High turnover, skills shortages and generational shifts mean traditional hiring models no longer work. Experts weigh in on what does.
As dealerships across Canada struggle to attract and retain employees, industry data suggests the challenge has less to do with short-term market conditions and more to do with a fundamental shift in workforce expectations.
Brigette Goldenshtein, manager of marketing and communications at the Canadian Automobile Dealers Association, said dealerships are having an increasingly difficult time attracting younger workers and keeping them.
“We’re seeing unusually high turnover rates that we haven’t seen in previous generations,” she said.
Findings from CADA’s 2024 Workforce Study, conducted in partnership with MNP, show turnover among Gen Z employees at 56 per cent and Millennials at 31 per cent.
While both figures are down from 2021, Gen Z turnover remains roughly three times higher than that of Gen X and Baby Boomers and accounts for a significant share of overall dealership turnover.
“When that is the future of the workforce, we’ve got a problem — and one that needs to be fixed ASAP,” said Goldenshtein.
The study suggests traditional dealership employment models are increasingly misaligned with younger workers’ expectations. What worked for previous generations, Goldenshtein said, is not necessarily effective today.
According to the report, turnover among Millennials and Gen Z is largely driven by poorly-defined career paths, commission-based pay plans and long working hours, including weekends.
“Previously, people were willing to trade long hours for a strong salary,” said Goldenshtein. “Now they’re looking for a total rewards package that includes time off, benefits, work-life balance and flexibility.”
Goldenshtein said many dealers recognize the issue but struggle with how to respond. Meaningful change, she said, starts with listening.
“You have to talk to your people. You can’t assume this is what they want.”
Millennials and Gen Z now make up 59 per cent of the dealership workforce, according to the study.
The real cost of turnover
For dealerships, the consequences of not acting on what employees are saying are showing up in turnover rates — and in the cost of constantly replacing staff.
Jeanna Giles, an HR advisor with Dealer Pilot who has worked both inside dealerships and with dealer groups across Canada, said many operators still underestimate the financial impact of employee churn.
Drawing on national labour data from iMercer, Giles said turnover across all Canadian industries averaged 10.2 per cent. Automotive falls under the broader retail and wholesale category, which recorded turnover of 21 per cent last year.
“But if we break it out through CADA — just the automotive industry in Canada — it averages 31 per cent per year,” Giles said. “So in 2024, it was 31 per cent turnover in an automotive dealership. Retention is a huge issue for automotive.”
Data from the same CADA workforce study puts total annualized turnover across Canadian dealerships at 31 per cent.
Giles said many people fail to recognize that the cost of turnover extends well beyond recruitment and wages. According to iMercer benchmarks, recruiting and hiring an average employee typically costs between 30 and 50 per cent of their annual salary, covering recruitment and the first three months of employment.
“Basically, if you hired someone on a salary of $100,000 a year, it would cost you about $30,000 just to hire that person, plus the $100,000 you’re going to pay them,” she said.
Once hired, dealerships must still onboard and train new employees, often relying on experienced staff to do so.
“And they’re making errors along the way,” said Giles.
“This increases your policy in the dealership, the cost of actually doing business, and has an impact on customer satisfaction — which of course affects profitability as well.”
Using a $100,000 salary example and the low end of the cost range, Giles estimated the financial impact of that level of churn. At an average turnover rate of 31 per cent, a dealership with 20 employees would typically replace about six people in a year.
“That would cost roughly $186,000 a year, using conservative estimates,” she said.
Beyond the financial impact, Giles said many dealerships continue to struggle with how new employees are brought into the organization. She pointed to a trial-by-fire approach that leaves new hires with limited training, unclear expectations and little structured support.
Leadership gaps often compound the problem, she added. Employees are frequently promoted into management roles because they excel at their jobs but receive little training on how to lead people. Without support, that transition can undermine retention.
For Giles, the issue is not a lack of effort around hiring, but a misunderstanding of what actually keeps people in place.
“It’s a whole package and a whole mindset.”
Fixing the structure
If high turnover is costly, Alexandre Lavoie argues the deeper issue is that many dealerships still treat hiring as a short-term fix rather than a long-term workforce strategy.
Lavoie, a human resources advisor with the Corporation Mobilis, said recruitment efforts often focus on filling immediate gaps, with less attention paid to what happens after an employee is hired.
“Are we hiring talent, or are we just filling positions? It’s not the same thing,” he said.
In his work with dealerships, Lavoie said many organizations invest heavily in attracting candidates, only to fall short when it comes to onboarding, development and follow-up.
“Once someone’s hired, it’s like they take it for granted that this person is part of the company, the culture, everything.”
That lack of follow-through, he said, can erode retention, particularly for employees looking to grow their skills or advance their careers.
Lavoie said it is common for employees to apply elsewhere not because they want to leave the industry, but because they see limited opportunities to progress where they are.
“Often it’s to upgrade, to grow, to advance,” he said. “So why isn’t it done internally?”
Training, Lavoie said, should not be treated as a one-time onboarding exercise, but as an ongoing investment tied to retention.
While some dealerships have turned to external recruitment strategies, including immigration, Lavoie said those approaches can play an important role but often require significant planning, resources and long-term commitment, making them difficult for some operators to rely on as a standalone solution.
Instead, he said, dealers need to take a more structured and intentional approach to workforce planning — one that connects recruitment, training and retention.
“Recruitment could be a structural, strategic issue, not just a temporary measure to fill a gap.”
For Lavoie, improving retention ultimately requires a shift in mindset. Hiring is only the first step. What determines whether employees stay is how they are supported, developed and given opportunities to evolve within the organization.
