Automotive Dealership Owners and Sales Managers

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QUICK FACTS about this job:

  • School Subjects: Business, Mathematics, Political Science, Psychology
  • Personal Skills: Communication/ideas, Leadership/management
  • Work Environment: Indoors and outdoors, One location with some travel
  • Minimum Education Level: Some postsecondary training
  • Salary Range: $50,000 to $117,748 to $30
  • Certification or Licensing: Voluntary (certification); Required (licensing)
  • Outlook: Much slower than the average
  • DOT: 290
  • GOE: 10.01.01
  • NOC: 0621, 6421
  • O*NET-SOC: 11-2022.00, 41-203 1.00

OVERVIEW

Automotive dealership owners are proprietors of retail businesses that sell cars exclusively from one or two manufacturers. Most dealerships are independently or family-owned franchises of an automotive manufacturer, such as Ford Motor Company or General Motors.In addition to retail services, dealerships provide maintenance ser vices, repair services, and financing. Sales managers coordinate and oversee the performance of sales staff so they meet monthly sales quotas set by the dealership.

HISTORY

For as long as there have been automobiles, there have been automotive dealerships and owners and managers that operated them. By 1951, nearly 47,500 automobile dealerships existed in the United States.

Industry consolidation has more than halved this number today, but the 21,200 dealerships nationwide account for about 14 percent of all retail sales in the United States. These dealerships employ more than 1.1 million people.

Many dealership owners and sales managers belong to the National Auto mobile Dealers Association (NADA), a nearly century-old organization dedicated to promoting the interests of domestic and international auto motive dealership owners. Many dealership owners that specialize in import cars belong to the American International Automobile Dealers, an association representing the economic well-being of more than 11,000 international name-plate dealerships.

THE JOB

To give the public easy access to view and purchase their vehicles, automotive manufacturers maintain franchised dealerships through out the United States. Automotive dealership owners manage the performance of their showroom and sales force, other departments, and act as a liaison between the manufacturer and consumers.

Dealerships are exclusive to a particular automaker, though they may offer cars from different lines. For example, a Ford dealership will have Ford models in its showroom, but may also have separate department and sales force to promote Lincoln, Mercury, or Land Rover models—other automakers operating under the Ford umbrella. Many existing dealerships are family-owned franchises; some have multiple partnerships; others have consolidated dealer ships into a chain representing multiple manufacturers.

The dealership owner’s primary focus is to keep the showroom and all other departments operating smoothly and profitably. They establish business policies including those relating to inventory, sales and commissions, and financing. Dealership owners deter mine the operating budget, which will dictate the size and variety of showroom inventory, sales force and support staff, and the setup of the physical building. They also develop seasonal promotions and advertising campaigns, often working with guidelines set by the manufacturer. Several times a year, they must represent the dealership at franchise meetings, where dealers receive training updates and other business support from the manufacturer. They also promote their dealership at automobile Conventions and trade shows.

Sales managers help the dealership owner manage the overall performance of the main showroom and staff. The most important responsibility of sales managers is the hiring and training of the showroom’s sales force and support staff. Sales managers assign duties and hours to employees, monitor their progress, evaluate their monthly sales performance, implement incentives and sales drives, and promote and increase base salaries or commissions when appropriate. When an employee’s performance is lacking, it is the sales manager’s duty to identify the problem and suggest needed changes. At times, the sales manager may have the unpleasant task of firing employees.

Many times, a customer will try to negotiate a lower price for a vehicle from a salesperson. The salesperson may try to counter with added price breaks or extra options at no charge. Oftentimes, the salesperson will have to confer with the sales manager regarding extra discounts off the invoice price. The sales manager has final say over financial transactions with a customer, and may also have influence on what financing options to extend to customers. While the best-case sales scenario is to sell a vehicle at its sticker price, sales people do not mind negotiating price. Sales commissions, monthly quotas, and “kick backs”—commission paid to the dealership from the manufacturer—are incentives to negotiate price to close a sale.

