The Cream Rises To The Top
As weve explained, a car salesmans salary can be a very changeable thing. Ask some experts how much car salesmen make per car and theyll tell you its as little as $300 per sale, while others will tell you its $1500, or more.;
What is clear is that to car salesmen, commissions are everything, and the more cars you sell, the more money you will make, and that if you continue to exceed your quotas every month – every salesperson is expected to sell a certain number of vehicles per week and per month, and those who dont make quota dont last long – the amount of commission youre getting could be negotiated upwards.
In the end, being a car salesman is all about making sales, and if youve got the confidence to pull it off, you can make buyers feel safe and comfortable, and even have them trust you, youre going to earn pretty good money. And hopefully own your own car dealership one day.
Types Of Pay Plans For Car Salespeople
Over my 42+ years in the retail car business, Ive seen too many different types of salesperson compensation plans. At each stop in my career, each pay plan had one thing in common they were structured to keep the total salespersons compensation within the industry benchmark of 18 to 22% of expenses .
Most comp plans fall within those industry benchmarks. So whether a salesman earned 35% of gross profit or 15% of gross profit on a deal, because of other factors involved, the compensation never really exceeded the 18 to 22% benchmark.;
How could that be? Easy, every comp plan has things baked into it that lower what part of a sales gross profit is commissionable. For instance, most pay plans have a thing called pack.
Pack is a predetermined dollar amount that will be subtracted from the deals gross profit before the commission is calculated. Pack is utilized to cover such dealership expenses as advertising, inventory management software, utilities and non-revenue producing employees, such as administrative and accounting staff.
The greater the stores expenses are, the larger the pack will be.
As an example, in a store where the salespersons commission is set at 35%, the pack might be $1,500. That means that $1,500 is subtracted from the gross profit every time the salesperson closes a deal before the commission is calculated.
How Do Car Dealers Make Money
Generally, youll take a cut of the profit your dealership makes. If youre the only salesperson, youre earning money based on the sales you personally make. But as your dealership grows, your salary can grow right along with it.;
As the dealership owner, you get the structure the way you pay any salespeople. Generally, youll pay a base salary and offer a commission on car sales, plus some bonuses. As youre structuring pay for any employees, make sure you leave some wiggle room so you can earn a salary yourself.;
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Car Salesman Confidential: How We Get Paid
These Days, the ‘Home Run’ Is Harder to Come By
I am a commissioned salesperson.
I get paid a commission every time I sell a car. My commission is a percentage of the profit. At the dealership where I work, I get paid 25 percent of the “front-end” profit and 5 percent of the “back end.” The front-end profit is made on the purchase price of the car. The back-end profit is found in financing and anything else we sell you, such as extended service contracts or GAP insurance.
For example, if I sell a car for $25,000 and there is a $1000 profit, or “gross” on the front end, I’m paid a $250 commission. If the customer finances through the dealership and we make $1000 on the back end, I get another 5 percent, or $50. Total commission before taxes: $300.
I think most people understand this, to some degree. What they don’t understand is that I only get paid if I sell a car. If I don’t sell a car, I don’t get paid. I make nothing. So if you come in and ask me to test drive a few cars, and I work numbers with you, and you take up three or four hours of my time, but you leave and don’t buy a car . . . I have made nothing. I am not compensated in any way for the time I just spent with you. I just poured three hours down the drain.
This is what motivates the salesman. Hunger. This is what makes us put up with the long hours and the obstacles and the delays the average customer throws our way. We don’t eat — or get paid– unless you buy.
Tell me about it.
How Much Commission Does A Salesman Make On A New Car
Commissions on new car sales vary from one dealership to another, but the usual range is from a 20-to-30 percent of the profit. The profit amount is also different among dealers. The bottom-line is that a good salesperson at a popular dealership can make over $50,000, but the average is considerably less. Two conditions account for this: sales that generate only “mini” commissions and the added cost of the dealer “pack.”
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Car Sales Salary Pay Plans And Performance
The crucial element to the car sales salary at any particular dealership is the pay plan. This is a detailed written strategy for compensating their salespeople that is performance oriented. Almost every salary in a car dealership is performance-based and this is especially true when it comes to the car salesperson. The car dealership wants to attract and keep the best car salespeople for their sales staff and this best done with an aggressive and generous pay plan. Therefore most compensation plans are designed to reward those financially those that sell;the most cars and makes the most profit on their sales.
