Here at the Car Sales Professional Blog we get lots of visitors that want to know more about Car Sales Commission or how car salespeople 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 salesperson 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 salesperson get paid because they want to know that before they learn how to become a car sales consultant. 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 Sales Commission or Not
The good car salesperson that has been selling cars for any period of time couldn't imagine a fixed car sales salary or getting paid any other way. The car salesperson 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 salesperson income of $100,000 a year. Sounds like an easy choice for me. I personally love getting paid on commission because I can control my annual income rather than a job classification, contract or seniority (see the car sales job description and car sales tips). If you get a fixed car sales salary then you are missing out on the benefits of car sales compensation.
Car Sales Commission and Compensation or How Do Car Salespeople Get Paid?
I will start right of by telling you that almost every auto dealership car sales commissions and compensation pay plan that I know is slightly different than the next. However, I will give you the overall idea of how and what does a car salesperson get paid and how a car 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 salesperson 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 reduced by the "pack" charge for let's 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 sales commission or how car salespeople 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 a 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 commission and 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 sales commission. When this happens the car salesperson gets paid a "Mini" which is also different at every dealer. I have seen "Minis" pay anywhere between $50 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 Sales Commission
To move along, another part of a used and new car sales commission that you can control is 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 salesperson to sell things like rustproofing, paint protection, fabric protection, and undercoating. These are often sold as packages and the salesperson 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 salesperson income.
Next on the list are car sales consultant bonuses which added to your car sales commission can make a big difference to your auto sales 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 Sales Commission Bonuses and How Car Salespeople Get Paid
Here is a list of some of the ways car salespeople 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.
Saleswoman or Salesman 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 above and beyond the standard commission.
Sliding Scale Car Salesperson 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 salespeople 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 salespeople. I have seen Saturday Bonuses for most cars sold, weekend rewards for most cars sold, extra money for cars sold on a holiday and other car sales skills...etc. This is one area where great car salespeople really excel.
Manufacturer Incentives as Car Salesman Compensation: There are several manufacturers that offer incentives the dealership salespeople that are paid directly to the salesperson. Some (not all) of the car makers require a salesperson 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 salesperson at a dealership that received more than $30,000 from the factory over the course of a calendar year. Now that's real money that can help you make a six-figure income via a not so average car sales commission pay plan.
How Much Do Car Salespeople 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 salesperson 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 sales consultant compensation does not stop with a commission and that is why you should know how to be a good car salesperson because you can earn over a $100,000 a year which is some serious money. That should be a sufficient answer for those of you that wonder about how much money do car salespeople make an auto dealership sales commissions. The real-life answers about how much car salesmen make are right here.
I hope this helps you understand how do car salesmen get paid and the basic structure of a car sales commission pay plan. I hope that helps all of you that have asked what does a car sales consultant get paid and what percent does an auto salesperson make on a car. There are several opportunities for the car salesperson to make big money. Plus there are many other automobile sales careers that have big earning potential.
Later, Fresh Up on the Lot