Car Sales Commission the Way it Works.
At the Car Sales Professional Blog, many visitors want to know more about the Car Sales Commission. They want to know how car salespeople get paid and how it works. Some visitors here are people considering a car sales career, and some are Newbies or Green Peas. People new to selling cars for a living have many questions and concerns regarding car salesperson compensation. For example, pay plans, working on commission, and not having a paycheck the same every week. I have received many emails asking what a car salesperson gets paid because they want to know before they become a sales consultant. Regardless of how hard they work or don’t work, they feel better knowing how much their paycheck will be every Friday. That’s why so many people ask how much car salespeople make.
Choosing a Car Sales Commission or Not
A good car salesperson selling cars for any period couldn’t imagine a fixed car sales salary. But, of course, they wouldn’t dream of getting paid any other way. The car salesperson commission reflects the labor, experience, and skills used to sell cars. There is no question that your paycheck can vary significantly from week to week. Plus, it can be influenced by the time of year, weather, manufacturers’ specials, etc.
But you have to ask your self would you instead make $40,000 a year and have the same paycheck every week? Or would you rather have your car sales commission check vary significantly from week to week and have a car salesperson income of $100,000 a year? Sounds like an easy choice for me. I love getting paid on commission because I can control my annual income. It’s much better than a job classification, contract, or seniority (see the car sales job description and car sales tips). However, if you get a fixed car sales salary, you are missing out on the benefits of car sales compensation.
Car Sales Compensation or How Do Car Salespeople Get Paid?
I will start by telling you that almost every auto dealership car sales commission and compensation pay plan differs slightly from the next. First, however, I will give you the overall idea of how and what a car salesperson gets paid. How a car sales commission and pay plan works is not a car sales salary.
To answer the common question of what percentage an auto salesperson makes on a car. I will start the commission of car salesmen and car saleswomen based on a profit percentage 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 vehicle you sold. For example, you sold the car for $20,000, and the invoice cost was $18,000. Therefore, the front-end profit is $2,000.
However, each car’s charge, called “Pack” or “the Pack,” is assessed for the dealership’s overhead. This is to pay for porters to clean the cars, lot maintenance, office people, paperwork, etc. This pack differs 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 of $ 1400 or more. So to get back to our example. The $2,000 profit from above is reduced by the “pack” charge of $500, which leaves you with a commissionable profit of $1500. So your $1500 profit determines your auto dealership sales commissions and compensation.
Car Sales Pay Varies
The next step of figuring out 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% to 40%. This is solely at the dealership management and owners’ discretion. For example, we will use a 30% rate. That means 30% of your “front end” profit or $1500 equals $450. Not bad for one sale, but there is much more involved regarding car salesman commission and compensation.
Let’s take the example of the car above, where the invoice costs $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 meager profit, and nothing is left for the car sales commission. When this happens, the car salesperson gets paid a “Mini,” which is different at every dealer. I have seen “Minis” pay between $100 to $300 to the salesman for selling a “Mini Deal.” Of course, if all your deals were “minis,” you would have to sell several cars to make any money for the month.
Bonuses, Incentives, and Car Salesperson Commission
Another part of a used and new car sales commission you can control is the sale of extras or add-ons that can earn you an incentive. Not all, but many auto dealership sales commission 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 $250 for selling one of these packages. The next thing that a car salesperson can sell are accessories for the car they just sold.
Things like remote starts, sunroofs, body molding, splash guards, trailer hitches, and entertainment systems, to name a few. Some dealers add these accessories to the deal and pay car sales commission on the profit of everything. Other dealers pay a fixed amount for each item sold. Either way, it is a chance to make more car salesperson income.
Next on the list are car sales consultant bonuses added to your car sales commission. These can significantly affect 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 salespeople. The most successful car salespeople are the dealership’s top producers that go beyond auto dealership sales commissions.
Car Sales Bonuses and How Car Salespeople Get Paid
Here is a list of additional ways car salespeople get compensated. These are 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 vehicles sold, get $600; sell 18 cars 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. Then, when you sell any of those cars, you may get 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 to motivate their salespeople to sell more cars. An example of a sliding scale percentage pay plan is as follows. Sell six cars get 20% commission, sell nine cars get 25%, sell 12 cars get 30%, sell 15 cars get 35%, and deal 18 or more and get 40%. You can 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 vehicles sold on a holiday, and other car sales skills…etc. This is one area where great car salespeople excel.
Outside Sales Compensation Adds Up
Manufacturer Incentives as Car Salesman Compensation: Several manufacturers offer incentives to the dealership salespeople that are paid directly to the salesperson. Some (not all) car makers require a salesperson to take some of their car sales training classes and become “certified.” Possibly some other method will register them with the factory, and when that person sells a new car, 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 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. If you are trying to figure out what kind of money you can make over a month. You should know that every deal and the auto salesperson’s commission differs. Over a month, you can figure that your sales can be classified in thirds. One-third “Minis,” one-third average, and one-third excellent front-end grosses or commissions.
As you can see, car sales consultant compensation does not stop with a commission. And that is why you should know how to be a good car salesperson: you can earn over $100,000 a year, which is some serious money. That should be a sufficient answer for those who wonder how much money car salespeople make in auto dealership sales commissions. The real-life answers about how much car salespeople make are right here.
I hope this helps you understand how car salespeople get paid and the structure of a car sales commission. In addition, I hope this helps all of you that have asked what a car sales consultant gets paid. Or what percent an auto salesperson makes on a car. There are several opportunities for the car salesperson to make big money. Plus, many other automobile sales careers have enormous earning potential.
Later, Fresh Up on the Lot