The gist of the matter is that the majority of automobile dealers don’t make a whole lot of money. Dealership salesmen make, on average, roughly $40,000 a year selling 10 cars every month. That comes out to around $330 per car if you do the math.
But that’s not the complete picture. The difference between excellent salespeople (who sell 20 or more cars per month) and subpar salespeople is significant (who might struggle to sell 8 cars in a month). A salesperson who can sell 20 automobiles per month will likely make $6$8k, while someone who can sell only 8 cars per month will probably make minimum wage.
Additionally, the $330 per car average takes both new and used automobile purchases into account. Used autos can occasionally pay $1,000 commissions, although new car sales rarely pay $300 or more.
Here is further information about how commission arrangements work at a typical volume brand dealership:
1. The least amount of money you can make while selling a car is the minimal commission set by almost all dealerships. Depending on the dealership, it can cost anything from $75 to $200.
In the auto industry, a sale that generates the smallest commission is referred to as a “mini,” and salesmen despise minis. The majority of newly sold vehicles are minis. You’re unlikely to make more than $75 to $150 when selling a new automobile, unless you’re asking sticker for a hot model.
2. The majority of dealers pay their salespeople a commission rate of 25%, which is calculated using gross earnings less a “pack” fee. Pack can also be a percentage but is typically a few hundred dollars ($800).
Example: You make a $3000 profit when you sell a secondhand car. After pack, the commission rate is 25%; the pack costs $800.
The average used automobile gross profit, as of May 2013, was roughly $2400, according to the NADA. The majority of dealers also add “administration costs” and “inspection fees” to their own inventory, in addition to pack, so this figure probably includes revenues that salespeople never see. In this approach, they further cut back on management and salesperson commissions.
3. The quota for salespeople is generally modest (8-12 units per month, depending on store and market). It’s challenging to retain salespeople who don’t meet their quotas, in part because they typically perform poorly and in part because they are pessimistic individuals who don’t make a lot of money and, as a result, sap everyone’s enthusiasm.
You get to keep your employment if you meet your quota. You risk losing your job if you don’t.
4. Salespeople frequently experience an increase in their base commission rate when they surpass their quota by 20% or more.
All of your commissions for the month may be boosted from 25% to 30% if, for instance, your quota is 8 automobiles and you sell 11. Your commission could increase from 30% to 35% if you sell 15 units.
5. For both new and used cars, pack fees and commission rates will vary.
6. The commission rates will differ across each department. For instance, internet salespeople may only receive a fixed price for each delivery rather than any commission at all. Salespeople for used cars may receive a commission of 35% but cannot promote brand-new vehicles.
7. Plans for car sales remuneration are made for hard chargers. You won’t make much money if you’re unwilling to put in 5060 hours per week of labor, aren’t assertive enough to ask for the sale, and aren’t polished enough to make them feel at ease.
If you meet every need, you can frequently make more than $100,000 a year. It all revolves around selling a ton of cars each month. You get paid for that.
*Niche brand dealerships, such as those for Jaguar, Porsche, Land Rover, and Ferrari, may or may not have a quota. It will rely on factors like their market size, employee count, etc. Additionally, they sometimes have smaller commission rates and monthly minimum guarantees.
In This Article...
How much does the top car salesperson earn?
Car salesmen in the US earn incomes ranging from $10,023 to $234,892, with a median pay of $42,645 each year. Car salesmen earn an average salary of $42,646 to $106,677, with the top 86 percent earning $234,892.
Where do auto salespeople earn the most cash?
So where does a dealership’s main source of earnings come from? At least not directly, it’s not from auto sales. According to NADA, it comes from the service and parts division, which generates the remaining 49.6 percent of the dealership’s gross income.
What position in a car dealership has the highest pay?
High-Paying Automobile Sales Jobs
- General Sales Manager for automobiles. $100,001 to $178,00 per year in pay.
- Manager of the automotive industry. Range of annual salaries: $58,000 to $175,000.
- General Manager of a dealership.
- Manager of Pre-Owned Sales.
- Used Vehicle Manager
- Manager of automotive sales.
- Manager of used car sales.
- Manager of New Car Sales.
Is working in auto sales stressful?
In addition to becoming an air traffic controller and a heart surgeon, selling cars is one of the most stressful professions.
You will have wasted all of your time working for nothing if you don’t generate enough sales. You’ll most likely get fired as well. It’s really hard to attempt to support a family on a car salesman’s salary.
Better have regular blood pressure checks. Some dealerships even have a portable defibrillator and a BP cuff in the break area (or at least they should).
Is it worth it to work as a car salesman?
Car salespeople have a wide variety of earning possibilities; according to PayScale, salaries can range from $19,000 to $84,000, with an average yearly salary of little under $40,000. As stated by the U.S. According to the Department of Labor’s Occupational Outlook Handbook, the growth of sales positions will be slower than average through 2026. With an expected increase in online and internet sales, growth in the sales sector is predicted to be in the 3% area.