“That’s Just How This Industry Works”: The Most Expensive Myth in Automotive Retail

Part 2 of 14: The Employee-Customer-Profit Connection

In this article, you’ll learn:
-Where the “high turnover is inevitable” mindset came from
-Why accepting it has become one of the industry’s most expensive habits
-How dealers who challenged this belief are achieving different results

Every industry has its sacred excuses. In automotive retail, the biggest one sounds like this: "High turnover? That's just how this industry works."

It gets said with a shrug. Sometimes a knowing smile. As if accepting 42% annual turnover is a mark of wisdom rather than a failure of imagination.

But here's the thing about industry-wide assumptions: they persist not because they're true, but because questioning them feels pointless. Everyone's doing it this way. It must be inevitable.

It's not.

Where This Mindset Comes From

The "that's just how it is" mentality didn't emerge from nowhere. It has roots in how automotive retail developed over decades.

The transactional sales culture. For years, the industry operated on a simple premise: get customers in, close deals, move metal. Salespeople were seen as interchangeable. If one burned out or left, another would take their place. The system was designed around volume, not relationships.

The sink-or-swim mentality. Training often meant throwing new hires onto the floor and seeing who survived. Those who made it were "naturals." Those who didn't? Weren't cut out for the business. This approach filtered for a certain type of person while losing countless others who might have thrived with actual development.

The compensation rollercoaster. Commission-heavy pay structures created feast-or-famine income swings that many people simply couldn't sustain. A great month followed by a terrible month followed by an okay month—that's stressful. People with families, mortgages, and bills to pay eventually seek stability elsewhere.

The schedule grind. Six-day weeks. Mandatory weekends. Holidays spent at the dealership. The industry built itself around hours that most people can tolerate for a while but few can sustain for a career.

These factors didn't create high turnover by accident. They created it by design—or at least by default. And because everyone operated the same way, the results seemed normal.

The Convenience of Fatalism

There's something comfortable about believing a problem is unsolvable. It lets you off the hook.

If high turnover is just "how the industry works," then you don't have to examine your management practices. You don't have to question your compensation structure. You don't have to invest in development programs that might take years to show returns. You can focus on the things that feel more controllable—inventory, marketing, floor traffic—and treat workforce churn as background noise.

This fatalism also creates a convenient explanation for customer experience problems. CSI scores slipping? Well, we've had a lot of turnover lately. Service complaints increasing? Hard to maintain consistency when half the team is new. The turnover becomes both the cause of problems and the excuse for not solving them.

But the dealers who've rejected this fatalism are proving something important: the "inevitable" turnover isn't inevitable at all. It's the predictable result of choices—and different choices produce different results.

The Proof That It's a Choice

Capitol Auto Group in Salem, Oregon just earned the #1 spot on Automotive News' Best Dealerships to Work For list.¹ Not for the first time—they've been recognized every single year since the program launched in 2011. That's fourteen consecutive years of building a workplace where people want to stay.

This isn't a single-store operation with unusual advantages. Capitol runs five dealerships with 450 employees. They face the same labor market pressures, the same competitive dynamics, the same industry challenges as everyone else.

What's different is how they think about their people. Dealer Matthew Casebeer puts it simply: "Empowering our employees is the real secret to our success. They don't have to 'check with a manager' to do the right thing; they have the freedom to take care of people."²

That philosophy shows up in their results. A service manager recently retired after 39 years with the company—having started as an entry-level shuttle driver. That's not a career path that happens by accident. It happens when an organization actually believes in developing people and promoting from within.

Carl Sewell, who built Sewell Automotive in Texas into one of the most respected dealership groups in the country, understood this decades ago. He literally wrote the book on it—"Customers for Life" has sold over a million copies.³ His core insight: you can't deliver exceptional customer experiences with a revolving door of disengaged employees. The two are inseparable.

What Different Choices Look Like

The dealers breaking the turnover cycle aren't doing anything magical. They're doing things that would seem obvious in most other industries.

