Bureau of Labor Statistics
Automobile Dealers
Automobile dealers are the link between the manufacturer of the automobile and the U.S. consumer. With their large inventories of cars, dealers provide consumers with a wide array of vehicles to meet their needs at different price points. Goods and services. The automobile dealer industry sells most of the automobiles, light trucks, and vans that operate on the road today. Sales of these vehicles are subject to changing consumer tastes, the popularity of the manufacturer’s vehicle models, and the intensity of competition with other dealers. Along with the sale of the car, most dealers also sell additional automobile-related services to potential buyers. These services include extended warranties, undercoating, insurance, and financing. Aftermarket sales departments sell these services and other merchandise after vehicle salespersons have closed a deal. Sales of these packages greatly increase the revenue generated for each vehicle sold. Because sales of automobiles fluctuate significantly, automotive dealers offer generous incentives, rebates, and financing deals during slow periods to maintain high sales volumes and to reduce inventories. Leasing a car or truck is an alternative to purchasing a vehicle and an additional service provided primarily by new car dealers. Leasing services have grown in recent years to accommodate changing consumer purchasing habits. As vehicles have become more costly, growing numbers of consumers are unable or reluctant to make a long-term investment in a new car or truck purchase. Leasing provides an escape from high initial investment costs and typically yields lower monthly payments than purchasing options. Performing repair work on vehicles is another profitable service provided by dealers. Service departments at motor vehicle dealers provide repair services and sell accessories and replacement parts. While most service departments perform repairs only, some dealers also have body shops to do collision repair, refinishing, and painting. The work of the service department has a major influence on customers’ satisfaction and willingness to purchase future vehicles from the dealer. Industry organization. The automobile dealer industry is comprised of two segments. New car dealers, often called franchised dealers, primarily sell new cars, sport utility vehicles (SUVs), and passenger and cargo vans. These franchised dealers sell and lease vehicles manufactured by a particular company—which may include several brands. Used car dealers comprise the other segment of the industry, and are sometimes referred to as independent dealers. These dealers sell a variety of vehicles that have been previously owned or formerly rented and leased. Improvements in technology have increased the durability and longevity of new cars, raising the number of high-quality used cars that are available for sale. While used car dealers by definition do not sell new cars, most new car dealers also sell used cars. According to the National Automobile Dealers Association, new vehicle sales account for more than half of total sales revenue at franchised new car and new truck dealers. But more importantly, these sales generate additional revenue in other departments of new car dealers, which are more profitable to the dealer. By putting new vehicles on the road, dealers can count on new repair and service customers and future trade-ins of used vehicles. Independent used car dealers usually have smaller staffs than their franchised counterparts. Most are stand-alone dealers, but increasingly nationwide companies are opening large superstores across the country. These large used car and truck dealers typically contract out warranty and other service-related work to other dealers or to satellite service facilities. Recent developments. In recent years, the sale of used cars has become a major source of profits for many new car dealers in the wake of shrinking margins on new cars. And to make them acceptable to more customers, some dealers promote “certified pre-owned” vehicles to customers who want a warranty on their used vehicle. This often raises the price, but in return provides customers with peace of mind. In economic downturns, the relative demand for these and other used cars often increases as sales of new cars decline. Nationwide used automotive dealer chains have increased in popularity over the last decade. Like the used car departments of new car dealers, they capitalize on the relatively large profits on sales of previously owned cars, trucks, and vans. Some of the larger dealers offer low-hassle sales on large inventories of these used vehicles. Growth in leasing agreements and rental company inventory will continue to provide quality vehicles to these large independent dealers, thus providing for future employment growth in the used car market. In an effort to achieve greater financial and operational efficiency and flexibility, greater emphasis will be placed on aftermarket services, such as financing and vehicle maintenance and repair, at both new and used car dealers. These services typically provide large profit margins for dealers, and remain less susceptible to business cycle downturns. They are also part of an effort to enhance customer loyalty and overall customer service. Perhaps the most significant recent development for automotive dealers has been increasing use of the Internet to market new and used cars and light trucks. Through websites, consumers can easily access vehicle reviews; view pictures of vehicles; and compare models, features, and prices. Many Websites also allow consumers to research insurance, financing, leasing, and warranty options. As a result, consumers are generally better informed and spend less time meeting with salespersons.