Automotive dealerships also have other departments that are often as profitable as their primary business of selling cars. The service department offers repair and maintenance work for vehicles. Services include periodic tune-ups and systems check-ups and repair, oil changes, brake repair, wheel alignment, and body work. A service department manager may supervise the work and performance of all service workers and technicians. Their duties include hiring and training of service staff, making work schedules, and establishing vehicle service policies and pricing.

The finance and insurance department often generates large profits for a dealership. A finance or insurance manager establishes relationships with financing and insurance companies, and in turn sells these products—auto loans, service contracts, extended warranties, and various credit insurance—to the consumer. This department often works closely with the sales department in offering these products when closing a car sale. The finance and insurance manager oversees the selling of service contracts and insurance policies to new vehicle buyers and arranges financing options for their purchase.

REQUIREMENTS

High School

Business, math, economics, and accounting courses will be the most valuable to you in preparing for business ownership. In addition, you will need to hone your communication skills, which will be essential in establishing relationships with automotive companies and customers. Take computer classes since it is virtually impossible to work in today’s business world without knowing how to use a computer or the Web. In addition, take as many automotive classes as possible. Marketing and advertising classes will be especially useful for aspiring sales managers.

Postsecondary Training

As the business environment becomes more competitive, many people in this field are opting for an academic degree as a way of get ting more training. A bachelor’s program, or at least an associate’s degree, emphasizing business communications, marketing, business law, business management, and accounting, should be pursued. Some people choose to get a master’s in business administration or other related graduate degree. Special business schools offer a one- or two-year program in business management. Some correspondence schools also offer courses on how to plan and run a business.

Some automobile dealership owners have degrees in sales or marketing; others have degrees in an automotive-related field. Sales managers typically have degrees in marketing, advertising, or a related field.

Aspiring dealership owners should be aware that is quite difficult to obtain a dealership. Many manufacturers often put those interested in becoming a dealer through an intensive training and interview process. General Motors (GM), for example, has aspiring dealers participate in a 12-month training session. Referred to as GM’s Academy Program, qualified individuals receive training in such areas as management, operations, and automotive retailing. Candidates must then undergo a thorough interview with GM officials, an assessment of their dealer skills, and a follow-up on available investment funding. Completion of the academy program does not guarantee future dealership opportunities. Manufacturers consider many factors when awarding a new franchise. For example, they take into account the number of existing dealerships that are currently being sold, if approval has been given for the establishment of new dealerships, and the number of qualified candidates already on the waiting list for dealerships.

The National Automobile Dealers Association also offers a comprehensive training program for future dealers and managers. For more information, visit http://www.dealeracademy.org.

Certification or Licensing

The National Independent Automobile Dealers Association offers the certified master dealer designation to used motor vehicle dealers who successfully complete a four-day program. Contact the association for more information.

A business license is a requirement in all states. Individual states or communities may have zoning codes or other regulations specifying what type of business can be located in a particular area. Check with your state’s chamber of commerce or department of revenue for more information on obtaining a license.

Other Requirements

Whatever the experience and training, a dealership owner needs a lot of energy, patience, and fortitude to overcome the slow times and other difficulties involved in running a business. Other important personal characteristics include maturity, creativity, and good business judgment. Business owners also should be able to motivate employees and delegate authority.

Sales managers should have excellent communication and persuasive skills. They should also be organized and able to delegate responsibilities to their employees.

Facts About Dealerships, 2009

• More than 1.1 million full-time workers were employed by auto mobile dealerships—1.1 million at new car dealerships, and 127,000 workers at used car dealerships.

• Sales and related careers made up 37 percent of jobs at dealer ships; installation, maintenance, and repair-related occupations, 26 percent; office and administrative support occupations, 15 percent; and transportation and material moving occupations, 13 percent.

• Approximately 50 percent of workers at dealerships had more than a high school diploma.

• Thirty-seven percent of employees worked more than 50 hours per week.

• The average number of employees at new vehicle dealerships was 53.

• The average annual earnings of employees at new vehicle dealerships was $47,191.

Sources: U.S. Department of Labor, National Automobile Dealers Association.

EXPLORING

Most communities have a chamber of commerce whose members usually will be glad to share their insights into the career of a business owner.

