A car salesman salary is a mystery to those that have never been in the profession because of many different factors that make up the overall income of an automobile salesman. This explanation should help clear up the mystery for anyone that is considering this potentially lucrative career and wondering how to become a car salesman. This can also serve as a guide for those that are already selling cars for a living or car sales newbies. Especially those salesmen that want to evaluate their current standing and discover the potential for increasing their car salesman salary whether they get paid a commission or they work under a hybrid style of pay plan.
I will also cover the average car salesman salary and the importance of sales performance including the relationship to the overall income potential at the dealership. The experience level of the car salesman can also be a factor in overall salary, but rarely is that a dealership consideration where compensation is concerned. The dealership pay plan often has the biggest impact on how the car salesman gets paid and whether the dealer sells new, used or both. Whether we talk about the neighborhood used car lot or the multiple lines mega new car dealership the car salesman salary calculation methods are explained and covered right here.
The Parts of a Car Salesman Salary
To get a better overall view of a car salesman salary you need to understand the different factors that make up how car salesmen get paid. These factors include:
- Weekly Pay
- Per Car Pay
- Hours Worked
- Dealership Bonuses
- Manufacturer Bonuses
Let's take a closer look at each component of a car salesman salary.
Car Salesman Commission and Salary
Most dealerships pay their salespeople on a commission basis. In other words, the number of cars sold and the profit of each sold car determines the car salesman salary. Of course, it’s more complicated than that because it depends on the pay plan that each dealership has in place. However, it also means that if the salesperson does not sell a car they do not get paid. This practice rewards the skilled members of the sales staff and starves those that are having a problem getting the hang of the job. This is one of the most popular reasons that people are hesitant to pursue a car salesman job.
Example: Let's say you sold a car and the profit on that car was $1,000 (after pack) and your commission rate was 25% (which varies from dealer to dealer from 20% to 40%). Then the car salesman would receive a 25% commission or $250. Not bad for a couple hours of work, but if the profit was only $200, 25% would only come to $50, but most dealerships also have a policy that pays the salesman a minimum flat fee (or mini) of $100 or so depending on the dealership. You get the idea, so what if you sold a vehicle with a $4,000 profit? That’s right you get paid $1,000. For a complete explanation and the details of a car salesman salary and commission visit: Car Salesman and Commission the Way it Works.
Weekly Sales Pay
A small percentage of car dealerships pay their salespeople a fixed weekly car salesman salary. In those cases, they may also pay a smaller commission rate or on a “per car” (see below) basis. This type of pay plan provides the comfort and security of a steady income every week, but it also allows the salesman to supplement their car sales salary and pay-scale based on their own initiative, drive, and ambition. This method of car salesman compensation rarely allows the even the best salesman to earn more than a slightly above average car salesman salary.
Per Car Sold Salesman Pay
The “per car” type of sales pay is often combined with a weekly fixed amount, but that is not always the case. Sometimes the “per car” amount is larger when the weekly pay is non-existent. This amount can range anywhere from $100 with weekly pay or up to $250 without weekly pay depending on the dealership and presence of other methods or opportunities to produce income that is part of the car salesman salary. The number of cars a car salesman sells a month depends on the skill level and experience. Check out How Many Cars a Car Salesman Sells for more information.
Hours Car Salesmen 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 salesman job description. They don’t stay at work beyond their scheduled time for fun it’s usually because they are wrapping up deals and selling cars which isn’t too bad if you are making money for staying late. Since the car salesman often has downtime during the day is can be a pleasure to be working and delivering a car if you are adding to your car salesman salary.
Dealership Car Sales Bonuses
One of my favorite ways to add to a car salesman 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 percent to 50% of a dealers car salesman 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.
Manufacturer Car Salesman Bonuses
For years now the auto manufacturers will run monthly sales promotions from time to time that will pay the car salesman a cash bonus for selling certain cars. I have seen the automakers offer car salesman cash of anywhere from $50 to $150 for selling a certain model car or even several models of cars. Usually, these involve cars that typically sell well and the manufacturers are trying to increase their market share. So it wouldn’t be out of the question to sell anywhere from 5 to 10 of these cars in a month which can add up to a nice additional income.
When we talk about a car salesman salary you need to consider the benefits. I am talking about the kind of benefits that include health insurance, paid vacation time and retirement benefits like a 401K savings plan. Not all car dealerships are willing to include these types of benefits in the overall pay plan and compensation package, but you do need to think about these things as part of your salary. If you don’t have these benefits available through your dealership you will need to make the necessary adjustments and allowances to cover those expenses. Any well-run dealerships will offer you these benefits, but once again every dealership is different and you will have to get that specific information from the dealership as part of your car salesman salary package.
