, drive them to jobs with competitors.

Gamification can help make the unappealing hours seem not so draining—for example, sales contests for holidays or during slow periods such as winter weekdays. Also, give your salespeople goals and incentives that aren’t directly tied to closing the sale, such as follow-up phone calls made to leads and existing customers. By acknowledging that the role of sales employees is unique, you can tailor engagement strategies that show you appreciate their important contribution to the dealership’s success.

4. A Lack of Incentives for Non-sales Employees

Service departments, customer support teams, building maintenance, lot attendants, and other employees who aren’t directly selling cars are just as vital to the success of a dealership as their counterparts in sales. However, they don’t have the commissions to inspire and motivate them like salespeople do—but that doesn’t mean they can’t be inspired and motivated.

Gamification for non-salespeople might look a little different, but they achieve the same objective: giving them opportunities to reach individual and team goals. The best gamification platforms also provide a way for employees to easily choose and redeem rewards that they’ve earned.

A quality platform is key to many of the other strategies that help automotive dealerships engage their employees and reduce turnover. Arcade brings gamification, incentives, analytics, and communication features into an easy-to-implement and easy-to-use solution that’s perfect for auto dealerships. Request a demo to learn more.

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