08 New Car Dealership

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Table of Contents

Industry Overview & Trends

When entering the automotive service industry, there are many different types of shops to choose from. This course covers six shop types to help inform a person entering into the industry the strengths and weaknesses of each type. Those that plan to enter the industry should do the research and choose a career path that best matches their personal strengths, weaknesses, and expectations.

The US automotive repair industry is huge with combined annual revenue of about $115 billion and about 160,000 service locations. New car dealerships currently have about a 25% market share of the automotive repair and service industry. This is a 5-10% increase over the past 20 years. In the past, some dealerships considered the service department a “necessary evil” that was a requirement to sell cars. With the profit margins dropping on new car sales, many dealers are taking a second look at the service department as a profit center.

Image 1: Typical look of a new car dealership service area

New car dealerships typically operate under a franchise agreement with the car manufacturers and are regulated by robust state-level franchise laws. The head of a local dealership is typically called the “Dealer Principle” and the number of dealerships that can be owned by a single dealer principle is typically limited by the manufacturer.

Often a dealership is owned by a dealer group which could include hundreds of dealerships that represent many different manufacturers. Working within a large dealer group could be an advantage if a worker likes to move periodically, yet still be able to work for the same company. A list of the major dealer groups is listed below.

Dealer Groups With 50+ Locations

Dealer GroupOutletsOwnershipVehicles Sold1
Penske Automotive Group Inc.260Publicly Held178,437
AutoNation Inc.235Publicly Held249,654
Lithia Motors Inc.209Publicly Held171,168
Group 1 Automotive Inc.184Publicly Held140,221
Sonic Automotive Inc.100Publicly Held93,281
Hendrick Automotive Group94Privately Held102,761
Ashbury Automotive Group91Publicly Held95,165
Larry H. Miller Dealerships64Privately Held61,097
Napleton Automotive Group52Privately Held35,045
Serra Automotive Inc.52Privately Held33,045
Greenway Automotive51Privately Held33,763
Ken Garff Automotive Group50Privately Held53,687
Data Provided by Automotive News
Footnote 1 : Based on 2020 new vehicle sales

Organizational Chart

The following organizational chart is typical of a dealership that is part of a dealer group (a company that owns multiple dealerships).

Typical Dearler Group Organizational Chart
  1. Many dealerships are part of a dealer group, but many are still independently owned/operated and the “Dealer Group” level would not exist in their organizational chart.
  2. The person that owns and operates a dealership is traditionally called the “Dealer Principle”. In some cases, the dealer principal may own several dealerships and a general manager is assigned to each dealership.
  3. Most large dealerships have a “Director of Parts and Service” position. In some cases, this person is not involved in the day-to-day running of the service department.
  4. Most dealership service departments have a tech that is dedicated as the “shop foreman”. While the shop foreman does produce some work, they are also compensated to handle difficult situations and to supervise less experienced techs. Some dealerships use the team approach with each team having a lead tech that plays the role of Shop Foreman within the group.
  5. At the automotive tech level, techs are further categorized by their skill levels which is closely tied to their factory training record.

Tech Positions

A Tech, B Tech, C Tech Levels

At the most basic level, dealerships may categorize their techs into the three levels that are common in the aftermarket service industry and shown in the list below. These three levels are covered in more detail in the Shop Careers Lesson.

  • A Tech – Highest Skill Set (Drivability, controller area networks (CAN) and emissions diagnostics)
  • B Tech – Mid Level Skills (General repair work)
  • C Tech – Entry Level Skills (Maintenance and basic part replacement)

Factory Training Levels

A significant amount of warranty repairs are performed at new car dealerships and the dealer is reimbursed for these repairs by the manufacturer. Most manufacturers will not reimburse the dealer unless the repair is performed by techs that have completed the OEM training on the system. This is a requirement that transcends a tech’s ASE Certifications or whether the shop foreman considers the tech an A, B, or C level tech.

Service Information System

All manufacturers have robust, web-based service information systems and are typically available in each service bay. One of the advantages of working at a new car dealership is the simplicity of working with one manufacturer’s information system.

Training Programs

Fundamentals Training – General

There was a time when a person could enter the automotive service industry without any training and “figure it out” over time, but those days are gone. Modern automobiles are extremely complicated and include complex mechanical, hydraulic, electrical, and electronic systems. A person entering the industry today without at least some fundamentals training is in for a frustrating career and will most likely leave the industry over time.

Fundamentals Training – Manufacturer’s Programs

One of the best options for fundamentals training is an A.A.S in Automotive Technology (two-year program) from a state-supported community college. Many colleges also offer manufacturer’s programs, such as GM ASEP, Ford ASSET, Toyota T-10, and Honda PACT that place you in the manufacturer’s dealership for hands-on training as part of the program.

For more information on post-secondary automotive training programs visit the Public School Training Programs Lesson.

Continuing Education Training

Continuing education training at a new car dealership is provided through the manufacturer’s online training/information system, and in some cases, with hands-on training at a manufacturer’s training facility.

Employer Training Plan / Benefits

Some of the points that should be addressed when evaluating a shop as a potential employer.

Training Plan

  • Does the potential employer have a plan (preferably written) on how to keep the shop’s technicians trained on emerging technologies?
  • It is ultimately the shop owner’s responsibility to set the policy on training and a serious commitment to ongoing training should be in a written training plan.

Training Budget / Funding

  • Does the shop have a plan to fund upgrade training?
  • What costs is the shop willing to pay for?
  • The cost to enroll in the training
  • The cost to travel to attend the training
  • The lost wages while a tech attends training

Training Incentives

  • Is there an incentive plan for techs to become trained at higher levels

Fringe Benefits

Fringe benefits in the automotive service industry shouldn’t be much different than other responsible employers in the technical services industry. In reality, the automotive repair industry is in competition with more than just the other shop down the street. They are ultimately competing with other transportation and service-related careers such as:

  • Heavy Equipment / Diesel Technician
  • Aircraft Mechanic
  • Wind Turbine Technician
  • Industrial Machinery Mechanic