Automobile Dealers Industry

Significant Points

Nature of the Industry[About this section] [To Top]

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.

Performing repair work on vehicles is another profitable service provided in this industry. Service departments at motor vehicle dealers provide repair services and sell accessories and replacement parts. Although 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. Used car dealers by definition do not sell new cars, but most new car dealers do sell some 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. These sales also 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. 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.

In an effort to achieve greater financial and operational efficiency and flexibility, greater emphasis is being 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 economic downturns. They are also part of an effort to enhance customer loyalty and overall customer service.

There has been a recent decline in the leasing of cars. With a car lease, a customer makes monthly payments for the use of a vehicle over a period of time, after which the vehicle is usually returned to the dealer. The major domestic car makers have cut back their leasing programs significantly, instead focusing on new car sales. Leasing is still expected to play a role in many new car dealers’ business plans in the coming years, however.

The increased use of the Internet to market new and used cars and light trucks has also had a significant impact on automobile dealers. Through the Internet, consumers can easily access vehicle reviews; view pictures of vehicles; and compare models, features, and prices. Many Web sites 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.

Working Conditions[About this section] [To Top]

Hours. Employees with automobile dealers work longer hours than do those in most other industries. Eighty-three percent of automobile dealer employees worked full time in 2008, and 35 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.

Employment[To Top]

Automobile dealers provided about 1.2 million wage and salary jobs in 2008. The vast majority of employment was in new car dealerships.

For many years, 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.

Occupations in the Industry[To Top]

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 purpose in coming to the dealer. Salespersons then explain and demonstrate vehicles' features in the showroom and on the road. Working closely with automotive sales worker supervisors, salespersons negotiate the final terms and price of the sale with customers. 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 25 percent of industry employment. Automotive service technicians and mechanics service, diagnose, adjust, and repair automobiles such as cars, vans, pickups, and 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. 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.

Table 1. Employment of wage and salary workers in automobile dealers, 2008 and projected change, 2008-2018. (Employment in thousands)
Occupation Employment, 2008 Percent Change,
2008-18
Number Percent
All occupations 1,186.0 100.0 -5.7
Management, business, and financial occupations 88.8 7.5 -8.1
  General and operations managers 21.8 1.8 -15.6
  Sales managers 22.3 1.9 -6.3
Sales and related occupations 437.9 36.9 -3.5
  First-line supervisors/managers of retail sales workers 45.4 3.8 -5.3
  Cashiers, except gaming 21.2 1.8 -6.2
  Counter and rental clerks 30.5 2.6 -10.3
  Parts salespersons 57.5 4.9 -5.3
  Retail salespersons 268.3 22.6 -1.6
Office and administrative support occupations 182.7 15.4 -9.4
  First-line supervisors/managers of office and administrative support workers 12.6 1.1 -5.4
  Switchboard operators, including answering service 12.7 1.1 -24.3
  Bookkeeping, accounting, and auditing clerks 29.0 2.4 -5.3
  Customer service representatives 15.9 1.3 4.2
  Receptionists and information clerks 15.4 1.3 -5.3
  Secretaries and administrative assistants 15.8 1.3 -12.6
  Office clerks, general 35.2 3.0 -5.3
Installation, maintenance, and repair occupations 300.8 25.4 -6.1
  First-line supervisors/managers of mechanics, installers, and repairers 30.8 2.6 -6.2
  Automotive body and related repairers 30.8 2.6 -11.9
  Automotive service technicians and mechanics 210.3 17.7 -5.3
  Helpers—Installation, maintenance, and repair workers 14.9 1.3 -6.2
Transportation and material moving occupations 153.7 13.0 -5.1
  Truck drivers, light or delivery services 16.5 1.4 -5.3
  Taxi drivers and chauffeurs 11.4 1.0 12.6
  Parking lot attendants 10.1 0.9 -14.8
  Cleaners of vehicles and equipment 77.8 6.6 -5.3
NOTE: Columns may not add to total due to omission of occupations with small employment.

Training and Advancement[About this section] [To Top]

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 2008. 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 a technician’s 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.

Outlook[About this section] [To Top]

Employment in automobile dealers is expected to decline due to restructuring of dealer networks by major domestic auto manufacturers. 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 decline 6 percent over the 2008-2018 period, compared with 11 percent growth for all industries combined. Recently, U.S. automakers have been forced to restructure their business operations—directly affecting the majority of car dealer establishments in the country. Restructuring efforts include offering fewer brands of vehicles and ending franchise agreements with a significant percentage of dealers in the coming years. Many of these locations are expected to close or to become independent used car dealerships. Consolidation of firms, which has been underway for some time, is expected to increase. The result is expected to be a more streamlined industry with fewer dealers responsible for total new car sales. Accordingly, employment in 2018 is expected to be below 2008 levels.

Employment in new car dealerships will decline because of the increasing durability of cars and the tendency for consumers to keep vehicles for longer periods of time. Used car dealers will also be affected by these trends, though not as significantly as new dealers. Both new and used car 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 tasks that are not traditionally completed by workers in the sales force.

Consumers' increasing use of the Internet to research automobile purchases will also contribute to employment declines. As consumers become more knowledgeable about automobiles, salespersons will need less time to inform customers of vehicle features and options, making these workers more productive.

Job prospects. The need to replace workers who retire or transfer to other occupations will result in many 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 increased income stability, and, therefore, fewer turnovers in the sales department. Dealers continue to seek highly educated salespersons, so those who have a college degree and previous sales experience will have the best job opportunities.

Opportunities in vehicle maintenance and repair should be favorable 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 compared to retail salespersons 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 workers with considerable industry experience. However, consolidation of new car dealers will further limit the number of managerial jobs. Competition for managerial positions will remain relatively keen.

Earnings [About this section] [More salary/earnings info] [To Top]

Industry earnings. Average weekly earnings of nonsupervisory workers in automobile dealers were $609 in 2008, substantially higher than the $386 average for retail trade and about the same as the $608 average for all private industry. Earnings vary depending on occupation, experience, and the dealer's geographic location and size. Wages in selected occupations in automobile dealers appear in table 2.

Table 2. Median hourly wages of the largest occupations in automobile dealers, May 2006
Occupation Automobile dealers All industries
First-line supervisors/managers of retail sales workers $33.73 $16.97
First-line supervisors/managers of mechanics, installers, and repairers 29.17 27.55
Automotive service technicians and mechanics 19.61 16.88
Automotive body and related repairers 18.95 17.81
Retail salespersons 18.91 9.86
Counter and rental clerks 17.90 10.05
Parts salespersons 16.26 13.71
Bookkeeping, accounting, and auditing clerks 14.74 15.63
Office clerks, general 11.64 12.17
Cleaners of vehicles and equipment 9.80 9.35

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 2008, relatively few workers in automobile dealers (3 percent) were union members or were covered by union contracts, compared with 14 percent of workers in all industries.



*Source: Bureau of Labor Statistics, U.S. Department of Labor. Used by permission.

Explore more careers: View all Careers or Browse Careers by Category