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Automotive Labour Shortage to Continue Into 2024

Autosphere » Dealerships » Automotive Labour Shortage to Continue Into 2024
The automotive industry faces a number of challenges in 2024. Photo Shutterstock

2023 was an eventful year for automotive jobs. Will 2024 be just as challenging?

The economic instability of 2023 forced many automotive companies to rethink their processes and change the way they operate. All in all, it was not an easy year!

More specifically, the new vehicle market has changed a great deal in recent months. According to the latest price index reports published by AutoTrader, the average price of a new vehicle rose from $59,000 in the first quarter of 2023 to $66,000 in the third quarter. That’s an increase of 11% in the space of 6 months.

Inflation is unfortunately not sparing the automotive industry. But in concrete terms, how does the rise in the average cost of vehicles affect dealers’ business?

After bottoming out in 2022, inventories of new vehicles in dealerships gradually improved over the course of the year. In fact, between Q2 and Q3, SUV inventories rose by 12.5% and car inventories by 8.4%. However, light truck inventories climbed the most, by 19.3%. On the other side of the coin, new van inventories have not budged since the end of COVID-19. Despite the fact that the situation is improving, inventories are still smaller than they were before 2020.

In these uncertain economic times, demand for new vehicles is still very high. However, the automotive market seems to be running out of steam, and dealers must now adapt their recruitment to the new economic reality.

Evolution of average vehicle prices in Canada according to AutoTrader data. Photo AutoTrader

The effects of inflation on car sales jobs

The year 2024 may not be an easy one for the car sales industry. Rising interest rates and vehicle costs will discourage many buyers from opting for a new vehicle.

So, in the current economic climate, one might think that the used market would be more attractive to consumers. But as Aymeric Deguire, CFO at Automobile En Direct, points out, it won’t be easy for anyone: “Since the problems with supply chains during COVID, the used market has exploded,” says Deguire. But I think 2024 is going to be a tough year for selling cars, both new and used.”

As a matter of fact, revenues from used cars are low right now, because the cost of purchasing vehicles for resale is very high. As a result, profit margins in the pre-owned sector more often than not don’t exceed a few hundred dollars, which affects demand for sellers.

What’s more, advances in technology also have a direct influence on the need for vehicle salespeople. According to Emmanuelle Bourque, recruitment expert at Auto-Jobs.ca, the vehicle sales environment has changed dramatically since the advent of the Internet: “Consumers no longer need to visit a dealership to buy a vehicle,” explains Bourque. Shopping is now done online, and we don’t need as many salespeople on site to serve customers.”

All in all, we can expect companies in the Quebec automotive sector to reduce their sales recruitment, without making any cuts.

Technical automotive trades still in short supply

Whatever the state of the economy in 2024, demand for automotive technicians should remain very strong. Indeed, even if inflation continues to rise, Quebecers won’t stop using their vehicles and needing to have them repaired in the workshop.

As a result, the demand for technical labour in the automotive sector is unlikely to fade in 2024, even if the economy deteriorates further. According to Bourque, even if the unemployment rate were to rise, the automotive industry would emerge almost unscathed: “There’s such a shortage of technical labour that we’re not afraid of a recession,” she explains. We even think that technicians might come to the auto industry to retrain if there are layoffs in other industries.”

There are still many vacant technical positions in the automotive sector. For example, there is a shortage of nearly 2,300 technnicians in the province, as well as 600 vacant jobs in collision shops. So, to make up for the shortage, dealers are less reluctant to recruit technicians with less experience, or even none at all.

Finally, it should not be forgotten that, with the aging of the population, many positions will become available over the coming year. With enrolment in automotive-related programs shrinking every year, we may well have difficulty replacing all these departures.

All in all, demand for automotive technical trades will remain very strong in 2024, and if the trend continues, it may even become more pronounced.

A steadily improving outlook for electric vehicle jobs

The range of electric vehicles on offer has improved considerably in recent months. Numerous new mid-range models, such as the Kia EV6 and Hyundai Ioniq 6, are set to hit Quebec roads in 2023. As a result, we can expect the arrival of these new models to increase demand for trained EV service technicians.

It’s also worth mentioning that many electric vehicles on our roads will reach the end of their warranties in 2024. Part of the demand for EV repairs will therefore shift from dealerships to independent workshops. This effect will only increase as EVs replace gasoline-powered vehicles, leading to the opening of many new positions in independent workshops.

What’s more, the Quebec government is strongly supporting the transition to electric vehicles, aiming to have 2,000,000 EVs on the province’s roads by 2030. So, it’s safe to assume that as early as next year, a number of electric vehicle-related jobs will be created to achieve this goal.

After all, Quebec only has six years left to go from 200,000 EVs to 2,000,000. So it’s safe to assume that the automotive industry will be putting its foot on the gas pedal in terms of job creation to achieve this audacious goal.

 

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