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Motor Vehicle Dealers

Nature of the Industry  |  Working Conditions  |  Employment  |  Occupations in the Industry
Training and Advancement  |  Job Outlook  |  Earnings

Significant Points

• Most jobs in motor vehicle dealerships offer above-average earnings, but require only 2 years of postsecondary training or less.
• Motor vehicle dealerships are expected to decline in number but increase in size, as consolidation continues in the industry.
• Employment growth is expected to be average but sensitive to downturns in the economy.

Nature of the Industry

Motor vehicle dealers are the bridge between automobile manufacturers and the U.S. consumer. Most dealerships offer one-stop shopping for customers who wish to buy, finance, and service their next vehicle. 

Full-service motor vehicle dealerships generally have four departments: new vehicle sales, used vehicle sales, aftermarket sales, and service. These departments employ a wide range of occupations including those involving management, administrative support, sales, service, and repair. In addition to full-service dealerships, some motor vehicle dealers specialize in used vehicle sales only. 

The new vehicle sales department in a full-service dealership accounts for over half of total dealership sales, making it the cornerstone and lifeblood of the dealership. Although profit margins on new vehicle sales are quite small in comparison with those of other departments, these sales spawn additional revenue for more profitable departments of the dealership. By putting new vehicles on the road, dealerships can count on aftermarket additions, new repair and service customers, and future used vehicle trade-ins. 

Sales of new cars, trucks, and vans depend on changing consumer tastes, popularity of the manufacturers’ vehicle models, and the intensity of competition with other dealers. The business cycle greatly affects automobile sales—when the economy of the Nation is declining, car buyers may postpone purchases of new vehicles and, conversely, when the economy is growing and consumers feel more financially secure, vehicle sales increase. 

Car and truck leasing is included in the new vehicle sales department. 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 the long-term investment entailed in the purchase of a new car or truck. Leasing provides an alternative to high initial investment costs while typically yielding lower monthly payments. 

The used vehicle sales department sells trade-ins and former rental and leased cars, trucks, and vans. Because new vehicle prices continue to increase faster than used vehicle prices, used vehicles have become more popular among customers. Also, innovative technology has increased the durability and longevity of new vehicles, resulting in higher quality used vehicles. In recent years, the sale of used vehicles has become a major source of profits for many dealers in the wake of decreasing margins for new vehicles. In fact, some luxury vehicle manufacturers promote “certified pre-owned” vehicles to customers who may be unable to afford new vehicles of a particular make. In economic downturns, the demand for these and other used vehicles often increases as sales of new vehicles decline. 

The aftermarket sales department sells additional services and merchandise after the new vehicle salesperson has closed a deal. Aftermarket sales workers sell service contracts and insurance to new and used vehicle buyers and arrange financing for their purchase. Representatives offer extended warranties and additional services, such as undercoat sealant and environmental paint protection packages, to increase the revenue generated for each vehicle sold. 

The service department provides automotive repair services and sells accessories and replacement parts. Most service only cars and small trucks, but a small number service large trucks, buses, and tractor-trailers. Some dealerships also have bodyshops 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 dealership. 

As is the case in the used vehicle department of a traditional full-service dealership, stand-alone used vehicle dealers sell trade-ins and former rental and leased vehicles. These dealers range from small, one-location stores to large, nationwide superstores. Each one capitalizes on the increased demand for used vehicles and relatively large profits on sales of previously owned cars, trucks, and vans. Some of the larger stores offer low-hassle sales on large inventories of these popular vehicles. Such dealers typically contract out warranty and other service-related work to other dealers or to satellite service facilities. Growth in leasing agreements and rental companies will continue to provide quality vehicles to these dealers, thus providing for future employment growth in the used vehicle market. 

Working Conditions

Employees in motor vehicle dealerships work longer hours than do those in most other industries. About 86 percent of motor vehicle dealership employees worked full time in 2000; nearly 42 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 usually is the exception, rather than the rule, in this industry. 

Most automobile salespersons and administrative workers spend their time in dealer showrooms; individual offices are a rarity. Multiple users share limited office space that may be cramped and sparsely equipped. 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 in general, 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 repairshops. 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. Minor cuts, burns, and bruises are common, but serious accidents are avoided when the shop is kept clean and orderly and safety practices are observed. Despite hazards, precautions taken by dealers to avoid and prevent injuries have kept the workplace relatively safe. In 1999, there were 6.3 cases of work-related injuries and illnesses per 100 full-time workers in the new and used motor vehicle dealers industry, equivalent to the national average of 6.3 cases. Separately, stand-alone used motor vehicle dealers reported only 2.3 cases of work-related injuries and illnesses per 100 full-time workers—well below the national average. 

Employment

Motor vehicle dealers provided about 1.2 million wage and salary jobs in 2000. An additional 50,000 self-employed persons worked in this industry. Sales, installation, maintenance, and repair workers shared two-thirds of industry employment. The remaining third primarily were management, administrative support, transportation, and material-moving positions. 

