The Generation Gap That Threatens Dealership Service Operations

by Kevin Donovan

There is a perfect storm brewing in the American labor market that’s posing particular problems for auto-dealer service and maintenance operations. Mechanics are aging out of the labor market, and there is a dearth of young, qualified service technicians to take their place. Demand for fresh blood is high, but low starting pay in a physically demanding work environment isn’t attracting workers in numbers enough to fills the holes. Dealers are left wondering where the next generation of talent will come from.

“The problem is that we don’t have many young people,” Chris Rudden, assistant manager of service and repair at Paul Conte Cadillac in Freeport, New York told DCG News. “We have nine service technicians, and most are 55 or older. We currently have nine master techs and only three trainees. We have a hard time finding qualified people.”

As the American auto industry evolves into a more technologically sophisticated world of computer diagnostics, many younger people don’t know how to drive a car, let alone change a spark plug.

To fill the gap, manufacturers and downstream dealerships are actively working with trade schools to train future mechanics in the skills needed to have a solid, high-paying career – and then convince them to stick around.

AutoNation, Inc., the nation’s largest retail franchise auto dealer, recently announced it plans to hire more than 500 service technicians and fund their training. Low unemployment, lagging technical school enrollment and the retirement of older mechanics were cited as the reasons for the decision.

“With the increased sophistication of automobile technology, demand for talent with up-to-date proficiency in computer diagnostics and related skills continues to grow,” said AutoNation said in a news release. “There is a tremendous career path for automotive service technicians as the rapid pace of advancements in-vehicle technology continues.”

Record low unemployment, while generally positive for auto dealers, means young people are pursuing careers away from a service pit.

“Banging on a line is tiring work,” Paul Conte Cadillac’s Rudden told DCG News. “It takes 10 mechanics to rotate the tires on an Escalade. With the rims, the tires weigh 40 pounds each.”

The pay, while ultimately very competitive for brand-certified technicians with years of experience, typically starts at minimum wage for entry-level positions. Higher paying career paths for similarly trained mechanics compound the problem for auto dealerships.

“Everyone leases now, so it’s not as lucrative as it used to be,” said Rudden. “People may need new brake pads, but if they’re turning in their [leased] car in six months, why bother replacing them? There isn’t much [higher-paying] off-warranty work.”

As with every aging generation passing the torch to the next, some feel younger workers lack the work ethic to succeed.

“The problem nowadays is kids don’t have the drive, the tenacity to stick with it,” Alberto Lopes, service and parts director at Sunrise Volkswagen in Lynbrook, New York told DCG News. “They only see the right now. I got into this business with an inspector’s certification and became a master technician in five years. Once you get that, you can grow your career.”

Many young people are graduating from technical schools without a specific skill set. The ones who do have the skills are looking for even higher paying careers, Edward Stella, an automotive technology teacher at the Joseph M. Barry Career and Technical High School in Westbury, New York, told DCG News.

“My more intelligent students go on to Associates Degree programs in automotive and applied mechanics, rather than entry-level positions,” he said.

Barry Tech is a not-for-profit Board of Cooperative Educational Services (BOCES) school offering secondary and adult-education programs tailored to the auto repair industry, and its graduates are sought after by local dealerships. But many become disinterested with the job and leave before advancing out of entry-level positions.

“It isn’t what they expected,” Stella added. “There’s a big difference between liking cars and working on cars.”

Some of the fault lies in the dealerships themselves.

“We teach the basics, tool usage and getting a car up on the rack,” said Stella. “But a big problem is dealerships stick new hires on the oil lube and aren’t putting them in a position to learn. There’s no substitute for on-the-job experience. Expectations are too high from dealerships, especially independent dealers,” which sell and service a wide variety of makes and models, he added.

But how does one gain valuable experience without dealerships willing to offer it? Dealership repair and maintenance shops aren’t known for engaging in the kind of trial-and-error system it takes to learn.

“You can’t just start them off on an A or B pit,” said Sunrise VW’s Lopez. “Dealerships can’t afford to invest in training.”

Barry Tech’s Stella agrees, noting, “It is very easy to make a very expensive mistake. A blown power-train control module (PCM) grid, essentially the brain of a car, can cost $700 to replace.”

Seeking to fill this labor gap are private, post-secondary education companies like Lincoln Educational Services, parent of Lincoln Technical Institute, with 24 campuses in 14 states nationwide focusing on multiple vocational programs, including automotive mechanic training.

“It’s a perfect storm of a skills gap and the demand for service techs that has dealers squeezed,” Scott Shaw, president and CEO of Lincoln Educational Services, told DCG News. “The challenge [for auto dealers] is to get techs with a high skill level. “

Lincoln Tech has partnered with vehicle manufacturers so students can train on brand-specific proprietary diagnostics equipment and enter the workforce certified to work at a franchised dealer repair shop. Manufacturers partnered with Lincoln Tech include Audi, BMW and its Mini subsidiary, Mazda and Volkswagen. The curriculum includes fundamental elements of scan-tool training.

It generally takes 13 months to complete the basic coursework, with an additional two to three months for a brand-specific certification. Lincoln boasts an 82 percent placement rate for graduates of its auto technician program, and as high as 89 percent for the Audi-branded certification, noted Shaw.

“All our curriculum and training is over a computer, which we provide,” Shaw added. “The most difficult coursework is in electrical. That’s what breaks down most frequently.”

Sunrise VW’s Lopez, for example, seeks graduates of a manufacturer’s branded certification program, such as the BMW Step program. “The Step program is intense training. More book learning than hands-on training,” he said.

Competing for the same pool of trained auto mechanics are local municipalities, which offer higher pay, more relaxed working conditions and the chance for significant overtime pay.

“Dealerships lose mechanics to municipalities,” said Barry Tech’s Stella. “They are paid more per hour regardless of work. Less demanding work environment and overtime pay.”

Paul Conte Cadillac’s Rudden offered a similar observation.

“My son-in-law was here for about a year,” he said. “Then he got a job fixing buses for the [New York State] MTA.”

Kevin Donovan is a freelance reporter based in New York. He has previously worked for Dow Jones & Co. and Thomson Financial, and his work has appeared in American Banker, The Bond Buyer and The Wall Street Journal. Mr. Donovan graduated with a B.S. in Economics from The University of Massachusetts at Amherst in 1997.