Here at the Car Sales Professional Blog we get lots of visitors that want to know more about Car Salesman Commission or how car salesmen get paid and how it works. Some of the visitors here are people considering a car sales career and some are Newbies or Green Peas. People that are new to selling cars for a living have many questions and concerns when it comes to car salesman compensation and pay, working on commission and not having a paycheck that is exactly the same every week. I get many emails that ask what does a car salesman get paid. Regardless of how hard they work or don’t work they feel better when they know how much their paycheck will be every Friday unlike the mythical car sales salary. That’s why so many people ask how much do car salesmen make.
Choosing a Car Salesman Commission or Not
The good car salesman that has been selling cars for any period of time couldn’t imagine a car sales salary or getting paid any other way. The car salesman commission reflects the exact amount of labor, experience and skills used throughout the week or month to sell cars and accessories (in most cases). There is no question that your paycheck can vary greatly from week to week and be influenced by the time of year, weather, manufacturers specials or a whole list of other things. But you have to ask your self would you rather make $40,000 a year and have the exact same paycheck every week or would you rather have your car sales commission check vary greatly from week to week and have a car salesman income of $100,000 a year. Sounds like an easy choice to me. I personally love getting paid on commission because I can control my annual income rather than a job classification, contract or seniority. If you get a fixed car sales salary then you are missing out on the benefits of car salesman compensation .
Car Salesman Compensation or How Do Car Salesmen Get Paid?
I will start right of by telling you that almost every auto dealership sales commissions and compensation pay plan that I know is slightly different than the next. However I will give the overall idea of how and what does a car salesmen get paid and how a sales commission and pay plan works, which in no way is a car sales salary.
To answer the common question of what percent does an auto salesman make on a car I will start off the commission of car salesmen and car saleswomen is based on a percentage of profit on the “front end” of the deal or car sold. The front end is the difference between the dealer’s invoice cost and the amount the customer paid for the car you sold. As an example: you sold the car for $20,000 and the invoice cost was $18,000. The front end profit is $2,000. How ever there is also a charge that is called “Pack” or “the Pack” that is assessed to each car for the dealership’s overhead. This is to pay for porters to clean the cars, lot maintenance, office people, paperwork, etc. This pack is different for every dealer and I have seen it go from $300 on a new car to $800 on a used car. Some high line dealerships have a “pack” charge that is $ 1400 or more. So to get back to our example the $2,000 profit from above is reduce by the “pack” charge for lets say $500 which leaves you with a commission-able profit of $1500. Now your $1500 profit is used to determine your auto dealership sales commissions and compensation.
The next step of figuring your car salesman commission or how car salesmen get paid is determined by your dealership. I have seen auto dealership sales commissions that pay anywhere from 20% up to 40% commission which is solely up to the dealership management and owners. For an example we will use 30% rate. That means that 30% of your “front end” profit or $1500 equals $450. Not bad for one sale, but what there is much more involved when it comes to car salesman compensation.
Let’s take the example of the car above where the invoice cost is $18,000 and you sold the car for $18,200. Now when you subtract the “Pack” of $500 you have a ($300) negative amount of “front end” profit. This example is known as a “Mini Deal” or “Mini” where the dealership decides to sell the car for a very low profit and there is nothing left for the car salesman commission. When this happens there car salesman get paid a “Mini” which is also different at every dealer. I have seen “Minis” pay anywhere between $100 to $200 to the salesman for selling a “Mini Deal”. If all your deals were “minis” you would have to sell quite a few cars to make any money for the month.
Bonuses, Incentives and Car Salesman Commission
To move along, another part of a car salesman commission that you can control are the sale of extras or add-ons that can earn you an incentive. Not all, but many auto dealership sales commissions plans allow the car salesmen to sell things like rustproofing, paint protection, fabric protection and undercoating. These are often sold as packages and the sales person can earn an extra $50 to $200 for selling one of these packages. The next thing that a car salesman can sell are accessories for the car they just sold. Things like remote starts, sunroofs, body molding, splash guards, trailer hitches and entertainment systems just to name a few. Some dealers add these accessories to the deal and pay car sales commission on the profit of everything and some dealers pay a fixed amount for each item sold. Either way it is a chance to make some more car salesman income.
Next on the list are car salesman bonuses which added to your car salesman commission can make a big difference to your auto salesman compensation and personal bottom line. Once again, bonuses are different at every car dealer across the country and not all dealers have all the bonuses I mention, but most have something similar. Bonuses are the extra incentive to reward the top sales people and the most successful car salesmen or women that are the top producers for the dealership that go beyond auto dealership sales commissions.