Workers in motor vehicle dealerships tend to be somewhat older than those in other retail trade industries. The median age of workers in dealerships was 38.7, with 26 percent between the ages of 35 and 44. 

Since 1950, the trend in this industry has been toward consolidation. Franchised dealers have decreased in number while their sales volume has increased. Larger dealerships can offer more services, typically at lower costs to the dealership and the customer. More than 75 percent of motor vehicle dealerships employ at least 10 workers, compared with about 32 percent for retail trade establishments in general. Dealerships with 10 or more workers employ about 98 percent of the workers in the industry, whereas such establishments account for fewer than 85 percent of all retail trade employment (see chart). On average, motor vehicle dealers employ nearly 24 employees per establishment, compared with an average of 16 employees in all retail businesses. 

Occupations in the Industry

The number of workers employed by motor vehicle dealers varies significantly depending on dealership size, location, makes of vehicles handled, and distribution of sales among departments. Table 1 indicates that the majority of workers in this industry are sales workers, automotive service technicians and mechanics, and administrative support personnel. 

Sales and related occupations are among the most important occupations in the dealership. Their success in selling vehicles and services determines the success of the dealership. Automotive retail salespersons usually are the first to greet customers and determine their interests through a series of questions. Before entering the dealership, many customers use the Internet to research and compare vehicle prices, features, and options. Salespersons then explain and demonstrate the vehicle’s features in the showroom and on the road. Working closely with automotive sales worker supervisors and their customers, they negotiate the final terms and price of the sale. Automotive salespersons must be tactful, well-groomed, and able to express themselves well. Their success in sales depends upon their ability to win 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. 

Installation, maintenance, and repair occupations are another integral part of dealerships. Automotive service technicians and mechanics diagnose, adjust, and repair automobiles and light trucks with gasoline engines, such as vans and pickups. Automotive body and related repairers repair and finish vehicle bodies, straighten bent body parts, remove dents, and replace crumpled parts that are beyond repair. 

Office and administrative support workers handle the paperwork of motor vehicle dealers. Bookkeeping, accounting, and auditing clerks; general office clerks ; and secretaries and administrative assistants prepare reports on daily operations, inventory, and accounts receivable. They gather, process, and record information; and perform other administrative support and clerical duties. Dealership office managers organize, supervise, and coordinate administrative operations. Many office managers also are responsible for collecting and analyzing information on each department’s financial performance. 

Transportation and material-moving occupations account for 1 out of 10 jobs in motor vehicle dealers. Cleaners of vehicles and equipment prepare new and used vehicles for display in the showroom or parking lot and for delivery to customers. They may wash and wax vehicles by hand and perform simple services such as changing a tire or battery. Truckdrivers operate light delivery trucks to pick up and deliver automotive parts. Some drive tow trucks that bring damaged vehicles to the dealership for repair. 

Management jobs often are filled by promoting workers with years of related experience. For example, most sales managers start as automotive salespersons. Shop managers usually are among the most experienced service technicians. They supervise and train other technicians to make sure that service work is performed properly. 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 repairshops seeking to purchase parts. 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 handle the administrative and customer relations part of the service department. 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 handle customer complaints, contact customers when technicians discover new problems while doing the work, and explain to customers the work performed and the charges associated with the repairs.

Sales managers hire, train, and supervise the dealership’s sales force. They are the lead negotiators in all transactions between sales workers and customers. Most advance to their positions after success as salespersons. They review market analyses to determine consumer needs, estimate volume potential for various models, and develop sales campaigns to accomplish dealership goals. 

General and operations managers are in charge of all of the dealership’s operations. They need extensive business and management skills, usually acquired through experience as a manager in one or more of the dealership departments. Dealership performance and profitability ultimately are up to them. General managers sometimes have an ownership interest in the dealership. 

Training & Advancement

Requirements for many jobs vary from dealer to dealer. To find out exactly how to qualify for a specific job, ask the dealer or manager in charge. The majority of positions do not require postsecondary education–––more than half of those employed have not received any formal education past high school. In today’s competitive job market, however, nearly all dealers demand a high school diploma. Courses in automotive technology are important for service jobs, as well as a basic background in business, electronics, mathematics, computers, and science. Sales workers require strong communication skills to deal with the public because they represent the dealership. 

Most new sales workers receive extensive on-the-job training, beginning with mentoring from sales managers and experienced sales workers. In large dealerships, beginners receive several days of classroom training to learn the models for a sale, methods for approaching prospective customers, negotiation techniques, and ways to close sales. Some manufacturers furnish training manuals and other informational materials for sales workers. Managers continually guide and train sales workers, both on the job and at periodic sales meetings. 