Many car dealerships operate like a small business when it comes to paying their salespeople. What I am trying to say here is that every dealership has a slightly different pay plan than the next. The General Manager of the dealership is typically responsible for the car sales pay plan, therefore, it’s rare to find two unrelated dealers that have the exact same car salesperson compensation strategy. Most pay plans for salespeople are similar in nature, but they vary slightly when it comes to bonuses and commission percentages. The best car sales consultant salary and pay plans for the person that wants to make a large salary is not necessarily the one with the highest commission rate. Its usually the one that has a lower rate and a higher number of bonuses and other opportunities to earn additional income.
How Much Does A Salesman Make Per Car
Many people do not know how much a salesman makes per car, and this blog post will explain the answer. A typical salesman makes $300-$500 for each car they sell. This is a lot of money when you consider that many salesmen have to work on commission only.
To be successful in this business, it takes countless hours of hard work and dedication. We hope that you enjoy reading about what we think is one of the most lucrative jobs out there.
It’s a question that car dealerships dread. Every time they need to make a sale, the salesman will be asked by potential customers how much money he makes per vehicle sold.
It’s not an easy answer because it depends on many factors like what kind of commission plan is in place; whether or not there are quotas involved; and if the salesperson has been with the dealership for more than six months. To know how much your car salesman earns you’ll have to ask them directly and find out what their individual situation is.
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How Much Do Car Salesmen Really Make
The short answer is that most car salespeople don’t earn a whole hell of a lot of money. Dealership salespeople average about 10 car sales per month, and earn an average of about $40k per year. If you do the math, that’s about $330 per car.
However, that’s not the whole story. There’s a vast discrepancy between great salespeople and bad salespeople . A salesperson who moves 20 cars a month is probably going to earn $6-$8k, while a salesperson who can only move 8 cars a month is likely to earn minimum wage.
There’s also the fact that the $330 per car average includes both new and used vehicle sales. New vehicle sales rarely pay $300+ commissions, while used cars can sometimes pay $1,000 commissions.
To sum up, I’d guess the average is close to $250 a car.
If you want to learn more, here’s how commission structures are setup at your average volume brand dealership:*
1. Almost all dealerships set a minimum commission amount, which is the least amount of money you can earn when selling a car. It can range from $75 to $200, depending on the dealership.
A car sale that results in the minimum commission is called a “mini” in the car business, and salespeople hate minis. For the most part, new vehicle sales are all minis. Unless you’re selling a hot model for sticker, you’re not likely to make more than $75 to $150 when you sell a new car.
$3000 gross profit – $800 Pack * 25% = $550 commission
More questions on Quora:
What Does A Bad Car Salesman Make
Those who dont practice or work on their skills as opposed to proactively seeking out customers, will usually find themselves at the very low end of the pay scale. This means they could be earning between $2,000 to $3,000 a month. I hate to categorize them as bad salespeople, rather theyre unmotivated salespeople, but the fact still remains, theyll only be earning a few thousand dollars each month. Any aspiration of earning six figures or more each year is hard to come by for this group of salespeople, theyre lucky to make more than $40,000 annually.
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How A Car Salesmans Pay Plan Works
Salesman pay plans can be very complicated and may allow the car salesman to make money in several different ways.
For example, making a commission from the gross profit of a single-car sale, but also from in-house and manufacturer bonuses, how many cars they sell, which cars they sell, and also various other cash spiffs bonuses.
Below Ive listed the different ways a car salesman can get paid by a car dealership.
How Many Days Off Do Car Salesmen Get
A typical schedule Car dealerships are commonly open six or seven days a week. They open early in the morning and stay open late into the night. Weekends are usually prime selling days, so a salesmans days off are typically on weekdays. The hours are varied so some salesmen come in early and others stay late.
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What Does A Great Car Salesman Make
Top producers , who are capable of selling between 25 to 50 cars a month will generally find themselves earning $150,000 to upwards of $500,000 or more annually. As someone once said, thats not chicken feed, that is some heavy duty money.
Oh, and you dont need a college degree in order to earn it, you just need to work on your craft , and put forth the correct effort. The correct effort is staying in contact with your existing customer base and always remembering that all of your contacts with them are about them and not about you.
The most successful automobile sales people I know understand that nothing happens without first connecting on a human level with your customer and always maintaining that type of connection into the future. Building relationships takes time, and in sales its easy to lose sight of this. A lot of new salespeople like to focus their energy on the next sale. The salespeople I worked with that earned over $500,000 per year liked to focus on building lasting relationships their existing customers. If you want to make more than six figures as a car salesman, this is one path to do it.
