Why Car Dealerships Experience the Highest Turnover Rate
Drawing on insights from the 2021 NADA Dealership Workforce Study: National & Regional Trends in Compensation & Retention, several key factors explain why turnover remains high in franchised vehicle dealerships.
Reasons for High Turnover
1. Volatile Economic Conditions & External Disruptions
- COVID-19 furloughs and terminations created unprecedented instability
- Supply chain issues led to inventory shortages, affecting sales roles
- Economic uncertainty made employees seek more stable employment
2. Income Is Variable / Pay Structures Add Stress
- Commission-based roles create financial uncertainty
- Fluctuating earnings due to inventory or demand shifts
- Unpredictable compensation makes long-term planning difficult
3. Long & Unpredictable Hours, Job Stress, and Burnout
- Weekend and evening work requirements
- High customer demands and pressure to meet sales targets
- Work-life balance challenges leading to burnout
4. Key Positions Endure Especially High Turnover
Commission-based roles and fluctuating earnings create additional challenges for retention.
Annualized Turnover by Position: Luxury vs Non-Luxury Dealerships
5. Demographic & Structural Contributors
- Higher turnover for female employees (e.g., female sales consultants)
- Younger employees (Gen Z, Millennials) leave due to unclear career paths
- Unpredictable compensation and demanding hours drive away talent
Calculate Cost Loss from High Turnover
1. Recruiting & Hiring
- Advertising costs
- Recruiter fees
- Background checks
- Interview time
- Typical spend: $3,000-$5,000 per new hire
2. Onboarding & Training
- Formal training requirements
- Industry average training cost: $7,500-$10,000 annually
- Much of this investment is wasted if an employee leaves early
3. Lost Productivity
- New hires take 3-6 months to ramp up
- NADA estimates lost productivity can equal 25-50% of annual salary
4. Customer Experience & Satisfaction
- High turnover disrupts customer relationships
- Can reduce long-term gross profit by $50,000-$100,000 over their lifetime
5. Team Morale
- Constantly replacing staff increases workload for remaining employees
- Leads to burnout and more turnover
6. Inventory & Sales Impact
- Lack of experienced sales consultants
- Can lead to $300,000-$500,000 in lost annual vehicle sales revenue per unfilled sales role
Annualized Losses
Given the overall turnover rate in 2020 was 40%, and dealerships employed ~1.06 million people, the industry likely lost billions of dollars annually just from turnover.
If even 25% of the 500,000+ turnovers were sales consultants, at ~$50,000 each, that’s $6+ billion lost per year in the U.S. alone.
Our Survey Methodology
At Star4ce, we design our survey process to capture authentic, real-time insights from dealership employees—in the most convenient and trusted way possible.
Mobile, Anonymous, and Flexible
Employees can complete surveys anytime, anywhere from their phones. Responses are anonymous, ensuring honest feedback without fear of repercussions.
Context-Rich Responses
Surveys are accessible throughout the workday, allowing for genuine workplace insights captured in real-time as employees experience their work environment.
Built on Trust
We partner with dealership leadership to communicate the confidential nature of surveys, building trust and encouraging participation.
From Data to Action
Our methodology transforms feedback into actionable insights that help improve employee satisfaction, strengthen culture, and reduce turnover—turning data into real results for your dealership.