Car Salesman Commission Bonuses and How Car Salesman Get Paid
Here is a list of some of the ways car salesmen get compensated in the form of bonuses that I have seen at various car dealers that are above and beyond their regular auto dealership sales commissions.
Salesman or Saleswoman of the Month: $100 to $400 (most cars sold)
Monthly Car Count Bonus: Sell 10 or 12 cars and get a $300 bonus, 15 cars sold get $600, sell 18 cars and get $900, sell 21 cars get $1200, sell 24 cars get $1500, sell 27 cars and get $1800. Again this amount will vary and is not a program at all dealers.
Sell Certain Cars: Management may select certain cars that are aged and hard to sell, so when you sell any of those cars you a bonus of $50 to $150 extra.
Sliding Scale Car Salesman Commission Percentage: When I talked amount the commission percentage above I used 30% as an example, but some dealers use the sliding scale in order to motivate their sales people to sell more cars. An example of a sliding scale percentage pay plan is as follows. Sell 6 cars get 20% commission, sell 9 cars get 25%, sell 12 car get 30%, sell 15 cars get 35% and sell 18 or more and get 40%. You can clearly see how this sliding scale auto sales commission pay plan rewards the top sellers in a dealership.
Miscellaneous Bonuses: Car dealers can have any number of different bonuses that are used to motivate their sales people. I have seen Saturday Bonuses for most cars sold, weekend rewards for most cars sold, extra money for cars sold on a holiday…etc.
Manufacturer Incentives as Car Salesman Compensation: There are several manufacturers that offer incentives the dealership sales people that are paid directly to the sales person. Some (not all) of the car makers require a sales person to take some of their car sales training classes and become “certified” or some other term that will register them with the factory and when a new car is sold by that person the factory will pay them a bonus. I heard of one sales person at a dealership that received more than $30,000 from the factory over the course of a calender year. Now that’s real money that can help you make a six figure income.
How Much Do Car Salesmen Make?
Selling cars is about the numbers and if you are trying to figure out what kind of money you can make over the course of a month you should know that every deal is different and so is the auto salesman commission. Over the course of a month you can figure that your deals can probably be classified in thirds. One third “Minis”, one third average and one third nice front end grosses or commissions. As you can see the car salesman compensation does not stop with commission and that is why a successful car salesman can earn over a $100,000 a year which is some serious money. That should be a sufficient answer for those that wonder about how much do car salesmen make and auto dealership sales commissions.
I hope this helps you understand how do car salesmen get paid and the basic structure of a car salesman commission pay plan. I hope that helps all of you that have asked what does a car salesman get paid and what percent does an auto salesman make on a car. There are several opportunities for the car salesman to make big money and many other automobile sales careers that have big earning potential.
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Later, Fresh Up on the Lot
K.B.
i have a question. my boyfriend is a car salesman. We feel the dealership is screwing him. they will not reveal how much they own the car for and therefore he has no idea if his commission is accurate. is that legal for the dealership to do?
Have a relative new in car sales. Another salesmen got the sale since my relative was off. Is this a common practice of an other salesmen getting the sale?
Did the customer ask for your relative?
What is the dealership policy on referrals?
I am 7 weeks into a new/used car lot. I hired on only because the first 4 weeks I would get trained and receive $350 per week(us new guys spent time test driving cars, going through test modules, picking, and dropping off customers, ect., not selling cars). Now they tell me I have to repay the training pay in full from my commissions. I have sold 4 cars in 2 weeks after my training period, and have not received any money at all. Is this legal? they said it’s company policy, but it is not written anywhere, i’m calling horse crap, what do you think?
The handbook states that training pay would be paid back if you quit within 6 months, I understand that, but it’s training pay, not a draw in my book, I would not have started the job if I knew that, I’m not funding the dealership!
Hi Mikey,
I haven’t heard of that before now.
