by Iris Winston
Remember Robin Williams as the slimy car salesman in the movie Cadillac Man? He slipped his business card to the grieving widow at her husband’s funeral and pressured her to buy a car at his dealership as soon as she collected her life insurance payment.
There may be little truth in the stereotype of the fast-talking, plaid-wearing, deal-chasing salesman, but the automobile-retailing industry, with some 350,000 employees across the country, recognizes that it has an image problem. It’s also perceived as having a high turnover of sales personnel.
“Turnover is an issue in the industry, although we have a number of salespeople who have been here for 20 years or more,” says Jim Low, Director of Marketing at Turpin Pontiac-Buick in Ottawa. “Turnover is generally based on the salespeople themselves. They tend to follow hot product lines and fresh customer bases. There’s also the performance issue. Sales figures and volume are very important in this industry.”
These are some of the reasons for a major industry study. The Canadian Automobile Dealers Association, the Automotive Industries Association of Canada, the Canadian Association of Japanese Automobile Dealers and the Used Car Dealers Association of Ontario launched a million-dollar study, 50 per cent funded by Human Resources Development Canada, to look at “all aspects of human resources in the auto industry, including training, employee turnover, image, recruitment and retention, new technologies management training and skills,” says Canadian Automobile Dealers Association Director of Public Affairs Huw Williams.
“The ultimate goal is to provide our industry with a road map to solving recurring human resources problems and to …improve our long-term performance,” he says.
Even those who are successful recognize that there are problems in the business of selling cars.
“It’s a hard business, mainly because the public carries an image,” says veteran salesman Greg Connolly, 51, who has been with Turpin Pontiac Buick for 22 years. “Rejection pushes a lot of people away from the car business. And it’s a harder business now” (than when he was a rookie salesman).
He says he considers himself fortunate to have started at the right time with the right employer.
“Cars were selling well in the 1970s,” he says. “And I got into the right dealership. The owner is the driving force. He’s very good to his employees and we have top-notch facilities.”
Turpin provides its sales force with a base salary, plus commission. (In most dealerships with this set-up, the base is from $800 to $1,000 a month.)
“That helps a lot of people, but in any dealership, if you don’t produce, you don’t stay,” points out Mr. Connolly.
“About 95 per cent of dealerships work on commission only,” says a new employee at another car dealership, who requested anonymity. “The way that the market is today, the customer gets a really good deal and the salesman doesn’t make any money.”
The business is particularly hard on women, says Mr. Connolly.
“There’s a lot of rejection in this business,” he says. “It seems to affect women more than men. Guys tend to get mad. Women tend to get hurt, though we’ve had some very successful saleswomen here. But a lot of women — and men — come and go in the business.”
New sales personnel must also contend with a steep learning curve and a highly competitive work atmosphere in most dealerships, he says. They must sound authoritative in describing the attributes of new vehicles, without having had much time to familiarize themselves with the automobiles’ key aspects. They also frequently hear that a customer belongs to another salesperson (“That’s my customer!”) among the group competing for commissioned sales and desperately trying to make their quota for the month.
“Long-term people have their own customers,” agrees Fausto Chiappa, who has been with three different dealerships during his three years in the business. “It’s hard to pick up stray customers.”
“It is a very competitive industry,” acknowledges Alan Hollinsworth of Carlingwood Motors, who is President of the Ottawa New Dealers Association. “But there’s still a place for commission, and there’s not necessarily a connection between commissioned sales and high turnover.”
Mr. Chiappa’s biggest problem with the industry is customer attitude. Currently, he is sales manager at Frank’s Auto, a Lada dealership specializing in economy vehicles, which, he says, have very little mark-up and, therefore, little room for negotiation.
“Customers are on the defensive,” he says. “They don’t trust you and believe the (car salesman) stereotype. When they’re bargaining on price, customers can turn vicious. People describe buying a car like pulling teeth. It shouldn’t be like that. It should be fun.”
