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
K.B.

12 Comments

Jen · April 14 at 9:47 am

Hey I have a question. I was just hired as a are saleswoman for a Nissan dealership and I’ve recently been told that if I don’t sell any cars I won’t be coming home with a check. Do salesman make hourly and then commission or could I potentially be working days and have nothing to show for it at all?

Ricky · April 12 at 8:17 am

hey KB,

It’s me again:)

I got interviewed last week and turns out I landed the job just by being a good talker and having customer service experience. I also impressed the owner when I told him that I have my own Jump-house rental business that I run as a side gig.

Anyway, I can you give me a little insight on what I should focus on and what I should expect to be taught in the first month? Also, what is some basic knowledge I should come on board with? I’m a fast learner but it would be nice to hear some more motivational words from you, since i partly credit landing this job to you

Rick

Salvador · March 24 at 12:18 pm

Thank you, this is really helpful and enlightning for some one thinking of moving into the career path of car sales.

KB · August 17 at 8:32 am

Did the customer ask for your relative?

What is the dealership policy on referrals?

Norman A Solow · August 12 at 6:00 pm

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?

Kay · August 12 at 11:09 am

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?

Jimbo · July 24 at 3:45 pm

Hope this helps some of the posters that are new to auto sales; this is a numbers game, and if you don’t work the numbers they will work you.

With any dealership or pay plan you must look at how it’s set up and what units are going to pay the best. If your dealer is adding addendum items to the cost of the new car like scotch guard or pinstripes and charging the deal hundreds of dollars you may never make over a mini selling a new car unless you aggressively market units that qualify for a bonus.
If the managers are desking deals on payments, they can short the front end gross by adding points or GAP to the back. so keep it “your deal by holding back on the trade or adding aftermarket.
If every used car gets run through service hundreds of inflated dollars will be added to the cost of the car, so pay attention as cars go through service.
Walk the back lot every morning looking at yesterday’s trades, if you see the right unit make your customer call on it ASAP before it can go through service.

Your manager is responsible for dealer profit; you are responsible for your paycheck

Justin · July 21 at 9:45 pm

@Ret….. that’s sounds like a decent payplan for someone just starting out. how much money did you make off of 12 cars? around $4000? 1600 salary, 1200 commissions and maybe 1000 unit bonus? usually any dealership that pays a salary pays less commission or flats. hard to make big bucks that way, you make money by holding gross and getting a percentage of it. get yourself acclimated to the business and then go to a dealership that pays 25-35 percent and then sell 12 cars. if they hold gross on their deals your income will double.

Justin · July 21 at 9:20 pm

I am 32 years old. have been working in the car biz since I was 14 as a porter my dad was the GSM of. 18 years later I am the used car manager of a VW store for the 16th largest dealer group in the US. during the many years pounding the pavement had many different payplans. I’ve never had a salary and always refused the draw. in sales I never made less than 50k a year and have made as much as 120k. to clarify one of the points mentioned, yes, having to pay back a draw is legal, they have basically paid you your commissions in advance, the fact that you sold 3 cars and only made 500 bucks is nobody’s fault but your own. if you paid me in advance for a job I never completed, you would want your money back right? same deal here. point number 2, the money they took out of your paycheck is called a chargeback. you sold a car and paid you a commission on the profit, If the profit changes because you can’t handle a beef on a cheap used car that was sold as-is you will participate in the adjustment of profit. lastly, all of you people talking about labor laws and unfair practices and who’s trying to screw who; if you don’t like the way it works: STAY OUT OF OUR BUSINESS! it’s greenpeas like you who constantly waste my time training you and then you just up and quit because you 1. don’t have the motivation to make it in this business 2. you aren’t hungry enough to hustle 3. have no business “trying it out” because some one told you you could sell anyone anything. it’s not a job, it’s your business and you should treat it like one, the harder you work the more you make, it’s not just putting in time. I made $20k one month selling hondas, sold 30 of them and probably worked 300 hours that month…. it is what it is. if you don like it, go punch the clock at mcdonalds or better yet Starbucks.

Dan · July 20 at 12:11 pm

This was nice reading, I see a lot of green pea’s on here, and it’s a shame they are on here instead of worrying about catching an up. I couldn’t agree more with the guy that said if you are worrying about your draw, you need to find a new line of work. As for the guy that sold 3 cars for the month… I am shocked you weren’t fired. As for the girl that asked about her boyfriend and giving “commission” to the guy that sold the customer years ago… NO! Don’t do it. Your boyfriend earned the commission, it is his. If the customer didn’t ask for him, than he get’s NOTHING. He is trying to take advantage of a new guy. If he gives in, he will be finished at that dealership.

I have been selling for over 12 years, I love it, make 90 to 120 a year. The worst part of this job is the hours, and working every weekend. Other than that, the money is good, the job (can be) fun, and it is easy work.

KB · March 8 at 6:12 pm

Never heard of such a thing.

yvette · March 3 at 2:19 am

By law does a dealer ship have to give a written notice or sign a consent informing of a pack is added to each vehicle?