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Average car dealer salary drops for the first time in five years

Cash flutters upwards

The average value of car retail pay package declined for the first time in five years as a result of a 9% drop off in commissions and incentives, the latest figures from the BDO Motor Salary Survey has revealed.

Excluding management positions the average package reduced in value by 3% to £40,000 as all departments saw a stagnation or reduction in average pay.

Management positions were also affected, BDO reported.

Managing directors and chief executives saw the biggest drop from executive positions, down 14.5% to £211,000 on average and dealer principals also saw a significant drop in pay down 12.6% to £97,000 on average.

However, finance directors bucked the trend with a 17.8% increase over the last 12 months to £178,000 on average.

A year ago AM reported how BDO’s eighth motor salary survey revealed an average increase in car retail employee’s annual remuneration from £40,000 to £41,000 during 2018.

But commenting on the lastest report's findings BDO Motor Retail partner, Steve Le Bas, said that it was "perhaps no surprise" that the challenging trading climate for dealer groups across the country had resulted in a fall in the average pay during 2019.

“This has particularly been felt in the level of commissions and other incentive being paid to employees,” he said.

The data has been compiled from groups and companies that together operate 425 dealership sites across the UK.

These businesses ranged from single site dealerships to large publicly listed dealer groups.

The data collated in the full version of the BDO survey covers 29 dealership positions covering all departments and includes two new positions - IT manager and marketing manager.

Le Bas said the last couple of years have seen persistent salary increases as a result of living wage increases and a labour market reaching ‘full employment’.

However, he said the drop that has been seen this year is a direct result of dealers’ squeezed margins and declining new vehicles sales, which are linked to the drop in commission.

There are large differences in salaries in different parts of the UK - the average pay in London is 24% ahead of the national average, with the North and Scotland falling 15% below.

Le Bas said dealers should monitor and consider the impact of the increased national living wage on their businesses with the rate expected to increase by 6% in April 2020, from £8.21 to £8.70 an hour.

Le Bas said: “Our expectations for the coming year are for further stagnation as a result of the continuing difficult market conditions and the prevailing general economic and political uncertainty.

“It will also be interesting to see if we start seeing a shift towards higher basic pay and lower commission structures as groups put a greater focus on selling online, potentially meaning less need for commission-based salespeople to ‘make the sale’ and the retention of staff.”

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