Dealership employees saw their earnings rise by 27 percent from 2020 levels, leading to an estimated earnings of around $103,000 per person in 2021 and marking the first time that average employee earnings crossed the $100,000 threshold.
This increase led to another milestone in the dealership world, the lowest employee turnover rate in the 11 years of the National Automobile Dealers Association’s (NADA) annual Dealership Workforce Study. According to data shared with Automotive News, average industry turnover was 34 percent in 2021, down from 46 percent in 2020. This was caused by employees being less inclined to quit or switch jobs because they were satisfied with their earnings.
These developments come on the heels of a record year for automotive dealerships, which saw average weekly earnings rise by 27 percent in 2021. Despite low inventories resulting from COVID-19 related bottlenecks and the microchip shortage, among other shortages, dealerships still profited.
This was caused by dealers having more power over negotiations for new cars, as the limited supply allowed them to justify selling a new car for sticker price or, in some cases, much more. In the case of used cars, dealerships have been notorious for listing them near or above what they retailed for brand new. This led to higher gross profits per-vehicle, which directly impacted the increase in earnings of sales employees, since their commissions are based on final vehicle sale price and the margin made on each vehicle sale.
“The drop in turnover and the increase in compensation were directly connected,” said president of ESi-Q Ted Kraybill. ESi-Q is a research company that conducts the study for NADA.
With new and used car prices falling but still siting near record highs, earnings for dealership employees is likely to remain elevated. In fact, industry analysts and the dealerships themselves believe this will remain the case for the near future. Due to an ongoing shortage of parts and labor, low inventories could remain well into 2024.