Join your high school’s business club, a group that may give you the opportunity to meet business leaders in your community. Con tact local dealership owners or sales managers and ask them to participate in an information interview. Discuss the pros and cons of business ownership, find out about the owner’s educational and professional background, and ask them for general advice.

You can also read industry publications, such as AutoExec (http://www.autoexecmag.com), to learn more about the field.

EMPLOYERS

As of 2006, there were 21,200 dealerships nationwide. Opportunities are available in all 50 states and in towns large and small. Approximately 28,000 sales managers are employed at automobile dealerships in the United States.

STARTING OUT

Few people start their career as an owner. Many start as a manager or in some other position within a dealership. An aspiring dealer ship owner should anticipate having at least 50 percent of the money needed to start or buy a business. Some people find it helpful to have one or more partners in a business venture.

The position of sales manager is also not typically an entry-level job. Most sales managers start their careers as automobile sales workers or in another position at a dealership. Visit http://www.showroom today.com for job listings and advice on career development.

ADVANCEMENT

Because an owner is by definition the boss, opportunities are limited for advancement. Advancement often takes the form of expansion of an existing business, leading to increased earnings and prestige. Expanding a business also can entail added risk, as it involves increasing operational costs. A successful business owner may be offered an additional dealership or an executive position with an automotive manufacturer.

Sales managers advance by becoming general managers of dealer ships, working for larger dealerships, overseeing more staff, selling more expensive and prestigious vehicles, or eventually owning their own dealerships.

EARNINGS

Earnings for dealership owners vary widely and are greatly influenced by the ability of the individual owner, type of vehicles being sold, other services offered, and existing economic conditions. Some dealership owners may earn less than $50,000 a year, while the most successful owners earn $300,000 or more.

General sales managers employed by automobile dealerships earned median salaries of $117,748 in 2005, according to the National Automobile Dealers Association. Salaries for new car sales managers ranged from $84,000 to $110,000, according to Automotive Careers Today, a coalition of all major automobile manufacturers and dealer organizations. Used car sales managers earned $82,000 to $106,000.

Benefits for sales managers depend on the employer; however, they usually include such items as health insurance, retirement or 401(k) plans, and paid vacation days.

WORK ENVIRONMENT

Automotive dealerships are usually open every day except Sunday and major holidays. Any professional working in this industry should expect long hours, especially during the evening and on Saturday. Busy times include the end of the month, when sales quotas are tallied, and during special promotions, such as a holiday or year-end clearance sales. Pressure or competition to sell is common among members of the sales force. At times, dealership owners and managers may have to contend with unsatisfied or difficult customers, or disputes between employees.

Dealership owners and managers work in comfortable office set tings, though their days are often hectic and demanding. As head management, they are often in the dealership until closing time— working 60-hour workweeks is not unusual. They often must travel out of town, or sometimes abroad, to attend conferences, trade shows, or to manufacturers’ headquarters or assembly plants.

Employment at automobile dealers is expected to grow 11 percent through 2016, according to the OUTLOOK

U.S. Department of Labor—or about as fast as the average for all industries. The automobile sales industry is tightly linked to the U.S. economy. When the economy is strong, more people purchase vehicles. When the economy is weak, people hold off on purchases, which affects employment at automobile dealerships—especially those that sell new vehicles. Employment growth for new car sales managers may be limited as the consolidation of new car dealerships continues. Nearly 67 percent of workers in this field are employed at dealerships with 50 or more employees, according to the U.S. Department of Labor.

FOR MORE INFORMATION

For industry information, contact:

American International Automobile Dealers

211 North Union Street, Suite 300

Alexandria, VA 22314-2643

Tel: 800-GO-AIADA

http://www.aiada.org

For information on accreditation and its dealer academy, contact:

National Automobile Dealers Association

8400 Westpark Drive

McLean, VA 22102-5116

Tel: 800-252-6232

Email: nadainfo@nada.org

http://www.nada.org

For information on certification, contact:

National Independent Automobile Dealers Association

2521 Brown Boulevard

Arlington, TX 76006

Tel: 800-682-3837

http://www.niada.com

For information on careers, visit

Automotive Careers Today

http://www.autocareerstoday.net

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