SAN FRANCISCO -

One of the most profitable areas of the dealership — if not the most profitable — is the service department. And what is the backbone for a successful service department? The people, and that, of course, includes your technicians.

Unfortunately, there appears to be a widespread shortage. One of the most consistent comments made by executives at the largest public dealer groups for the last several quarters is the fact that many are struggling to find qualified technicians.

One of those retailers — Asbury Automotive Group — revealed its most recent plan to cull the shortage of automotive technicians at the company in mid-March. The auto group says it plans to hire between 200 and 400 technicians over the next year or two. In a conference call last fall, AutoNation executives discussed how technician hiring efforts paid off for them. 

Dealer groups, essentially, are striving to answer this question: who’s going to work on all of these vehicles when they return for service? Even with steady unit sales growth, service revenue remains an integral part of dealer profitability, and you need to attract the right service personnel before you can facilitate the customers.

And that’s where it can get tricky. Ted Kraybill, the president of ESI Trends, fleshed out some details from the NADA’s recent 2014 Dealership Workforce Study Industry Report with Auto Remarketing at the last NADA Convention.

According to Kraybill — who designed the study — your dealership will need to adjust to the new predominant demographic for technicians looking for jobs: Generation Y.

“Obviously, with technicians and service advisers, you have more and more of the millennials that are coming into the service department,” Kraybill said. “Of new hires, into technician positions, over 50 percent of the new hires are millennials. Which would be, I think, expected, but it is also saying that perhaps more of the older, experienced techs are staying. They’re not jumping around as much from dealership to dealership.”

The most common and apparent method to attract talent in such an environment is to offer higher wages. According to Kraybill, technician positions saw a 2-percent increase in compensation in 2014 compared to the year before.

Those in certain parts of the country should note that this isn’t only due to competition within the automotive space — the increased need from other industries, especially in oil field services, has led to the leaching of technical talent into other sectors, according to Kraybill.

Another tactic becoming more common, which Kraybill warned about, is retention incentives.

“More and more dealerships are adding retention bonuses,” Kraybill said. “But they’re only doing it, really, for technicians, which is causing some problems.”

Kraybill said that the retention bonuses he’s seeing, which are given after the technicians stay with the company for a certain amount of time, range from small yearly bonuses to sizeable bumps in the technician’s flat-rate pay. This, however, doesn’t always go over so well with the non-technician staff he has surveyed.

“But we see comments coming back from service advisers, parts employees, and so forth,” Kraybill said, “and they say, ‘Why don’t we get retention bonuses? Why is it only the techs?’”

It also makes sense, in this situation, to look at who can actually afford to pay technicians these higher rates. According to Kraybill, 2014 saw a decline in the gap between what the largest dealer groups (with more than 40 dealerships) and what the medium dealer groups (between 10 and 40 dealerships) are paying their staff.

“What we’ve seen is that the large dealer groups were paying higher salaries than the other two categories,” Kraybill said. “But in this past year, across all positions in a dealership, salary growth was only 1.3 percent — that was down 3.4 percent the prior year. But within that 1.3 percent, most of the salary growth was at the midrange dealer groups.”

This does, however, leave out a piece of the picture — the dealer groups with less than 10 rooftops and the individual dealers, who cannot always afford to raise salaries to attract talent.

“The smaller dealer groups, the dealers that have one, two or three stores, they can’t necessarily compete with what the big guys are offering,” Kraybill said.

So what else can you do to sweeten the job offer? Fortunately for the smaller dealers, money isn’t everything to the growing demographic of technicians.

“Pay isn’t a high priority with millennials,” Kraybill said. “They come into a dealership and in an interview they’re more likely to ask questions about work schedule, time off, flexibility and training. Millennials are all about balancing job and free time because they figure that they’re going to be working for a long time.”

According to Kraybill, highlighting your ability to hone millennials’ marketable skills is key. Smaller dealers, if they make it part of its “employment brand,” can often spend more time training individuals and speed them through the ranks, in addition to their other advantages.

“They need to compete on other things, like more of a family culture, because it truly is a family business,” Kraybill said. “They need to compete, perhaps, on allowing more flexibility, more job- and personal-life balance. They can make community service and involvement in the community as part of their employment brand.”

Editor's note: Auto Remarketing editor Joe Overby contributed to this article. Look for more fixed ops coverage in our April 1 issue.