Hours. Employees with automobile dealers work longer hours than do those in most other industries. Eighty-four percent of automobile dealer employees worked full time in 2006, and 37 percent worked more than 40 hours a week. To satisfy customer service needs, many dealers provide evening and weekend service. The 5-day, 40-hour week is the exception, rather than the rule, in this industry. Work environment. Most automobile salespersons and administrative workers spend their time at shared desks or nearby offices in dealer showrooms. The competitive nature of selling is stressful to automotive salespersons, as they try to meet company sales quotas and personal earnings goals. Compared with that for all occupations, the proportion of workers who transfer from automotive sales jobs to other occupations is relatively high. Service technicians and automotive body repairers generally work indoors in well-ventilated and well-lighted repair shops. However, some shops are drafty and noisy. Technicians and repairers frequently work with dirty and greasy parts, and in awkward positions. They often lift heavy parts and tools, and minor cuts, burns, and bruises are common. Despite hazards, precautions taken by dealers to prevent injuries have kept the workplace relatively safe. In 2006, there were 4.1 cases of work-related injuries and illnesses per 100 full-time workers in the automobile dealers industry, close to the national average of 4.4 cases per 100.
Automobile dealers provided about 1.2 million wage and salary jobs in 2006. In addition, there were 58,000 self-employed workers in this industry. New car dealers employed 1.1 million wage and salary workers while used car dealers employed about 127,000 workers. Since 1950, the trend for new car dealers has been toward consolidation. Franchised dealers have decreased in number, while their sales volume has increased. Larger dealers can offer more services, typically at lower costs to themselves and the customer. The number of used car dealers, however, has recently been increasing. Almost 2 out of 3 workers in the automobile dealer industry work in establishments with 50 or more employees (chart 1).
The number of workers employed by automobile dealers varies significantly depending on dealer size, location, makes of vehicles handled, and distribution of sales among departments. Table 1 indicates that the majority of workers in this industry were in sales occupations; installation, maintenance, and repair occupations; and office and administrative support occupations. Sales and related occupations. These occupations are among the most important in automobile dealerships and account for 37 percent of industry employment. Sales workers’ success in selling vehicles and services determines the success of the dealer. Automotive retail salespersons usually are the first to greet customers and determine their interests through a series of questions. Salespersons then explain and demonstrate vehicles’ features in the showroom and on the road. Working closely with automotive sales worker supervisors and the customers, salespersons negotiate the final terms and price of the sale. Automotive salespersons must be tactful, well groomed, and able to express themselves: their success depends on winning the respect and trust of prospective customers. In support of the service and repair department, parts salespersons supply vehicle parts to technicians and repairers. They also sell replacement parts and accessories to the public. Parts managers run the parts department and keep the automotive parts inventory. They display and promote sales of parts and accessories and deal with garages and other repair shops seeking to purchase parts. Installation, maintenance, and repair-related occupations. Workers in automotive maintenance and repair are another integral part of automobile dealers, constituting 26 percent of industry employment. Automotive service technicians and mechanics service, diagnose, adjust, and repair automobiles such as cars, vans, pickups, and sport utility vehicles (SUVs). These workers are the largest repair occupation at 18 percent of industry employment. Closely related to service technicians, automotive body and related repairers repair and finish vehicle bodies, straighten bent body parts, remove dents, and replace crumpled parts that are beyond repair. Supervisors of installation, maintenance and repair workers, usually called shop managers are among the most experienced service technicians. They supervise and train other technicians to make sure that service work is performed properly. Service managers oversee the entire service department and are responsible for the department’s reputation, efficiency, and profitability. Increasingly, service departments use computers to increase productivity and improve service workflow by scheduling customer appointments, troubleshooting technical problems, and locating service information and parts. Service advisors cover service departments’ administrative and customer relations duties. They greet customers, listen to their description of problems or service desired, write repair orders, and estimate the cost and time needed to do the repair. They also contact customers when technicians discover new problems with their vehicles and explain to customers the work performed and the charges associated with the repairs. Other occupations. Office and administrative support workers organize and maintain the paperwork of automobile dealers and make up about 15 percent of employment in the industry. Bookkeeping, accounting, and auditing clerks; general office clerks; and secretaries and administrative assistants prepare reports on daily operations, inventory, and accounts receivable. Office supervisors organize, supervise, and coordinate administrative operations. Some perform managerial duties as well. Management positions are often filled by promoting workers with years of related experience. Sales managers hire, train, and supervise the dealer’s sales force. They are the final executors in all transactions between sales workers and customers. They also review market analyses to determine customer needs, estimate volume potential for various models, and develop sales campaigns. General and operations managers are in charge of all dealer operations. They need extensive business and management skills, usually acquired through experience as a manager in one or more of the dealer departments. Dealer performance and profitability ultimately are up to them. Transportation and material moving occupations account for about 13 percent of jobs in automobile dealers. Cleaners of vehicles and equipment prepare new and used cars for display in the showroom or parking lot and for delivery to customers. Truck drivers typically operate light delivery trucks to pick up and deliver automotive parts, while some drive tow trucks that bring damaged vehicles to the dealer for repair.
