Slumping sales in the second half of 2000 hurt dealership employees who depend on commissions from new-vehicle deals.
General managers, new-vehicle sales managers and sales people at average size dealerships took hits in 2000, according to the results of the Ward's Dealer Business annual salary survey.
Average general manager compensation dropped from $100,480 in 1999 to $97,414 in 2000. New-vehicle sales manager pay slipped from $83,245 in 1999 to $81,225 last year. The average new-vehicle sales person's pay dipped slightly from $51,976 in '99 to $51,630 last year.
Bonuses, too, were down for these positions. The average general manager bonus fell to $41,103 from $50,959 the previous year. New-vehicle manager bonuses dropped from $20,000 in 1999 to $19,877 in 2000. Bucking the trend were the bonuses paid to new-vehicle sales people. Their bonuses increased from $7,057 to $8,463.
“It's the commissions, I suspect,” says David E. Cole, director of the Automotive Research Center at ERIM in Ann Arbor, MI. “If sales are soft, they're going to lose commissions, and a significant part of their compensation is based on commissions.”
But wasn't last year a record sales year? “The early part of the year was good, but the latter part of the year was poor,” says Mr. Cole who adds that many dealerships added staff at the beginning of the year when sales were brisk. The dip of salesperson pay may be attributed to spreading the commissions among more people. “So even if sales stayed the same, the commissions would be spread out farther and show up as a loss for the individual position.”
Gary Ackerman, president of the Gaudin Automotive Group in Las Vegas, NV, says, “Our new-vehicle grosses are down and that'll drag those pays down.”
Mr. Ackerman says he keeps his people from losing too much in down periods by paying all commissions based on the grosses of the entire dealership, rather than department by department.
General managers, new-vehicle sales managers and new-vehicle sales people at larger stores did significantly better than the average. More than 52% of the general managers at stores that do more than $40 million in annual business made more than $145,000. Almost a quarter of the new-car managers made more than $85,000 at the larger dealerships. New-car sales people stayed pretty close to the average, even at the big outlets.
“Our new-vehicle grosses are down and that'll drag those pays down.”
— Gary Ackerman
Gaudin Automotive Group
Ward's annual survey, which was conducted by Intertec Research and polled more than 300 dealers of various sizes from all over the country, also showed that the trend away from straight commissions continues, although at a slower pace than in years past. In 1998, 60% of a dealership's personnel were on straight commission. In '99, it was down to 50%. In 2000, it's at 49.5%.
This can be attributed to the dealers' willingness to be flexible when it comes to compensation packages in order to attract a different sort of sales person, who might be more customer-friendly.
Mr. Ackerman offers new employees either a full-commission deal or $1,500 per month plus $100 per car sale. In the first year, people can switch to full commission at any time. After the first year, they only have the opportunity to switch annually.
Mr. Ackerman says the salary attracts females and family people rather than workaholics, but having salaried sales people puts more pressure on the sales managers to keep people motivated.
At his older store, Gaudin Ford, most people eventually switch to straight commission. At the newer store, Ford Country, 40% of the sales staff is on salary.
The slower new-vehicle market may have affected some other areas of dealer compensation. According to the survey, fewer dealers are offering paid vacations, paid holidays, deferred compensation plans, medical insurance and dental insurance. More dealers, however, are offering employees paid sick leave and demos to drive.
New-vehicle sales people still are the kings of spiff, with almost 91% of dealers offering these incentives. Cash remains the spiff of choice, with bonuses and dinners closely trailing.
Positions other than those dependent on new-vehicle sales commissions showed increases in pay from 1999 to 2000.
Used-vehicle sales managers saw a slight increase from $80,023 to $80,421. Their bonus increased from $18,767 to $23,225. Used-vehicle sales people saw a rise from $49,731 to $51,276. Their bonus went from $7,117 in 1999 to $8,944 in 2000.
Internet sales people have been seeing a steady increase over the last three years. In 1998, the average pay was $41,667. In 1999, it jumped to $44,760 and last year went to $47,989.
F&I managers averaged $75,102 in salary and $19,597 in bonuses. That's an increase in pay from $69,824, but a smaller bonus, from $23,497, which also can be attributed to waning sales at the end of 2000.
Parts department managers increased to $53,460 from $49,161. Service and body shop managers checked in with an average compensation of $61,610 and $54,058, respectively. Both were increases.
Service technicians improved from $43,282 to $44,061. Body shop techs made $43,188 in 2000, compared to $41,564 in 1999.
The average office manager made $46,540 last year, up from $44,003 the pervious year. Their bonuses also improved from $5,174 to $6,032. The controller/bookkeeper position made an average of $58,764, up from $55,962 in 1999.