So there you have it, car salespeoples earnings can range from not much, all the way to youve got to shitting me, I didnt know that you could make that type of money. That is what makes the car business so great!
Learn From Your Coworkers
One of the best ways to pick up sales skills is by observing the experienced salespeople in your workplace. Pay attention to how your most successful coworkers interact with customers and conduct their sales. Build your relationships with other salespeople and ask them to explain their process or make suggestions for how you can improve. If you approach them with a genuine desire to learn, they may be willing to share some tricks of the car sales trade.
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How Much Do Dealers Make On New Cars
A common misconception about new car dealers is that theyre out to make a quick buck, getting the best of you during the negotiation process and eventually overcharging you for a new vehicle. The truth, however, is that most dealers just want to satisfy their customers rather than gouge them. Believe it or not, car dealers actually make very little profit on a new car sale while the bulk of your hard-earned money goes directly to the manufacturer. To learn exactly how much a dealer is making on your new car, customers can consider obtaining a vehicle cost report which also provides you with a breakdown of fees, finance and lease rates as well as any additional incentives available in your area.
How Much Tax Will You Have To Pay As A Car Salesman
For an individual filer in this tax bracket, you would have an estimated average federal tax in 2018 of 22%. After a federal tax rate of 22% has been taken out, Car Salesmen could expect to have a take-home pay of $39,990/year, with each paycheck equaling approximately $1,666*.
* assuming bi-monthly pay period. Taxes estimated using tax rates for a single filer using 2018 federal and state tax tables. Metro-specific taxes are not considered in calculations. This data is intended to be an estimate, not prescriptive financial or tax advice.
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Dealership Car Sales Bonuses
One of my favorite ways to add to a car sales salary is the bonuses offered by the dealership based on performance. Obviously, this will be different at every dealership, but I know of dealers where bonuses can be anywhere from a few percents to 50% of a dealers car salesperson salary each month. The variety of sales bonuses/spiffs can include specific cars sold, aged inventory sold, the first car of the day sold, top grossing sales, car count and host of other rewards for salespeople. These premiums are designed to motivate the sales staff by offering additional income, which is the method, that car the dealer has been using for years to increase sales and profits.
Hours Car Sales Consultants Work
If you were expecting to work 9 to 5 Monday through Friday think again because car salespeople often average 50 to 55 hours per week. Their schedule may only consist of 40 up to 50 hours a week, but staying at work after closing time is actually quite common. Your scheduled hours should usually be included in your car sales consultant job description. They dont stay at work beyond their scheduled time for fun its usually because they are wrapping up deals and selling cars which isnt too bad if you are making money for staying late. Since the car salesperson often has downtime during the day it can be a pleasure to be working and delivering a car if you are adding to your car sales salary.
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How Much Commission Do Car Salesmen Get
To understand how much commission car salesmen get, you have to know the basics of how dealerships make money selling cars.
Whether new or used, each vehicle has a predetermined cost. For new cars, it includes freight and pre-delivery inspection and for used cars it includes reconditioning and detailing expenses. The amount of money the salesperson sells a car for above cost is known as âgross profit.â
Thereâs one other expense thatâs taken out of gross profit that most car buyers donât know about: a âpackâ fee. Essentially, the pack fee is set aside in a fund guaranteeing that the dealership gets paid at least something on the car regardless of what the salesperson actually sells it for. Itâs guaranteed profit for management and ownership.
Commission is calculated based on a percentage of the selling price minus the cost and the pack fee.
How much commission does a car salesman make per vehicle? That depends on the commission structure at the dealership, and itâs usually calculated based on volume ranging from 20% to 40% of gross profit. For example:
- A salesperson who sells one to seven cars per month can earn around 25% of the gross on each vehicle.
- A salesperson who sells eight to 10 cars per month earns 30% commission per car.
- From 11 to 14 cars per month, the commission earned is 35%.
- For 15 cars and over, the car salesman commission rate is 40% per car.
The more you sell, the more you earn incrementally.
How Much Commission Does A Bmw Car Salesman Make
The salesman gets a percentage of the gross profit, usually about 20% so if you offer $800.00 over invoice, he will only net $160.00 for his efforts. Most of the salesmen in the dealership sell between 7 and 15 vehicles per month so if they were all deals like yours, well would that kind of income work for you?
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