Human Resources Challenges in Mexico’s Automotive Industry
STORY INLINE POST
The automotive industry in our country requires a great deal of specialization within the different areas and brands. Training and retaining the different dealership’ teams has always been a challenge in this industry and the focus of today’s article.
The automotive industry in Mexico has faced different challenges throughout the years. We will divide them into four different stages to better understand human resources mobility within the industry:
1. The Traditional Five
2. Japanese Newcomers
3. Korean Newcomers
4. Chinese Newcomers
The Traditional Five
For many years, our automotive industry was shared by five main brands (Nissan, GM, Ford, Volkswagen, Chrysler). Brand identification for our customers at that point in time was very clear. Families adopted a brand and it was very common to see all members of a family using vehicles of the same brand. Brand loyalty was, often, inherited; sons and daughters continued with the same vehicle brand when starting their own families. They would change their vehicle when the new version of their current model was launched. They maintained an unbreakable loyalty to their selected brand.
Meanwhile, from the industry point of view, most team members were trained by the various programs provided by these brands. Team members were valued based on the different brands qualification programs and it was usual for every dealership employee looking for new job opportunities to move among the different dealerships of the same brands where they were trained and valued. This was very natural because their gained qualifications were only recognized by their brand dealerships, meaning that is where they could gain more money due to the achieved qualification levels. At that time, the number of dealerships was almost the same so the only issue was employees coming and going from one dealership to another. This period lasted from 1996-2002 when new brands came to Mexico and started to consolidate.
Honda arrived in our country in 1996 with their first vehicles after having already penetrated the motorcycle market. Toyota followed in 2002 and these two new players shattered the traditional industry, “stealing” customers from the existing brands by letting them know that quality Japanese brands were a good option. They mainly based their strategy on offering cheaper service costs and excellent customer service.
This fact brought our first massive human resources crisis in the industry. Several trained team members from the traditional brands moved, looking for new opportunities in these diverse new facilities. While there wasn’t significant market growth, we suddenly had a slightly bigger market with more vehicle options, more dealerships and a bunch of specialized technical and commercial experts required to comply with the new companies’ needs.
During 2014-2015, just as the market had adjusted to the new players, market share had been redistributed, and customers were used to the Japanese names, new Asian brands landed in our country. Korean brands were not known in Mexico so they needed to build positioning and create confidence among new customers.
They arrived with a very aggressive strategy, big stores and warranty periods that were beyond what was available in the market at that time. They brought nice-looking products and promised long-lasting quality in each of them. Many new stores were opened in record time. These new brands were suddenly in all the main markets and every important automotive corridor.
At the same time and speed, they were building new facilities that needed to recruit team members, so a very deep second human resources crisis arose among almost every brands’ dealerships and manufacturers. Wages were the main tool for attracting talent and the future promise of potential growth those newcomers offered made a lot of the existing brands’ employees look for adventure and a better future, giving these two new Korean brands a chance.
At that time, not all dealership groups and owners had developed a succession plan within their teams so it became very difficult to find the right people to complete the depleted teams.
Today, we are immersed again in a new human resources challenge. China has turned its gaze to our market and has started opening new branches in our country. We are still expecting to receive seven or eight new Chinese brands in the upcoming years. Are we ready? Let's say each one of them opens 30 new dealerships in the first year to start their market representation. Without including new staff for manufacturers (or importers), our industry will require around 12,000 new, experienced professionals to build the different dealership teams. Where are these professionals going to come from? Will we be able to supply all the different operational requirements? Will the speed required to build these teams endanger quality in the customer service we are today delivering at the current brand dealerships due to a lack of team members? Are we ready? Are the different groups or companies in the automotive distribution industry working on the urgent need for succession planning?