However, this is often not the case in this very competitive industry in which the average work week is between 50 and 60 hours and the average salary is from $30,000 to $35,000. Top salespeople can make up to three times this amount. Many make considerably less, especially if they are working in a commission-only dealership.
In her 1997 book Car, author Mary Walton says that the average commission for a salesman of an $18,000 sale in the US in 1996 was around $140. If the buyer negotiated the invoice price, the salesman’s cut dropped to $50. While bonuses, based on sales numbers and other perks sweeten the mixture, selling cars remains a tough business.
“Occasionally, groups of guys get something like a trip to Las Vegas,” says Mr. Connolly, “but it’s nothing like (the promotions offered in) high tech.”
For him, giving fair deals and good service are their own reward. Over the years, they have brought him regular return customers.
“Price is really a non-issue these days,” says Mr. Connolly. “The margins are so small that customers now are looking for service.”
He credits that service aspect with his longevity in the business.
“I have a lot of loyal customers who come back to me,” he says. “Hopefully, that’s partly because of the way I treat them, but it’s also the dealership.”
Because of the general continuity in all areas of Turpin’s work force, customers are able to establish relationships with the staff who service their vehicles as well as the people who make the initial sales, he says.
“We hang on to our staff very well. We have a good working atmosphere, a good pay plan, a good owner, good everything.”
Despite the picture that Mr. Connolly draws, some of the public retain their negative image of auto sales people. Mr. Hollinsworth says that image is generally created by a minority.
“There is certainly a perception that we have a high turnover in the business,” he says. “To some extent that’s true, but the large percentage are stable and professional.”
He says that the sales force fits into three categories.
“There’s the low-profile, career-oriented salesperson who plans to stay a long time at one dealership,” he says. “They’re the backbone of the industry. Then, there’s the group dedicated to the industry but not to a particular dealership. They are still career-oriented sales people, but they tend to move with the hot product.”
It is the third group, representing around 15 per cent of the work force that he sees as the industry’s main problem.
“These are the people who come in looking at it as a stop-gap,” he says. “Their attitude is ‘I’m just going to make some money selling cars till a real job turns up.’ They find out that it’s not an easy job, move on quickly and are an expense to the industry.”
As they do not intend to stay long enough to develop repeat customers, but are keen to make a few quick sales, they may well contribute to the Cadillac Man-style image.
Automobile sales courses, such as the three-year Canadian Automotives Institute program run on the Georgian College campus in Barrie, help to weed out such non-career sales personnel, says Mr. Hollinsworth.
“Having a well-trained sales force is good for the industry,” he says. “People who go through develop a basic understanding of the industry and the set of (personality, attitudinal and educational) skills required to be successful.”
Monique Vallincourt, program manager of the Georgian College program, says that the program boasts a 97 per cent placement rate and relatively low sales staff turnover.
“About 60 per cent of the students go back to the dealership where they did their co-op training and get a permanent position there,” she says, pointing out that by the end of the three-year program, students have accumulated a full year of practical sales experience and have a clear idea of its demands and rewards.
Some discover that it is not the ideal career for them.
“I found out that I’m a terrible car salesman,” said Richard Thomas, after completing the course. “I know that the talk is to get into relationship selling, but I found that window dressing more than anything. But I found parts of the program useful anyway. It’s a business administration course that focuses on automotive-sales examples, but can be used in any facet of business.”
He is now the operations manager of a tool rental store in Toronto.
“It is a very competitive industry,” says Mr. Hollinsworth. “It’s over-dealered. It is not lucrative. Mark-ups are very low and margins are minimal. People are not just looking at selling a car and moving on to the next customer. They have to sell service too.”
“We would like to reach the level of the real estate people, who are licensed and regulated,” he adds. “And we are approaching that.” (This is, in fact, one of the possible results of the current industry study.)
Even so, selling automobiles will remain a tough business for the foreseeable future.