(Note: Below is the first section of our latest paper on attracting and hiring great automotive technicians. To skip ahead and read the entire white paper, please click on the download link at the bottom of the page.)
The Current State of Dealership Hiring & the Need for More Technicians
The Issue At Hand
The retail auto industry is currently seeing a drop off in new car sales. According to a recent press release by J.D. Power, “For the fifth time in the past seven months, U.S. new-vehicle retail sales are expected to drop in September, falling 1.4% from a year ago.” While many dealers are aware of this news, they don’t seem to be worried about this drop off, due to being financially incentivized by manufacturers to focus on the number of new cars being sold.
Nevertheless, Q4 2016 is projected to be the first time since 2008 that the industry is going to see heavy stagnation and a drop for many brands in new car sales. Life has treated the retail auto industry well with the drastic rise in new car sales since 2010. However, the industry is now forecasting a decline in new car sales, with projections expecting this to continue to drop off.
“Following 66 consecutive months of retail sales growth that began in September 2010, we’ve seen four declines in the past six months, and this much of a pullback in August will be a disappointment for the industry. Softening retail sales amid low interest rates, relatively cheap gas and automakers pushing more aggressive incentives may be an indicator that further growth in this cycle will be difficult….but as momentum slows, the industry will need to be cautious to balance volume and margin, as incentives are close to record levels.” – John Humphrey, Senior VP of the global automotive practice at J.D. Power
Due to the current and forecasted decline of new car sales, dealers are being forced to turn to the area of their business that they can control to drive additional revenue: fixed operations. Some advanced dealers have begun placing their focus on how they can drive more money from their service departments. As fixed operations becomes the main focus for these dealers, it sets the stage to trickle down into the overall market.
All of this means that more and more dealerships will have to place a priority on boosting their service departments, which starts with ensuring those departments are staffed with quality talent.
However, the majority of dealerships are highly limited by their current talent pool—especially with auto technicians.
What’s Causing This Problem?
Dealerships are having trouble recruiting and hiring auto technicians. This can be attributed to the fact that there is a serious shortage of qualified technicians in the market today.
There are several reasons for this:
- The education market has drastically changed since 2008
- Tech schools are limited; there’s a shortage of training schools in the US
- The younger workforce is either uninterested or uninformed about career possibilities aligned with tech school education
- Experienced technicians, namely Baby Boomers, are beginning to retire at a record rate
As a result, dealerships’ hands become tied—having to resort to hiring entry-level talent and immediately develop them as a way to supplement this lack of experienced technicians. This further suggests that growing a talent pool within service departments will become even more crucial for dealerships. Yet as stated earlier, the majority of dealers are unaware of this critical need.
Every dealer knows from their manufacturer what their UIO (Units In Operation) are within their PMA (primary market area). But few dealers are aware of how to estimate the amount of auto technicians. This is something that many OE dealers are paying close attention to today.
The writing’s on the wall. How many dealers and dealer groups have enough techs and service advisors today to fill the demand that will flood their drive over the next five years? While the answer to this question is most likely slim to none, here’s the real question that only dealers can answer: how will dealerships respond?
Discover how you can improve on finding and hiring technicians for your dealership by downloading the entire white paper below.