Some service technicians and repairers may begin as apprentices or trainees, helpers, or lubrication workers. They work under close supervision of experienced technicians, repairers, and service managers. Even though beginners may be able to perform routine service tasks and make simple repairs after a few months on the job, they usually need 1 to 2 years of experience to acquire enough skills to become a certified service technician. 

Automotive technology is rapidly increasing in sophistication, and dealerships increasingly prefer to hire graduates of postsecondary automotive training programs for trainee positions. Graduates of such programs often earn promotion to the journey level after only 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’s degree in automotive technology or auto body repair. They generally provide intense career preparation through a combination of classroom instruction and hands-on practice. Good reading and basic math skills also are required to study technical manuals, keep abreast of new technology, and learn new service and repair techniques. 

Various automotive manufacturers and their participating dealers sponsor 2-year associate degree programs at postsecondary schools across the Nation. Students in these programs typically spend alternate 10- to 12-week periods attending classes full time and working full time in the service departments of sponsoring dealers. 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 visit many shops to conduct short training sessions. 

Workers need years of experience in sales, service, or administration to advance to management positions in dealerships. Employers increasingly prefer persons with 4-year college degrees in business administration and marketing, particularly in dealerships that are larger, more competitive, and more efficient. Some motor vehicle manufacturers offer management training classes and seminars. 

Job Outlook

Wage and salary jobs in motor vehicle dealerships are projected to increase 12 percent over the 2000-10 period, compared with projected growth of about 16 percent for all industries combined. Growth in the automobile industry strongly reflects consumer confidence and purchasing habits. The structure of dealerships, the strength of the Nation’s economy, and trends in consumer preferences will influence the employment outlook for this industry. 

Over the 2000-10 period, population growth will increase demand for motor vehicles and employment in motor vehicle dealerships. Growth of the labor force and in the number of families in which both spouses need vehicles to commute to work will contribute to increased vehicle sales and employment in this industry. As personal incomes continue to grow, greater numbers of persons will be able to afford the luxury of owning multiple vehicles, which also should increase sales. However, the penchant for the public to keep vehicles for many more years than in the past may have a dampening effect on motor vehicle sales. 

The trend towards dealership consolidation should have a minimal effect on the industry because of continued demand for vehicles and related services. Dealerships will always need well-qualified people to work in the various departments of the dealership. In an effort to achieve greater financial and operational efficiency and flexibility, greater emphasis will be placed on after-sales services, such as financing and vehicle service and repair. For larger dealerships, this will also include onsite body repair facilities. 

Opportunities in the service and repair sectors of this industry should be plentiful, especially for persons who complete formal automotive service technician training. The growing complexity of automotive technology increasingly requires highly trained service technicians to service vehicles. Most persons who enter service and repair occupations may expect steady work because changes in economic conditions have little effect on this part of the dealership’s business. 

Opportunities for sales positions will depend largely on the state of the economy, which will continue to play a dominant role in motor vehicle sales. Replacement needs will be a greater source of job openings than will overall dealership expansion. The high turnover of sales jobs, characteristic of this industry, will ensure many job openings for sales workers in motor vehicle dealerships. In addition, as consumers’ expectations and demands continue to increase, dealerships will seek more highly educated salespersons. Persons who have a college degree and previous sales experience should have the best opportunities. If alternative sales techniques and compensation systems, such as using salaried noncommissioned sales professionals, become more common, the greater income stability may lead to less turnover of sales jobs. 

Opportunities in management occupations will be best for persons with college degrees and those with considerable industry experience. However, consolidation of dealerships will slow the growth of managerial jobs. Competition for managerial positions will remain relatively keen.  

Earnings

Most automotive sales workers are paid on a commission-only basis. 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. Dealerships, especially larger ones, also pay bonuses and have special incentive programs for exceeding sales quotas. With increasing customer service requirements, some dealerships and manufacturers have adopted a noncommissioned sales force paid entirely by salary.

Most automotive service technicians and mechanics receive a commission related to the labor cost charged to the customer. Their earnings depend on the amount of work available and completed.

Relatively few workers in motor vehicle dealerships, 4.0 percent, are union members or are covered by union contracts, compared with 14.9 percent of all workers in private industry.

Table 2. Median hourly earnings of the largest occupations in motor vehicle dealers, 2000
Occupation	New and used car dealers	Used car dealers	All industries
General and operations managers	$39.11	$25.39	$29.41
Sales managers	38.79	32.97	32.94
First-line supervisors/managers of retail sales workers	28.23	21.06	13.23
First-line supervisors/managers of mechanics, installers, and repairers	21.66	17.96	21.27
Retail salespersons	17.81	13.03	8.02
Automotive service technicians and mechanics	16.87	11.69	13.70
Automotive body and related repairers	15.76	12.57	15.00
Counter and rental clerks	14.90	9.32	7.87
Parts salespersons	13.47	12.84	10.85
Cleaners of vehicles and equipment	8.02	7.65	7.55

Source: Career Guide to Industries, Bureau of Labor Statistics

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