Sales Force Turnover Drops at Car Dealers in 2006
Drop continues a general 20-year trend
By Brendan Moore
The average turnover rate at new-car dealerships in the United States has dropped from 48% in 2005 to 42% in 2006, according to the folks at NADA (National Automobile Dealers Association).
Just by way of comparison, the (voluntary) turnover rate across all jobs in the U.S. is about 23% nationwide.
The average turnover rate among salespeople has dropped dramatically if viewed over the last 20 years, even though there are sometimes there are increases or plateaus in certain years. The average sales personnel turnover at franchised dealers has been as high as 85% in the past. If you were buying new cars 20 years ago, you can probably attest to the high turnover rate among salespeople – it was not unusual to go to a high-volume dealership six months after visiting the first time, and not seeing anyone you recognized on the showroom floor during the second visit.
Paul Taylor, NADA chief economist, says that dealership sales force turnover tends to decrease as overall sales slow down, with more people staying put wherever they’re at since the grass doesn’t necessarily look greener at another dealership in times of overall auto industry sales declines. Auto sales in 2006 fell 2.6% from 2005 sales figures.
The NADA also says that larger dealerships tend to have lower churn rates among their salespeople than small dealerships because they can keep salespeople happier in down sales cycles by simply spending more marketing money.
The NADA says that American new-car dealers spent a combined $7.8 billion (USD) in 2006. That’s the advertising the dealers paid for; it is exclusive of the money the manufacturers spent on brand and model advertising nationally. The NADA says that’s a 2% increase from 2005 and represents an average $590 advertising cost borne by the dealer per new car sold. The average new-car dealership in the U.S. spends $364,610 on advertising for their new car sales department. A large dealership in a major metro area might spend easily spend over a million dollars in the same 12-month period.
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