KB,
I have the same issue as Kay’s boyfriend. Get 25% front end only. We have spiffs and monthly bonus deals. I love selling cars. Been doing it for 6 or more months. The dealer charges 600 pack on new and 1000 on used. When it comes to used the only way to know sort of what they got in the car is if it was a trade. When I first started I got a sheet showing commission, cost gross ect. To this day I have recieved maybe 10% of my sheets before I get my check. I never know what I am getting paid until I get my check. It also seems that some of the pack is used for advertising, but they get a reimbursement on each new car invoice plus holdback yet they still add pack to the invoice amount. You ask and dont get a straight answer unless you are on the top (which I plan to be). The key is to find a dealer you can communicate with and trust. I hope to move on soon to a better one. I cant prove it but I am sure the finance department manager skim from the front and make it in the back. How else can you give free warranty’s.
Hi John,
You have addressed several different subjects here, but most importantly you should be getting your sheets.
Maybe changing dealerships is a good idea.
KB
I’ll Guarantee you all that KB was the resident House Mouse at the dealerships(stealerships) that he has worked for. He blows smoke up your bunghole like a fed fire. Car sales is a JOB (Just Over Broke) for anyone that is not the resident cheese fed rodent.
Find a different line of work if at all possible unless you just want to die young. After 23 years in the biz don’t even ask me how many salesmen I have seen drop dead from a heat attack or stroke.
Hi Rita,
You sound bitter!
If you sold cars for 23 years and you are just over broke you should have gotten out years ago.
What were you thinking???
There are many people making a six figure income selling cars and I am not talking about years ago. I am talking about TODAY!
KB
Hi KB
After reading the useful information, I decided to give myself a try to step into auto sales. Thanks!
Do you have any suggestion or advise to me since I don’t have any experience on auto sales?
Car sales changed my life. It’s crash course in Life, work hard get paid. Percentages, ups, GP, goals, ding to dong, cash is king, knockin heads off, turnin no’s into yes’s, I frigging love it. An ultimate testament to Darwinism, only the strong survive. Do you have what it takes? Probably not, that’s why I love it. If you read this and it pissed you off, quit, if your smiling rite now, cheers.
Twright(liltrav)
Thanks for writing.
Read all the tips and posts, but most importantly listen closely to your customers, not only what they say, but how they act too. Then watch other top salespeople and see what they do and say.
KB
What’s up KB
I been selling cars for 5 years and I love it it took me a couple years to get the hang of it you know the hours. I didn’t go to college or nothing and I make really good money doing this I started when I was 19 (started in detail at 18) and I’m 24 now and I make bout 6000 a month
I thinks that’s real good you know I average 17 cars a month and recently I got promoted to asst mgr I been with this company for 21 months and they pay me a percentage of dealer ship profit and I still can sell cars too but lately i been averaging 12 cars a month what is your out take on this ?
Hi Ryan,
Nice job so far.
You did not mention if the dealerships sales are down or is it just your sales that are down?
Yea the dealership sales are down too but I’ve been working the desk and signing up customers up damn near all month and I have only 3 cars out now and I’m just frustrated about my sales.
You have the power to change that!
Sure the car biz has ups and downs even for us super stars. I have been at it for 13 years. Started when I was 20. I have made 100 plus every year and at all three dealerships I have worked at. Maybe the people whom complain about a sales job should work at Carmax and be an order taker. For everyone wondering about the slow times, stop smoking 5 packs a day and go in side and work the dealerships data base!!! I love the car biz! You might tell me no but all I hear is YES YES YES!!!
I work at a large high line dealer in the northeast. I am a top producer this year and will do 240 cars and with that I will make about 185k. I know this is very good income given the market but I am curious if I could negotiate a better plan. I have the standard pay pan all the other sales people are on. I am not sure how to approach or even if it’s worth approaching thoughts and feedback appreciated.
Hi Dave,
Thanks for your input. I am very glad to hear from you and so are so many others that frequent the site.
KB
Hi Top Producer,
Great and hats off to you. The worst thing that could happen is that you ask and are told no, so you might as well ask.
Keep up the great work.
KB
I have recently purchased a used vehicle and the dealership wants me to come work for them. I have been hired and have no clue what to do as a salesman, other than what I know about talking to people. I have been told by many that I would be good, because I am good with people, but I just dont want to get screwed by taking this job. Any thoughts?
Matt
Read all the posted on the blog here to get an idea of what the car business is about. Plus you will want to watch and listen closely to what is going on. Pay attention to what the top sales people are doing and do the same.
Hi KB,
I am a new entry trying to find my way into the industry, I have worked as a saleman with a Ford Dealership in Nigeria for 3 yrs as a strong performer.
With no working experience in U.S, do you think i stand a chance of nailing a sales man job, if not what are the stepping stones.