They're providing realistic job previews so people know what they're signing up for. They're creating structured onboarding instead of sink-or-swim. They're building compensation models that provide stability alongside performance incentives. They're offering schedules that acknowledge people have lives outside work. They're developing clear advancement pathways so talented people can see a future, not just a job.

None of this is revolutionary. It's just not how the industry traditionally operated—which made it feel impossible until someone proved otherwise.

The gap between industry-average dealers and the top performers isn't resources. Plenty of well-capitalized dealer groups have mediocre retention. The gap is belief. The top performers believe turnover is a problem worth solving. The average performers believe it's a reality worth accepting.

The Cost of Acceptance

Here's what gets lost in the "that's just how it is" mindset: acceptance has a price.

Every time a trained employee walks out, you're paying that price. Every time a customer notices they're dealing with someone new again, you're paying that price. Every time a manager spends another week interviewing and onboarding instead of developing the team, you're paying that price.

The industry pays roughly $20 billion annually for the privilege of accepting high turnover as inevitable.⁴

That money doesn't disappear. It flows to recruiting firms, job boards, training programs for people who won't stay long enough to apply what they learned. It shows up in lost sales from inconsistent customer experiences. It appears in the form of manager burnout and institutional knowledge that walks out the door every month.

The dealers who've rejected the fatalism aren't spending that money. They're investing it differently—in retention, development, and culture—and keeping far more of what they earn.

The Question Worth Asking

Instead of "that's just how this industry works," what if the question became "why do we accept results that would be unacceptable anywhere else?"

A 42% annual turnover rate in most industries would trigger emergency meetings. Consultants would be hired. Strategies would be overhauled. The assumption would be that something is broken and needs fixing.

In automotive retail, that same rate barely registers. It's just Tuesday.

The dealers changing this equation started by rejecting the premise. They looked at the same industry everyone else sees and asked a different question: What would it take to build a place where people actually want to stay?

The answers weren't complicated. The commitment to finding them was.

The first step to solving the turnover problem is understanding what's actually happening in your organization. ESi-Q provides the employee experience data and analytics that help dealers move from assumptions to answers—so you can make decisions based on what your people actually need, not what the industry has always accepted.

About The Author

Cathy Palochko has spent her career in learning and development almost exclusively in automotive, including senior leadership roles in training and development for multi-franchise dealer groups and extensive experience on the agency side supporting OEMs.

Frequently Asked Questions

Why do people think high turnover is inevitable in automotive retail?
The "that's just how it is" mindset has roots in how the industry developed: transactional sales cultures that treated employees as interchangeable, sink-or-swim training approaches, commission-heavy compensation creating income instability, and demanding schedules. Because most dealers operated this way, the resulting turnover seemed normal rather than a problem to solve.

What dealerships have proven that low turnover is possible? 
Capitol Auto Group in Oregon has been recognized on Automotive News' Best Dealerships to Work For list every year since 2011—fourteen consecutive years. Sewell Automotive in Texas built one of the most respected dealer groups in the country on the principle that employee experience drives customer experience. Both prove that different choices produce different results.

What do low-turnover dealerships do differently? 
They provide realistic job previews, structured onboarding instead of sink-or-swim training, compensation models balancing stability with performance incentives, schedules acknowledging life outside work, and clear career pathways. None of this is revolutionary—it's just not how the industry traditionally operated.

Is the gap between high and low turnover dealerships about resources? 
No. Plenty of well-capitalized dealer groups have mediocre retention. The gap is belief. Top performers believe turnover is a problem worth solving while average performers believe it's a reality worth accepting. The dealers changing this equation started by rejecting the premise that high turnover is inevitable.

Footnotes:

¹Automotive News Best Dealerships to Work For 2025; Capitol Auto Group recognition history 
²Matthew Casebeer, Capitol Auto Group Dealer Principal 
³Carl Sewell, "Customers for Life" (1990, revised editions) 
⁴See Week 1 footnote for $20 billion calculation methodology