Tackling turnover in dealerships: Strategies to improve recruitment and retention

Many Canadian auto dealerships have found themselves plagued with the same problem: high employee turnover.

According to the Canadian Automobile Dealers Association’s 2024 National Workforce Study, the current employee turnover rate is about 31 percent, higher than the average Canadian voluntary turnover rate of 11.9 percent (as per imercer).

This 31 percent represents a four-point drop since 2021. And with this many people leaving their roles, Canadian dealerships face serious challenges in keeping their team engaged and satisfied.

It begs the question: how can you tackle this turnover issue and create an environment where employees want to stay?

Let’s explore why your employees are leaving and examine some practical strategies you can use to improve your recruitment and retention, particularly for Gen Z workers.

Why is turnover high?

Let’s start by addressing why dealerships are seeing a 31 percent employee turnover. First, there’s the environment itself.

Survey respondents — particularly Gen Zs and Millennials — reported long hours and weekend shifts, commission-based pay structures, and poorly defined career paths as major drivers for their exits. Meanwhile the exits of Gen X and Baby Boomer employees were most often related to retirement. The report found that Gen Z turnover is three times that of Gen X and Baby Boomers.

Here’s the thing: the next generation of our workforce wants more flexibility in their work arrangements. They crave balance between their work and personal lives, which makes dealership roles like sales reps and service technicians less appealing.

As discussed in a recent webinar, called “The Future of Talent in Canadian Dealerships — Understanding your CADA Workforce Study Results,” these jobs often require employees to be on-site, making hybrid or remote work nearly impossible. Unlike desk-based roles, positions like lube technicians and sales consultants demand hands-on interaction with customers and vehicles. As a result, dealerships struggle to offer the type of flexibility workers now expect from their employers.

Additionally, many employees — especially your next generation of workers — expressed difficulty in envisioning a clear career path within the dealership. They struggle to see how their current roles connect to future opportunities. They want more than just a paycheque, they want career mobility, learning opportunities, and a sense of purpose in their work.

Create a flexible and attractive workplace

So, how can dealerships adjust? One solution is to rethink scheduling.

While it may not be possible to offer remote work to all your roles, there are creative ways to introduce flexibility. For instance, dealerships may want to consider offering split shifts or shorter bursts of work. Much like the restaurant industry will split shifts during peak hours, your dealership can implement similar strategies, allowing your team to have more control over their schedules.

In addition to flexible hours, providing mental health and wellness programs can make a consideration impact on retention. Offering resources for mental health support not only shows that your dealership values its employees, but it helps to reduce burnout.

And let’s not forget continuous learning. One of the biggest mistakes a dealership can make is assuming their people only want to climb up the ladder. Today’s workforce is interested in upskilling — like learning new skills, upgrading the ones they already have, and / or exploring different aspects of the business.

Providing your workforce with opportunities for professional development, whether it’s through mentorship or cross-department training, not only helps to keep them engaged — it gives them a reason to stay.

Build clear career paths

Career progression is key when it comes to keeping your best talent. Without a clear path forward, employees — especially Gen Z — are quick to move on to other opportunities.

Your dealership should focus on creating structured career paths, offering employees a clear view of what the next steps could look like. This doesn’t have to be a complicated endeavour. You can start by providing a clear job description that includes potential paths forward or discussing career goals during performance reviews with your existing team members. Employees should know exactly what skills and experiences they need to advance within the organization.

Career paths aren’t only about promotions. They’re also about giving your workforce opportunities to move laterally within the business. For example, a service technician might be interested in transitioning to a sales consultant role, or a sales consultant might want to explore a customer service position. Offering these types of opportunities can make a considerable difference in retention rates.

Strengthen employee engagement

It’s not just about the work being done. Employee engagement is another critical piece of the retention puzzle. One easy — and often overlooked — strategy for improving engagement is conducting “stay interviews.”

Unlike exit interviews, which only happen after someone has decided to leave, stay interviews focus on the employees who are still with your team. These discussions give your employees a chance to share why they stay, what they love about their job, and what could be improved.

These conversations are incredibly valuable because they help you address small issues before they become a reason for leaving. Stay interviews also leave your workers feeling heard and appreciated, which can go a long way in improving retention.

Leadership also plays a huge role in employee satisfaction. Empathetic leadership — leaders who truly understand and care about their employees’ needs — can make all the difference. Dealership leaders should prioritize self-awareness and develop the skills needed to support their teams, both professionally and personally.

Lastly, mentorship programs can be a game changer. By pairing newer employees with more experienced staff, you create an environment where knowledge sharing becomes part of the culture. Mentorship doesn’t have to be formalized either, it can happen naturally through coffee chats, ride-alongs, or team-building events. These relationships help employees feel connected to their work and to each other.

Enhance employment branding

In today’s job market, a strong employment brand can be just as important as offering competitive pay. Job seekers now expect to know what it’s like to work at a company before they even apply. However, many dealerships focus almost exclusively on selling products and services, neglecting to showcase what it means to work at your operation.

Take a look at your website. Does it clearly explain what it’s like to work there? Does it highlight employee benefits, company culture, and values? If not, it may be time to change that. If possible, make sure your website includes testimonials from current employees, highlights any community involvement, and provides a clear path for applicants to ask questions about what it’s like to work at your dealership.

The first steps to reducing turnover

Reducing turnover and improving retention starts with a few simple changes. Any easy first step would be starting to schedule stay interviews to understand why your current employees stick around. From there, look for opportunities to offer more flexible scheduling and invest in wellness programs. And take the time to develop clear career paths so employees can see their future with your dealership.