Hi Ade,
You shouldn’t have any problem landing a car salesman job with your experience.
Good Luck
KB
I am new to the car salesman business any advice?
Hi Allem,
Welcome to the business of selling cars for a living.
To answer your question, watch and listen closely to the top salespeople for clues.
KB
Hi,
I am a woman who is seriously thinking about gettig into the car sales business, that is if they hire me. I ‘ve read most of these posts and I’m certainly not scared. Two questions: 1. Would a higher end dealership decline me quicker over, let’s say a Hyundai, Kia or Cheverolet and 2. what would be your best advice for a woman in this business.
Thanks…LG
Hi LG,
This a great time to enter the car business and either any of the brands that you mention would be a good place to start. It all depends on the dealership and how they operate rather than the brand when it comes to hiring.
Your second question about advice on being a woman in the car business…let’s go…quit wasting time. This a great time for women to be in the car business. Read the comments from Diane on the the Car Sales Woman post that I just published.
KB
My uncles recently invited me into working at a dealership with them… I have no clue on car sales, any books or reading you may suggest?
Hi Robert,
Have you considered reading my book?
How do you split commissions? I am tired of another sales person opening a door for someone and then taking 1/2 the commission after I spent 2 weeks getting the customer to commit. WHat is the rule of thumb when to split a commission?
Hi Hal,
When two sales people are involved in a sale the commission is split between them. An example might be where one takes the customer through the steps of the sale and the second closes the deal.
KB
Im 20 years old and have a huge interest in cars. I have been into wheeling and dealing. I have been denied by several dealers because of lack of experience what is the best step to take to get my foot in the door.
Try different dealers until you find one. They are out there.
KB
I work at a domestic dealership since i was 16, working my way up from service to sales and now into F&I. This business is awsome and people can make some serious money here. The best thing I got was training. Im not talking about ready brochures as a newbie. Im talking about sales trainers like Brian Tracy and Grant Cardone. Spend the money for Cardone and learn from him and you will earn significant amount more money. My question though is what is the average payplan like for an F&I manager?
Hello Skys the Limit,
Nice job moving up through the ranks from service. It sounds like you are on your way to a having a great career.
F&I pay plans are all over the board and I have rarely seen one dealership pay plan the same as another.
It will not only depend on the rate you charge, but also is significantly impacted by other products like insurance. warranties and maintenance agreements.
Best of luck, keep up the great work.
KB
O.k. I’m thinking about getting into car sales for the 1st time. What’s it like at Carmax? They look like a great company, but I’m nervous about the 100% commision.
I worked for a dealership that withheld manufacturers spiff and paid you a 200 dollar flat regardless of what gross you made. they said 25 to 40 % comm. they wont tell you how much they marked it up cause I was new. new guys who sold ten cars made 2,000 and old dogs who sold 10 cars made much more. I think they pay the older guys differently cause making 10,000 in a month when the deakership only offers a 200 dollar flat doesnt seem likely. I went to another dealership and with bonuses and comm combined it was easily 5 to 600$ a sale. Shady?
Hi Joem,
Pay plans are different at practically every dealer, but it does sound a little funny. However I can’t imagine there being a dealership where they would pay the older guys better than the newer guys.
KB
Hi Newbie,
I have to say that I have not had any first-hand experiences with Carmax.
As far as selling for them I couldn’t offer a any help, but maybe some of you car guys and gals out there could.
KB
I am curious to know whether a car dealership will hire people with no previous car sales experience on the basis of commission only?
Hi, I am considering a career in the car sales industry but I would like to work at a dealership selling super cars or sports cars, such as Ferrari or Porsche. Would a dealership such as this pay more? And is it just as likely to get accepted at these dealerships as it is say at Hyundai?
Thanks, Richard
That would be most car dealerships.
Thanks Dan
That is a great way to look at it. You will get out what you put in.
KB
You make more money selling high end sports cars, but you probable wouldn’t get a chance without experience.
I can’t imagine that there is a dealership that sells high end vehicles would be willing to train a newbie and take a chance a losing sales while they are doing it.
Yes, it would be easier to get hired at Hyundai.
Good Luck
KB
Quick ? Ive been in the biz for about a yr now and with my second dealer. My dealer has a 800 dollar pack but then they take out 250 1st clean fee, 35 first oil change, 50 nitro fill, and then delivery clean of 40 … Isnt this money taken out supposed to be what the packs for and not on top of it?
Maybe it is time to think about changing dealers.
KB