Selling Cars in the Age of Chip Shortages: Online Discussions and More Bargaining

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The global chip shortage has reduced vehicle inventories and left dealerships with few cars to sell. It also left car salesmen and women with less to do on the dealership lot.

Dealers laid off thousands of sellers at the start of the pandemic. While some have been rehired, around 70,000 people who worked at new car dealerships have been permanently laid off.

For those who remain, work has been transformed by both pandemic restrictions and an accelerated shift to online shopping. Salespeople who once spent days prowling around dealerships offering test drives are now fighting over leads online and blaming frustrated customers for the chip shortage.

It wasn’t all bad, say dealers and sellers. Short inventories have reduced haggling, and fewer sales staff means some are making more money on the job, which typically earns between $ 40,000 and $ 60,000 a year, depending on the commission.

The new normal could last for years as dealerships work well with fewer people, said Marc Cannon, executive vice president of AutoNation, based in Fort Lauderdale, Fla. Inc.,

the largest publicly traded chain of car dealerships in the country. AutoNation cut nearly 4,000 employees last year, most of them at dealerships.

“We are not going to go back to pre-pandemic employment levels,” Cannon said. “Why immediately replenish the staff if you are working more efficiently?” “

Employment at franchised auto dealerships in the United States fell from 1.15 million in February 2020 to less than 900,000 two months later, according to the National Automobile Dealers Association. Some jobs were added in the summer of 2020, but dealership employment has been stuck at around 1.08 million workers in the past year, according to association data.

Dealerships are also cutting back on their CFOs, said David Rosenberg, owner of New England chain DSR Motor Group. Its concessions have reduced the number of business leaders – who earn about $ 110,000 a year between salary and commission – by about 40%. He has already employed around five managers per dealership; now that number is around three, he said.

“With the chip shortage there is less volume to handle and because the profit levels are so high, now is a good time to experiment with staffing,” he said.

The number of semiconductors in a modern car, from ignition to brake system, can exceed a thousand. As the global chip shortage continues, automakers from General Motors to Tesla find themselves forced to adjust production and rethink the entire supply chain. Illustration / video: Sharon Shi

Car salespeople now spend less time waiting for customers to walk through the door and more time on computers, chatting with people online to answer questions about what’s available in the lot, or delivering cars purchased online.

Sellers don’t really negotiate prices because the shortage of cars means customers have to pay the sticker price, or almost, said Kyle Hunter, part owner of the Meador Dodge Chrysler Jeep dealership in Fort Worth, Texas. “Much of the bargaining went out the window,” he said.

Selling cars has long required long shifts, weekends at the dealership, time-consuming communications about car pricing and financing options and work on commission pay, said Mark Rikess, director. general of Rikess Consulting, which advises dealers. The job required charisma, self-confidence and bordering on insistence, he said, adding that it helps to have a great personality.

Today’s auto sales roles require more technical knowledge, as well as analytical skills to rank leads from the web, Mr. Rikess said. Many dealerships are trying to turn their stores into delivery and service centers, where customers have the option of completing their purchase transaction online and then picking up the car there.

Nick Downey, a 32-year-old car salesman at White River Subaru in White River Junction, Vt., Said he spent days showing customers around the lot, where between 100 and 150 new vehicles were parked and ready to go. purchased. Now he is monitoring phones and answering customer questions in online chat rooms about details of the few cars available and new orders.

He says he has become a pro at explaining the new car landscape resulting from the chip shortage.

Employment at franchised auto dealerships in the United States fell from 1.15 million in February 2020 to less than 900,000 two months later, according to the National Automobile Dealers Association.


Photo:

David Paul Morris / Bloomberg News

“The majority of business is generated from the Internet,” he said, adding that his salary has remained stable as higher car prices make up for the lower volume he sells. “We’re starting to move away from the ‘we’re looking to get the customer and get the upper hand’ stigma. We are just trying to give a good experience.

Used car dealers have a similar experience, although they are often busier as buyers unable to find what they want in new vehicle showrooms browse used car lots.

Abe Samari, director of retail strategy for Swickard Auto Group, which operates dealerships in several states, said sales of pre-pandemic cars were around 70% new and 30% used. Now it’s reversed.

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Quotas for new car sellers now include used cars, which were previously ignored because they sold so little. Some salespeople are still hitting their compensation targets by selling fewer cars because used vehicle prices have jumped, Samari said. He believes that the wages have increased for most car salesmen.

David Smith, CEO of Sonic Automotive Inc., in Charlotte, NC, which operates about 100 dealerships in the United States, laid off about 1,500 of its 9,000 people last year, many of whom were in sales positions. . The smaller staff are more efficient, and salespeople were selling around 18 cars a month instead of the eight to 10 they sold before the pandemic, he said.

“We tried to keep the ‘A’ players and they are a lot more productive,” he said. “I think they’re happier to earn more money.”

Buying and Selling Cars During the Pandemic

Write to Patrick Thomas at [email protected]

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