Perks and a Car Sales Salary
Perks for the car salesman are not very plentiful other than the possibility of driving a dealer demo car. Some dealerships still offer this to their salesmen, but you will be taxed as part of your car salesman salary for the privilege of driving a demo car. However, this can save you from buying, maintaining and insuring a vehicle to get back and forth to work, which can take a bite of your paycheck. Typically you will also have a perk that allows you and your family members to buy cars and parts at a discount, but how many cars do you buy and how often is limited. Forget about having holidays and weekends off other than a select few when the dealership is closed, but typically you will need to be at work when people are off of work and want to shop for cars.
When the salesman works on a 100% commission basis there may be times that you won’t have any weekly pay come payday. It shouldn’t be often if at all, but it can happen when your deals aren’t funded in a timely manner or you sales were terrible the past week. When and if it does happen the draw will come in handy. The draw is designed to automatically advance a fixed car salesman salary to hold them over until next week. Then next week you will be paying back the draw as long as your commissions exceed a certain amount. If the salesperson is continually getting and paying back a draw from their salary it’s time to make a change. Change the car salesman, change dealerships or change professions.
Car Salesman Salary, Pay Plans and Performance
The crucial element to the car salesman 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 salesmen 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 that sells 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 salesmen. 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 salesman compensation strategy. Most pay plans for salesmen are similar in nature, but they vary slightly when it comes to bonuses and commission percentages. The best car salesman salary and pay plans for the person that wants to make a large salary is not necessarily the one with the highest commission rate. It’s usually the one that has a lower rate and a higher number of bonuses and other opportunities to earn additional income.
The Average Car Salesman Salary and Earnings
When we talk about the average car salesman salary there are many things to consider. The average is a subjective term and nailing down the average earning for a person that sells cars for a living is difficult to do. It doesn't matter if we are talking about a Chevy car salesman salary or that of a luxury vehicle salesman because it all works the same way. One of the reasons for a seemingly low average income for people selling cars is the rate of turnover. Car salesman jobs traditionally have a high turnover rate. This is for several reasons, but this is also one of the main reasons that the median car salesman salary is so low. I polled readers of this website in an effort to find how much do car salesmen make and the results are much higher than people expected. If you are thinking about becoming a car salesman you should take a look.
Overview How Do Much Car Salesmen Make
Average Car Salesman Salary Ranges
Not Good: 0$ to $20,000 a Year
If your car salesman income falls in this range it means you just started selling cars or you need to find a different vocation. This car salesman salary and pay-scale is unacceptable and something needs to change immediately. Either get with the program or get another job.
Weak: $20,000 to $40,000 a Year
The middle to upper end of this car salesman salary range is not uncommon, but lower than average. Car salesmen working at a used car lot or a very small new car dealership located in a rural area can often be topped off at this level because of showroom traffic and available customers. So if you are earning under $40,000 a year you need to accept your income, make a move to a larger dealership or start paying attention to the other members of the sales staff that are earning more than you. Let those salespeople teach you how to sell more cars by observing them when they work. Watch, listen and learn from your fellow salespeople that are earning more than you.
Average Car Salesman Earnings $40,000 to $60,000 a Year
Obviously, this is a range, but if you want to know the average car salesman salary it comes in at the lower end of this range. Most average salesmen fall in this income range. The good news is that it doesn’t take much to get to the next pay scale. Ask for some referrals, get back to basics, sell an extra car or two a month and read some of the articles on this website. That’s right, you can give yourself a raise with a little extra effort and some car salesman tips.
Just Above Average $60,000 to $85,000 a Year
This income bracket of a car salesmen salary is very common and most salesmen are in this bracket and the bracket below. You know how the business works and you are comfortable selling cars. You may work at any of the new car dealerships and probably sell a mix of new, used and lease cars. Typically you have been in the business for a year or more. You are selling a few referrals now and then, but you can sell more. You can easily move to the next level of income by working on your closing percentages and asking for more referrals and doing some prospecting.
Top Car Salesman Salary $90,000 to $250,000 a Year
Congratulations, if you are at this level of income you are a “Car Sales Professional”. This person knows how to sell cars and close deals. They control their own income and have the ability to give them a raise whenever they want. This kind of car salesman salary is not uncommon; in fact, a six-figure income is very common. Salespeople in this bracket usually make up the top 20% of a dealership’s sales staff. You don’t have to work at a high line dealership in order to earn $250,000 a year. I know several salesmen that make this kind of income and they don’t work at Mercedes or BMW and some even achieve this level of earnings on a Honda, Ford or Chevrolet car salesman salary. You can be a great car salesman too!
Now that you know all about a car salesman salary and how car salesmen get paid you should be ready to start your new car sales career or make some changes and increase your earnings. The business of selling cars is full of opportunity and there is plenty of money to be made is this profitable and rewarding career of being a car salesman.
Check Out the Survey "How Much Do Car Salesmen Make"