Dealer Danny McKenna's two Volkswagen stores sit on prime property near Los Angeles, making it a breeze for him to hire and keep people.
VW's diesel emissions cheating scandal has left desirable diesel vehicles in stop-sale status and led to lower sales of other new cars, prompting many sales staffers at some VW dealerships to look for greener pastures, dealers and consultants say.
"Everyone now is saying, "If you want me to work for you, you have to guarantee me money,'" said McKenna, owner of McKenna Automotive Group in Norwalk, Calif.
And employees will leave for the promise of more money.
That happened to McKenna on June 29, when his general manager left and took eight salespeople with him to a competitor for the promise of three times what McKenna could pay. The manager had run McKenna Volkswagen Surf City in Huntington Beach, Calif., and McKenna Volkswagen Cerritos in Cerritos, Calif., for eight years.
Those two stores together sold about 5,000 new and used vehicles a year before the emissions scandal erupted last fall. Diesels made up about 20 percent of new-car sales at each of those two stores. This year, the two stores will sell about 3,000 total vehicles, McKenna said.
"The GM left because he's tired of the VW stuff," McKenna said.
The staff's sudden departure left McKenna scrambling ahead of Fourth of July weekend. Luckily, McKenna has seven stores that sell Porsche, Audi, Mini, BMW and VW brands. The managers and staff from the other stores stepped in to handle the VW stores' business until McKenna hired three new managers and six salespeople by July 11.
As luck would have it, the new managers had worked for McKenna's BMW and Audi stores "many years ago." They wanted to return to the company and brought the six others with them.
"They walked away from good-paying jobs at other brands, and I had to guarantee them money to keep them until we see how the VW thing plays out," McKenna said.
To do that, McKenna has had to adjust his operations. He's slashed costs at both his VW stores to the "bare minimum."
"So that whatever you do put in the books, the store makes money, and I can give employees a little more money," McKenna said.
McKenna has increased the used-vehicle inventory by about 40 percent at each store compared with a year earlier to subsidize slower new-car sales. His salespeople can sell new or used cars to earn commissions, but even that has challenges.
"You think that's the answer, but the manufacturer is pushing the new-car sales so much with incentives, we compete against that," McKenna said.
McKenna has 130 employees at both stores, he said. Since the VW scandal broke, his turnover rate for sales staff, cashiers and receptionists has doubled. Also, VW's scandal hampers his ability to recruit replacements.
"I have tried to replace a couple of key people and was unable to because of the scandal," McKenna said. "The money was good and everything was right, but they wouldn't come because of the VW "BS.' They felt, "Why fight the customer and defend yourself when you could be at a Lexus or Toyota store?'"
McKenna said for himself and many VW dealers, "Life is difficult right now."