Service departments account for and absorb most of a dealership’s losses in sales and fixed expenses. That is not going away anytime soon. With new car front-end grosses declining, most dealerships will increasingly rely on service business to, well, stay in business.
The problem isn’t a lack of service business, but a shortage of qualified technicians to perform it. Also, according to a recent article in Automotive News, the race to acquire technicians may just be outweighed by the race to retain the ones dealerships already have.
With warranty and recall repairs on the rise, the sheer volume of service business has skyrocketed. However, according to that same Automotive News article, many technicians (especially those paid on a flat-rate pay plan) are dissatisfied and do not expect to remain in this career for more than a few years. In fact, in a recent survey of more than 35,000 service technicians, 52 percent stated that they wouldn’t recommend their career to anyone else, which is an increase from last year.
Other than the flat-rate pay plan, one of the critical points of contention is the divide between dealer management and technicians. Dealer leadership tends to want incentive-based pay plans which, ultimately, lead to staff paying their own salaries. From a business perspective, this is understandable. However, these type of pay plans can be dangerous as, by making a technician work faster to get paid more, work can be of lower quality.
Furthermore, in addition to the regular service department workload, millions of recalls need to be fixed. There are still a little under 17 million vehicles that have not had their defective Takata airbags replaced. And, as reported in the State of Recalls Report for 2018, recalls aren't going away anytime soon. Last year recalls increased over 2017 levels, which was a record year. The sad facts are that those same technicians who feel overworked and underpaid are staring at a long line of recalled vehicles in the service drive.
With more than 50 percent of technicians surveyed reporting that they do not like their jobs and do not plan to stay at them longer than a few years, the future of recall repairs and compliance is at risk. I understand that dealership profitability is vital. However, I can guarantee you that, if those experienced technicians leave while new, inexperienced technicians (supposedly) take their place, dealerships will find that the decade of lucrative service revenue will swiftly dwindle, leaving millions of vehicle owners at risk.
Perhaps it's time to reevaluate compensation plans for technicians to not only shore up the staff dealers already have but to attract future technicians that dealerships will need to ensure profitability.