Keeping Dealership Sales Staff from Leaving at Nissan

Nissan—the automobile manufacturer—no doubt considered it good news that its overall sales were up 4.4 percent as of September 2018. But, it was bad news for Nissan that it had 100 percent turnover in dealership sales positions within the same year. Nissan is not alone. Employee turnover in auto dealerships has been consistently increasing over the past five years, while US auto sales have been generally good.

Part of the issue is that car dealerships rely on millennials for many of their hires. Millennials often have more debt than earlier generations and are looking for stable pay. How do car dealerships usually pay salespeople? Their pay is typically solely based on commission. Commissions have been shrinking as customers walk into dealerships with internet research in hand that gives customers—not salespeople—the upper hand in car negotiations. Millennials often think of car dealership sales jobs as involving lots of customer haggling and an “old boys’ club”—aspects of a job that doesn’t usually excite prospective hires.

One of the ways dealerships are addressing these issues is by changing how employees are paid. At some dealerships, salespeople are paid by how many vehicles they sell per month. Other dealers are increasing commission-based pay and offering monthly sales bonuses. Offering benefits, like free college tuition for employees who don’t leave the company and shorter workday hours, have helped some dealers keep salespeople on the job. And those dealers who have set “no-negotiation low prices” have removed the need for salespeople to have to haggle with customers.

Since so many salespeople at dealerships are new to their jobs, they often don’t know as much as they should about the cars they’re selling. There is so much technology to learn about each car when you’re new on the job. A Texas-based Hyundai dealership recently implemented online training for salespeople to minimize a problem that has cropped up partly due to high employee turnover: potential buyers knowing more about the cars than the salespeople themselves.

Case Questions

1. How have external forces affecting the HRM process impacted car dealerships’ recent experience with employee turnover?
2. Several of the compensation issues described in this chapter could be applied to this case. Which issues are they, and how do they apply?
3. Which of the dealerships’ attempts at reducing turnover do you think seems most promising? What else might they do to reduce turnover?
4. How, if at all, could realistic job previews for potential sales staff at car dealerships help reduce turnover?