Chronic shortage of service techs threatens dealership profits

The shortage of automotive service technicians is indisputable, even as the industry debates its numerous causes. That gap threatens the financial health of new-vehicle dealerships.

"Everybody sees profitability in the service drive as the future," says Adam Robinson, CEO of Chicago-based Hireology, which sells technology-based human resources services to dealerships and other businesses. "But nobody has changed the strategy for talent."

Robinson cites key factors underlying the tech shortage: "Career path is murky, pay plans are highly variable, the hours aren't great — so we're 0-for-three on this. Dealers who can change that dynamic before their competitors do are going to have a real advantage in the market" for techs.

There are roughly 750,000 auto techs and mechanics nationally, the U.S. Bureau of Labor Statistics reports. To meet anticipated demand and respond to attrition, the bureau estimates, the industry will need about 46,000 more technicians by 2026 — a 6 percent growth rate from 2016.

New-vehicle dealerships employ about 317,000 service techs, 19 per dealership, according to the National Automobile Dealers Association.Older techs who are leaving the business, and newer ones who bolt, will create an industrywide shortage of 20,000 to 25,000 techs in the near term, predicts Mattia Janigro, a manager at the automotive research and consulting firm Carlisle & Co.

Half of entry-level technicians hired by dealerships and independent shops from certified auto tech programs leave within two years. If the shop environment doesn't turn them off, having to spend thousands, even tens of thousands, of dollars to provide their own work tools can. Career ladders for younger dealership techs are often undefined.

At the same time, dealerships face a wave of retirements by senior technicians, Robinson told Fixed Ops Journal: "It's not uncommon for me to talk to fixed ops directors and hear, 'The average tenure in my shop is 28 years, and I am losing 60 percent of my techs in the next five years to retirement.' "

The average dealership technician is 40 years old and has 19 years of tech experience, according to the Carlisle survey of 15,000 techs in 2016. The study found that the typical tech would not recommend the career to a friend.

Ted Kraybill, CEO of ESi Trends in Largo, Fla., which compiles the annual workforce survey for NADA, notes that techs who leave their jobs don't necessarily retire or go to work for another dealership.

"In a lot of the areas of the country, skilled techs are hired away from automotive service to oil service" and other industries, Kraybill notes.

Median pay for dealership techs in 2016 ranged from $29,024 for a lube tech to $69,703 for a master technician, NADA says. The median pay — half earned less, half more — for service advisers was $62,333. In comparison, the Bureau of Labor Statistics says median pay last year for an aircraft technician was $61,260.

The average tech works 44 hours a week, the NADA study says. Some dealerships assign techs to a 40-hour work week made up of four 10-hour shifts. The four-day week provides consistent time off, but presents other challenges, Kraybill says.

"If you cut down on number of hours and are open more hours, you need more techs to cover it," he notes.

The culture of dealership service departments may also contribute to the tech shortage. For many shops, industry observers say, that culture hasn't changed much since the mid-20th century — mostly male, sometimes crude. The obsolete image of the "grease monkey" too often persists, despite determined industry efforts to eradicate it.

Shop life can still be dirty, even though a growing share of repairs require computer and electronics skills rather than mechanical ones. Barely 1 percent of dealership techs are women, compared with 19 percent of dealership employees overall, NADA says.

"I don't think dealers can completely fix that issue," Robinson says. "But it would be inexcusable for a dealer to lose a female technician because its fixed ops culture was hostile."

Donny Seyfer, executive officer of the National Automotive Training Task Force, notes that fewer high schools offer auto shop programs, further diminishing the potential supply of techs. Even when such classes are available, he adds, there is often a disconnect between what they teach and what service departments need.

Assigning young students to tear down an engine or repair a transmission is a bad fit in an industry where the National Institute for Automotive Service Excellence estimates that maintenance accounts for 70 percent of techs' work, Seyfer says.

"Hell would freeze over before a shop manager at a dealership would cut a kid loose on that kind of thing," he says. "Why are we teaching that in school? Why aren't we getting [students] to the point where they are ready for light repair work?"

Despite such obstacles, many observers say they are optimistic that dealerships — with the help of automakers, suppliers and postsecondary educators — can cope with the tech shortage.

Janigro says service departments that "get it" do not lose their service techs.

He points to Santa Monica Audi in California, which he says provides a clear career path, asking technicians where they want to be in five and 10 years.

"And then help them get there," he says. "They never lose anybody. They haven't had any attrition in years."

Seyfer says he also sees "some movement" to close the tech gap.

"There's so much going on in the industry to try and encourage younger people," to pursue tech careers, he says. "If we don't screw it up, we have nothing to worry about."

But he adds: "If we keep doing it the way we have been doing it, we absolutely have something to worry about."