In today’s competitive job market nearly all dealers require at least a high school diploma for most sales and service-related jobs; about half of all workers in the industry had some formal education beyond the high school level in 2006. Courses in automotive technology, electronics, and computers are important for maintenance and repair jobs, as is certification by the National Institute for Automotive Service Excellence. For managerial occupations, a basic background in business, marketing, or sales is usually required. Sales and related occupations. Sales workers require strong communication and customer service skills to deal with the public. Most new retail salespersons receive extensive on-the-job training, beginning with mentoring from sales managers and experienced sales workers. In large dealers, beginners receive several days of classroom training to learn about vehicle features, methods for approaching prospective customers, negotiation techniques, and ways to close sales. Some manufacturers furnish training manuals and other informational materials to sales workers. Managers continually guide and train sales workers, both on the job and at periodic sales meetings. Successful retail sales persons can become office supervisors, sales managers, or operations managers. Installation, maintenance, and repair-related occupations. Automotive technology is rapidly increasing in sophistication, and dealers prefer to hire graduates of postsecondary automotive training programs for entry-level automotive service technician or automotive body repairer positions. Graduates of such programs often earn promotion to the journey level after a few months on the job. Most community and junior colleges and vocational and technical schools offer postsecondary automotive training programs leading to an associate degree in automotive technology or auto body repair. They generally provide intense career preparation through a combination of classroom instruction and hands-on practice. In addition, dealers increasingly send experienced technicians to factory training centers to receive special training in the repair of components, such as electronic fuel injection or air-conditioning. Factory representatives also often visit shops to conduct short training sessions. Applicants for automotive service jobs should have good reading ability and basic math skills to understand technical manuals, keep abreast of new technology, and learn new service and repair techniques. Some service technicians and mechanics may begin as apprentices or trainees, helpers, or lubrication workers. They work under close supervision of experienced technicians, repairers, and service managers, and require several years of experience to advance to journey level positions. Certification through the National Institute for Automotive Service Excellence (ASE) provides recognized credentials in automotive service and repair. Though not mandatory—currently ASE estimates around 50 percent of workers in automotive service positions are certified—certification increases technicians’ chances of finding employment and advancing within the occupation once employed. Other occupations. Dealers require years of related experience in sales, service, or administration for workers to advance to management positions such as sales manager or operations manager. Employers increasingly prefer persons with 4-year college degrees in business administration and marketing for these positions. This is especially true of the larger, more competitive dealers. In addition, some motor vehicle manufacturers offer management training classes and seminars. Workers in transportation and material moving occupations usually need a high school diploma or equivalent, or experience in a related field.
