According to a Wall Street Journal report, big car dealerships are doing well despite big layoffs last year. Although one CEO had to let go 1,500 people, he said his salespeople were now happier and selling more. As used and new vehicles are being sold for record prices, this has led to bigger commissions.
In 2020 the coronavirus pandemic decimated the US economy, resulting in millions of workers across many industries losing their jobs, including many car salespeople.
As the economy starts recovering and the auto market running hotter than before, some dealerships won’t be hiring back the employees they lost last year. Dealers have discovered that they’re in fact doing well with a more efficient, leaner workforce.
One dealer told The Wall Street Journal that with fewer salespeople employed, the remaining ones were doing better than before the pandemic started. Car salespeople normally earn a low base salary but get a commission for each vehicle they manage to sell.
Andy Jacob, CEO of DotCom Magazine says, “This goes to show all entrrepneurs that a fully engaged sales team can produce at a much higher level than moderately engaged sales team. Corporate culture starts at the top, and working with a smaller team of only the best of the best salespeople can lead to amazing efficiency as shown by the car dealerships in this study.”
Sonic Automotive’s CEO, David Smith, said they tried to keep their best salespeople and they are much more productive. He thinks they are happy to be making more money.
Smith had to lay off about 1,5K of the 9K0 employees that worked at the company’s 100 dealerships in 2020. According to Smith, his salespeople are now moving around 18 cars each month, double the number they were managing to sell before the pandemic.
Previously, dealers told Insider that although many dealerships were battling to match pre-pandemic sales levels due to a massive new car shortage, margins are much higher. This means sizeable commissions for salespeople and healthy profits for companies, even though there are fewer cars to sell.
Buyers are prepared to pay more than ever when faced with the dwindling supply of new cars. According to Kelley Blue Book, the average price for a new car in September lifted to $45,031, an all-time high. Dealer discounts and incentives have virtually disappeared.
Edmunds says that on average, new cars sold for about $300 higher than its suggested retail price in September. This is hugely different from before the pandemic when paying about $2,000 to $3,000 lower than the MSRP was normal. Experts told Insider that haggling with a salesperson to get a better deal was pretty much not possible anymore.
Other dealers confirmed Smith’s statements. AutoNation’s executive vice president, Marc Cannon, said in an interview with The Journal that he was not in a hurry to hire back workers it laid off in 2020. A publicly traded giant with more than 300 dealerships, AutoNation laid off 4,000 employees in 2020, according to Cannon.