Get Your Motor Running

by Cameron Macht
August 2011

With 368 establishments located throughout the 13-county Central Minnesota planning region, motor vehicle and parts dealerships remain an important component of the local economy and a fixture of many towns. Although not every city still has a hardware store, supermarket, or lumber yard, most still probably have a couple of auto repair shops and at least one auto dealership.

In fact, nearly 16 percent of the retail trade establishments in the region were involved in motor vehicle and parts sales, the most of any retail sector. With 4,148 covered jobs and total payroll nearing $144 million in 2010, motor vehicles and parts dealerships were also the third largest retail trade sector in terms of jobs, behind general merchandise stores and food and beverage stores. However, those stores tend to be larger and are more likely to be located in the larger cities and employment centers in the region rather than the small towns.  According to data from DEED’s Quarterly Census of Employment and Wages (QCEW) program, every county had several motor vehicle and parts dealers, ranging from nine in Renville County to 89 in Stearns County (see Table 1).

In addition to covered employment, motor vehicle sales are also a large source of self-employment with 389 nonemployers in the region, according to data from the U.S. Census Bureau’s Nonemployers Statistics program.[1] There were several self-employed dealers in each county, again ranging from nine in Renville County to 71 in Wright County. More than two-thirds of the counties in the region had as many or more self-employed motor vehicle dealerships as employer establishments.

Wheeling and Dealing

There were 132 automobile dealerships in central Minnesota providing 2,242 covered jobs, making it the largest subsector in the motor vehicle and parts dealers sector, although that was 32 fewer dealerships than the peak in 2005. As these locations were shutting down, employment declined as well.

Likewise, national headlines were filled with auto industry struggles in recent years – ranging from bankruptcies to bailouts to safety recalls – before getting back on track in the last year. Starting in the second quarter of 2008 and running through the first quarter of 2010, automobile dealers in central Minnesota shed jobs for eight straight quarters. However, since the first quarter of 2010, central Minnesota’s car dealers have seen three straight quarters of employment growth (see Figure 1).

Interestingly, there were more used car dealerships in central Minnesota than new car dealerships, but nearly 90 percent of the jobs were at new car dealers. With 1,941 jobs at 61 dealerships, new car dealers averaged about 32 jobs at each site, compared to about four employees at each of the region’s 72 used car dealers. However, employment was picking up faster at the used car dealerships, including a 9 percent increase in jobs from 2009 to 2010.

Checking with the Manager

The most recognizable occupations at a car dealership are often the salespeople and their sales managers, but most dealerships have a wide range of jobs available. New car dealerships typically have automotive service technicians and mechanics, and some have automotive body and related repairers on staff as well as cleaners of vehicles and equipment, parts salespeople, and delivery truck drivers.

But car dealerships also have offices filled with bookkeeping and accounting clerks, cashiers, customer service representatives, receptionists, and office managers. Many of these occupations are lower-skilled and can be learned with some amount of on-the-job training. The highest skilled – and highest paying – jobs are in management, including sales managers, general and operations managers, first-line supervisors of mechanics and repairers, and office managers (see Table 2).

Fixing It Up

As new and used sales declined during the recession, vehicle owners put a higher premium on maintaining their current cars and trucks. Central Minnesota actually gained 159 net new covered jobs at 28 net new auto parts, accessories, and tire stores between 2005 and 2010, making it the second largest segment of the motor vehicle and parts dealers industry. The region now has 133 auto parts and accessories stores providing 902 covered jobs and 31 tire stores with 307 jobs.

Likewise, the related automotive repair and maintenance subsector remained in demand despite the recession. According to QCEW data, there were 410 automotive repair and maintenance establishments in central Minnesota with 1,481 covered jobs in 2010, as well as another 1,028 self-employed auto repair and maintenance shops in 2008. 

Traction Control

The recession stalled out some of the long-term trends for the industry, with Minnesota’s employment projections now mirroring the employment declines experienced in the past few years. Statewide, motor vehicle and parts dealers are expected to cut jobs by 5.6 percent during the next decade, a loss of nearly 1,650 employees. In central Minnesota motor vehicle and parts dealers are still expected to grow, but by just 3.7 percent (see Table 3).

Three-fourths of that growth is expected to occur at other motor vehicle dealers, which includes recreational vehicles, motorcycles, and boats. Both automobile dealers and auto parts, accessories, and tire stores are projected to gain a small number of jobs in the next decade, while auto repair and maintenance shops are expected to hold steady or see small job declines.

Central Minnesota’s car dealers, auto repair shops, and parts and accessories stores will likely wait to hit the hiring accelerator until the auto industry and economy have regained some traction. But when they do, the revving up will likely be felt in every city and county across the region.

[1]U.A. Census Bureau Nonemployer Statistics. www.census.gov/econ/nonemployer/index.html

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