Employment growth will result from an increased focus on sales of automotive-related services at both new and used dealers. Finance and insurance services, automotive repair, and sales of used cars at new car dealerships will be responsible for many of the new jobs in this industry. Opportunities will be good for salespersons and customer service representatives with related experience and computer skills, and for automotive service technicians who have several years of experience or are ASE certified. Employment change. Wage and salary jobs at automobile dealers are projected to grow 11 percent over the 2006-2016 period, the same as the 11 percent growth for all industries combined. Job growth in automobile dealers typically is a reflection of consumer confidence and purchasing habits. The long-term strength of the Nation’s economy and trends in consumer transportation preferences heavily influence the employment outlook for this industry. Through 2016, growth in the driving-age population will increase demand for passenger vehicles and boost employment in automobile dealers. However, the trend for the public to keep vehicles longer than in the past may have a dampening effect on motor vehicle sales. New and used car dealers may also face increasing competition from online electronic auctions that enable new and used goods, including vehicles, to be traded consumer-to-consumer and business-to-consumer. Any future dealer consolidation should have a minimal effect on the industry because of continued demand for vehicles and related services. Dealers will continue to seek greater financial and operational efficiency and flexibility, resulting in greater emphasis on aftermarket services, such as financing and vehicle service and repair. This focus will require additional workers—for example, loan officers and service technicians—to help with the larger workload. Independent used car dealers will continue to experience employment growth as increases in vehicle leasing and rental company fleets continue to provide quality vehicles to the used car market. Increasingly, these dealers also provide repair services for their vehicles and will demand more service technicians, although some used car dealers still prefer to contract out their warranty and service-related work to other dealers or perform them at satellite service facilities. Employment growth among sales occupations will be limited somewhat by consumers’ increasing use of the Internet to research automobile purchases. As consumers become more knowledgeable, salespersons will need less time to inform customers of vehicle features and options, making these workers more productive. Job prospects. In the future, dealers will seek more highly educated salespersons, and those who have a college degree and previous sales experience will have the best job opportunities. Opportunities in vehicle maintenance and repair should be very good for persons who complete formal automotive service technician training. The growing complexity of automotive technology increasingly requires highly trained automotive service technicians and mechanics to service vehicles. Automotive service technicians in this industry may expect steady work because changes in economic conditions have little effect on this part of the dealer’s business. Opportunities in management occupations will be best for persons with college degrees and those with considerable industry experience. However, consolidation of new car dealers will slow the growth of managerial jobs. Competition for managerial positions will remain relatively keen. The need to replace workers who retire or transfer to other occupations will result in many additional job openings for workers in automobile dealers—retail salespersons in particular. Some dealers are trying to reduce turnover among salespersons by using alternative sales techniques and compensation systems, such as paying salaries rather than commissions. This may lead to more income stability and less turnover in the sales department.
Industry earnings. Average weekly earnings of nonsupervisory workers in automobile dealers were $636 in 2006, substantially higher than the $383 average for retail trade, as well as the $568 average for all private industry. Earnings vary depending on occupation, experience, and the dealer’s geographic location and size. Earnings in selected occupations in automobile dealers appear in table 2.
Most automobile sales workers are paid on commission. Commission systems vary, but dealers often guarantee new salespersons a modest salary for the first few months until they learn how to sell vehicles. Many dealers also pay experienced, commissioned sales workers a modest weekly or monthly salary to compensate for the unstable nature of sales. Dealers, especially larger ones, also pay bonuses and have special incentive programs for exceeding sales quotas. With increasing customer service requirements, small numbers of dealers have adopted a sales force paid entirely by salary. Most automotive service technicians and mechanics also receive a commission related to the labor cost charged to the customer. Their earnings depend on the amount of work available and completed. Like new salespersons, entry-level technicians may be paid a modest salary until they are able to perform repairs on their own. Benefits and union membership. Managers and some salespersons may enjoy the use of dealership vehicles for official business use. It is also common for dealership owners to drive vehicles owned by the dealership for limited personal use, such as driving to and from work. In 2006, relatively few workers in automobile dealers, 3 percent, were union members or were covered by union contracts, compared with 12 percent of workers in all industries.
For more information about work opportunities, contact local automobile dealers or the local offices of the State employment service. The latter also may have information about training programs. For additional information about new car dealers, including information on careers and training, contact:
For additional information about independent used care dealers, including information on careers and training, see the following Website, sponsored by State Independent Dealers Associations: http://www.piada.org/Used_Car_Dealer_Info.htm For additional information about automotive service and repair careers and training in the automotive dealer industry, contact:
More information on the following occupations may be found in the 2008-2009 edition of the Occupational Outlook Handbook:
4411
Suggested citation: Bureau of Labor Statistics, U.S. Department of Labor, Career Guide to Industries, 2008-09 Edition, Automobile Dealers, on the Internet at http://www.bls.gov/oco/cg/cgs025.htm (visited
September 17, 2008
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Last Modified Date: December 18, 2007 |
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