A car dealership CEO says he cut staff by 17%. Now employees are 'happier' and selling twice as many cars.

Toyota car dealership — Toyota Camry cars are seen at a car dealership in San Jose, California, United States on Tuesday, November 19, 2019.
Yichuan Cao/NurPhoto via Getty Images

Large car dealerships are doing fine after big layoffs in 2020, The Wall Street Journal reports.
One CEO said salespeople are happier and selling more after his company let go 1,500 people.
New and used vehicles are selling for record prices, leading to big commissions.

As the coronavirus pandemic ravaged the US economy in 2020, millions of workers across industries lost their jobs. Car salespeople were no exception.

Now, with the economy recovering and the auto market hotter than ever, some dealerships aren't planning to hire back the employees they cut loose last year, The Wall Street Journal reports. Dealers have found that they're doing just fine with a leaner, more efficient workforce.

Moreover, with fewer salespeople on staff, those that remain are faring better than before the pandemic, one dealer told The Journal. Car salespeople typically earn a base salary plus a commission for each vehicle they sell.

"We tried to keep the 'A' players and they are a lot more productive," David Smith, CEO of Sonic Automotive, said. "I think they are happier making more money."

In 2020, Smith laid off some 1,500 of the 9,000 employees that worked across the company's roughly 100 dealerships. Now, salespeople are moving around 18 cars per month, double the 8-10 they were selling before the pandemic, Smith said.

Although some dealerships are having trouble matching pre-pandemic sales volumes amid a massive shortage of new cars, margins are way up, dealers told Insider previously. That means healthy profits and sizeable commissions for sales associates, even with fewer cars to sell.

In the face of a dwindling supply of new cars, shoppers are willing to pay more than ever. The average transaction price for a new car rose to $45,031 in September, according to Kelley Blue Book, an all-time-high. Dealer incentives and discounts have practically vanished.

Edmunds estimates that in September the average new car sold for nearly $300 above its suggested retail price, a huge departure from before the pandemic, when paying $2,000-$3,000 below MSRP was the norm. These days, haggling with a salesperson for a deal is pretty much off the table, experts told Insider.

Other dealers echoed Smith's takeaways. Marc Cannon, executive vice president at AutoNation, told The Journal the chain is in no rush to hire back workers it let go in 2020. AutoNation, a publicly-traded behemoth with more than 300 locations, laid off 4,000 employees last year, Cannon said.

"We are not going to get back to pre-pandemic employment levels," Cannon said. "Why would you immediately rebuild staff if you're running more efficiently?"

Are you a dealer or salesperson with a story to share about selling cars in today's chaotic car market? Are you a dealer struggling with too few vehicles to sell? Contact this reporter at tlevin@insider.com

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