Dealer group salaries increased on average this year – but pay levels continue to be relatively stagnant, new research reveals.

According to the fifth BDO Motor Salary Survey, the average remuneration package increased from £38,000 in 2014 to £39,000 in 2015, excluding chief executives. This is a rise of 2.6%. The survey collated responses from 130 businesses that together operate over 285 dealership sites. Twenty-six dealership positions were represented.

Malcolm Thixton, BDO head of motor retail, said: “With many dealers across the country reporting increased levels of profitability and continuing rises in the level of registrations, salaries have started to increase with an overall average of 2.6%.

“Excluding CEOs, though the historic trend still suggests the level of pay continues to be fairly stagnant with the comparative average in 2011 being £37,000.

“The increase in the current year was shared between a small increase in base salaries and a similar rise in the average level of incentives.”

For the first time since this survey started CEOs and managing directors have seen their average pay increase.

There were several key themes in 2015:

> the continued minimal change of non-management salaries,

> reasonable increases in management salaries (following historic reductions),

> and the overall percentage of those paying into pensions increasing year on year, following the implementation of auto-enrolment at 75% (2014: 55%).

“Our expectation for the forthcoming year is that salary increases will be commonplace as dealers start to implement pay increases following the continued strengthening of dealer profitability and the UK economy generally (with national data showing wages increasing now at around 3%),” Thixton said.

“Further to this, with recent legislation with regards to the new living wage we also expect to see some impact around the lower paid positions with higher than average increases.”

“Executive and management still continue to be well remunerated as befitting their roles and responsibilities with dealer principals seeing the largest pay rise across all categories.”

Employee costs continue to be the largest expense in any dealership, accounting for a significant percent of gross profit, and with market pressures on margins, expense management is critical to sustained profitability.

The average base salary for all positions surveyed was £32,000 (2014: £29,000), with a further £10,900 (2014: £10,900) receivable in commissions and benefits.

On average a third of total earnings continues to be commission driven.

Furthermore, for all 26 positions surveyed, the average payroll profile comprises a commissions element, therefore supporting the necessity to appropriately structure bonus and commission packages.

The remuneration packages for the key executives continue to be the highest of all the positions.

The average total remuneration

	2015	2014	2013
Managing director / CEO	£181k*	£130k*	£130k
Finance director	£138k	£116k	£118k
Dealer principal	£93k	£91k	£77k

 

* The average salary for the current year by MD’s in entities with turnover > £50m is £182k (2014: £165k)

These packages contain a significant proportion of commissions, ranging from 20% to 75% of their total package.

The average length of service at a dealership is seven years, average holiday entitlement 25 days and average hours worked per week is 42.