Dealer groups saw an average salary increase of 7% in the last 12 months, according to the latest Motor Salary Survey from accountants and business advisers BDO.

This figure, which excludes management positions, is broadly in line with the UK average, but is significantly less than the record year-on-year increase of 16% achieved last year, when the sector enjoyed a post-Covid surge in profits.

The largest increases were within the parts, service and administration departments where 8-9% increases were found. Vehicle departments saw a lower increase (4%) but this follows a significant 14% rise in the previous year. Service technicians are the most sought-after role, and the skills shortage has pushed up pay by 13% on average.

Participants in the survey employ around 25,000 people and in the last year had an estimated staff turnover of 31%, although overall staffing levels remained consistent.

“Staff retention remains a key issue,” said BDO director James Evans, who analyses the data for BDO’s motor retail team. “At 31%, employee turnover is higher in motor retail than it is in the wider economy. For those completing our survey, it represents a loss of 7-8,000 people in the last 12 months.”

“This level of attrition comes at a significant cost to all groups in respect of recruitment and time invested in training, as well as having an upward pressure on wages as groups compete to attract the best talent,” added Evans.

With the introduction of agency and the continued shift to electric vehicles, there is a need for employers to plan for the skills they need in the future. “Those dealers already considering the implications and planning accordingly will be more agile in their response and best placed to future-proof their business,” said Evans.