It varies from state-to-state, but the impacts of COVID-19, the economic downturn, and a shrinking job market are causing many dealers into familiar territory: doing more with less. “Dealers have faced big market shakeups for the past hundred years,” states Tyler Anderson, Director of Business Development at Dealertrack DMS. “But, this may be one of the biggest they’ve ever faced.” While innovating through challenges and navigating changing buyer habits may be normal for dealer groups, some regions in the country have been hit extra hard. “It’s interesting to note that just a few miles across state lines, some businesses are thriving. But, things have been changing so rapidly this year, both dealers and buyers are likely to see more impacts,” notes Anderson. The real challenge for the automotive market will be finding that perfect, magic formula between top talent and operational efficiency.
From Turnover Troubles to Lean Teams
Just two years ago dealers faced record low unemployment driving extremely high turnover rates. Finding sales professionals with the right skills was expensive and a near constant burden. Turnover in 2016 was as high as 43%, costing dealers $7,500 in gross profit, per employee according to an NADA report. Fast-forward to today and the problem is completely different, yet no less challenging. Hireology, the automotive retail HR solutions experts, predict that dealership jobs will shrink by up to 10 percent post-pandemic, equating to 100,000 lost jobs based on NADA’s counts of franchised dealers in 20191. This number reflects a “new normal” after recovering from a high of around 20 percent during the height of the pandemic earlier in 2020. Dealers will need to find a way to move more units while maintaining a sales team with fewer people. And who you hire to fill those sales professional roles will be more important than ever.
While the world was busy reeling from the major impacts of economic uncertainty at the beginning of the pandemic, the automotive industry was busy rolling its sleeves and preparing to fight for its business. “Dealers are entrepreneurs,” states Tracy Fred, VP ofOperations, Sales and Services at Cox Automotive. “And in times of challenges, entrepreneurs see opportunities.” In a recent appearance on CBTNews, Fred points out that, normally, dealers find change incredibly difficult—and so do consumers. But, when COVID-19 set in, what would have taken months to accomplish, took many dealers a matter of days to pull off. And it’s been paying off for everyone. Two out of three buyers surveyed during this time have been happier with the digital sales processes dealers are offering2. And, “58% of consumers who purchased a vehicle from a franchise dealer during COVID found the experience to be much improved because it was more efficient and faster, and easier to do from home,” she notes.
Expectations on Experience Matters
The trend of doing more with less is likely to extend beyond this year and into 2021. As Anderson points out, “This puts dealerships in a unique position to focus more on finding the optimal mix of talent to carry more of the sales process from start to finish.” This presents a unique silver lining to buyers, too, he notes. “When dealers begin to match sales people with the right digital sales tools, a smoother, touchless sales process takes its place.” Buyers are likely to spend more time with just one sales person, with fewer hand-offs along the way between departments. This also means that sales people will take on more work, need more training, and rely on their dealership’s technology stack to carry the lift. Finding, and recruiting, talent to fill these roles will be just as important as the technology that you use.
Reduce Friction with Integrated Offerings
Dealerships are doing everything they can to meet the needs of the market from standing up full, digital sales solutions for remote shopping and building safer environments for shopping, servicing, and everything in between. Going forward, sales people are taking on more and more responsibility in an environment that now demands more technology skills. Pairing the right talent with the right tools to help sales people become more efficient and productive begs the question: where are the friction points? Operational efficiency will demand better integrations that provide seamless processes for a reduced workforce taking on more responsibility. “The stakes have never been higher,” states Mandi Fang, VP of Operations and FIxed Ops at Dealertrack DMS. “Optimizing your dealership’s technology integrations ensures your employees are getting the support they need to eliminate inefficiencies and navigate the uncertainty of the current environment.”
Dealerships who master the challenge of placing the right talent in the right seats are halfway there. It’s only by adding the right technologies that enable better efficiencies, smoother processes, and integrations that improve upon the customer experience that dealers will discover “doing more with less” is less of a burden, and more of an advantage.
2 Cox Automotive COVID-19 Consumer and Dealer Impact Study