Car Salesperson Salary and Earnings
A car sales salary is a mystery to those who have never been in the profession. Many factors make up the overall income of an automobile salesperson. This explanation should help clarify the mystery for anyone considering this potentially lucrative career. Plus, those that are wondering how to become a car salesperson. This can also guide those already selling cars for a living or car sales newbies. Especially those salespeople that want to evaluate their current standing. And discover the potential for increasing their car sales salary, regardless of whether they get paid a commission or work under a hybrid style of pay plan.
I will also cover the average car sales consultant’s salary and the importance of sales performance, including the relationship to the overall income potential at the dealership. The experience level of the car salesperson can also be a factor in the overall salary. But rarely is that a dealership consideration where compensation is concerned. The dealership pay plan often impacts the car salesperson’s pay 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 salesperson salary calculation methods are explained and covered here.
The Parts of a Car Salesperson Salary
To get a better overall view of a car sales salary, you must understand the factors that makeup how car salespeople get paid. These factors include:
- Weekly Pay
- Per Car Pay
- Hours Worked
- Dealership Bonuses
- Manufacturer Bonuses
Let’s look at each component of a car salesperson’s 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 salesperson’s 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 they are not paid if the salesperson does not sell a car. This practice rewards the sales staff’s skilled members and starves those struggling to get the hang of the job. This is one of the most popular reasons people hesitate to pursue a car sales consultant job.
Example: Let’s say you sold a car, and the profit on that car was $1,000 (after pack). Your commission rate was 25% (which varies from dealer to dealer from 20% to 40%). Then the car salesperson would receive a 25% commission or $250. Not bad for a couple of hours of work, but if the profit were only $200, 25% would only come to $50. Most dealerships also have a policy that pays the salesperson 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 sales 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 salesperson salary. In those cases, they may also pay a lower 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. Still, it also allows the sales consultant to supplement their car sales salary and pay scale based on their initiative, drive, and ambition. Unfortunately, this method of car salesperson compensation rarely allows even the best salespeople to earn more than a slightly above-average car sales salary.
Per Car Sold Sales Consultant Pay
The “per car” type of sales pay is often combined with a weekly fixed amount, but that is not always true. Sometimes the “per car” amount is more significant when the weekly pay is non-existent. This amount can range anywhere from $100 with weekly pay to $250 without weekly pay, depending on the dealership and other methods or opportunities to produce income that is part of the car salesperson’s salary. The number of cars a car sales consultant sells monthly depends on the skill level and experience. Check out How Many Cars a Car Salesman Sells for more information.
Hours Car Sales Consultants 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 be 40 to 50 hours a week, but staying at work after closing time is quite common. Your scheduled hours should be included in your car sales consultant 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 make money. Since the car salesperson often has downtime during the day, working and delivering a car is a pleasure.
Dealership Car Sales Bonuses
One of my favorite ways to add to a car sales salary is the bonuses offered by the dealership based on performance. Of course, this will differ at every dealership. However, I know of dealers where bonuses can be anywhere from a few percent to 50% of a dealer’s car salesperson’s monthly salary. The variety of sales bonuses/spiffs can include specific cars sold and aged inventory sold. The first car of the day sold, top grossing sales, car count, and other rewards. These premiums are designed to motivate the sales staff by offering additional income, which the dealer has used for years to increase sales and profits.
Manufacturer Car Sales Consultant Bonuses
For years, auto manufacturers will run monthly sales promotions. They will pay the car salesperson a cash bonus for selling certain cars. I have seen automakers offer car salesperson cash anywhere from $50 to $250, often for selling a particular model car or even several models of vehicles. 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 discussing a car sales salary, you need to consider the benefits. I am talking about the 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 benefits in the overall pay plan and compensation package, but you need to consider these things as part of your salary. If you don’t have these benefits available through your dealership, you must make the necessary adjustments to cover those expenses. Any well-run dealership will offer you these benefits. Still, once again, every dealership is different, and you will have to get that specific information from the dealership as part of your car sales consultant salary package.
Perks and a Car Salesperson Salary
Perks for the car salesperson are not plentiful other than the possibility of driving a dealer demo car. Some dealerships still offer this, but you will be taxed as part of your car sales salary for driving a demo car. However, this can save you from buying, maintaining, and insuring a vehicle to return to work. Typically you will also have a perk that allows you and your family to buy cars and parts at a discount. But how many cars 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.
The Draw, Not the Salary
When the salesperson works on a 100% commission basis, you may not have any weekly pay come payday. It shouldn’t often be, but it can happen when your deals aren’t funded promptly, or your sales were terrible the past week or month. When and if it does happen, the draw will come in handy. The draw is designed to automatically advance a fixed car salesperson’s salary to hold them over until next week. Then next week, you will be paying back the draw if your commissions exceed a certain amount. If the salesperson continually gets and pays back a draw from their salary, it’s time to make a change. Change the car salesperson, change dealerships, or change professions.
Car Sales Salary, Pay Plans, and Performance
The payment plan is the crucial element of the car sales salary at any particular dealership. This is a detailed written strategy for compensating their salespeople that is performance oriented. Almost every salary in a car dealership is performance-based, especially for the car salesperson. The car dealership wants to attract and keep the best car salespeople for their sales staff, which is best done with an aggressive and generous pay plan. Therefore most compensation plans are designed to reward those financially who sell the most cars and make the most profit from their sales.
Many car dealerships operate like small businesses when paying their salespeople. I am trying to say that every dealership has a slightly different pay plan than the next. The dealership’s General Manager is typically responsible for the car sales pay plan. Therefore, finding two unrelated dealers with the same car salesperson compensation strategy is rare. Most pay plans for salespeople are similar, but they vary slightly regarding bonuses and commission percentages. The best car sales consultant 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 with a lower rate, a higher number of bonuses, and other opportunities to earn additional income.
The Average Car Sales Salary and Earnings
When we talk about the average car salesperson’s salary, there are many things to consider. The average is subjective, and nailing down the average earning for a person selling cars is difficult. It doesn’t matter if we are talking about a Chevy car salesperson’s salary or that of a luxury vehicle sales consultant because it all works the same way. One of the reasons for a seemingly low average income for people selling cars is the turnover rate. Car salesperson jobs traditionally have a high turnover rate. This is for several reasons, but this is also one of the main reasons the median car salesperson’s salary is so low. I polled readers of this website to find out how much car salespeople make, and the results are much higher than expected. If you are considering becoming a car salesperson, you should look.
Overview How Do Much Car Sales Consultants Make
Average Car Salesperson Salary Ranges
Not Good: 0$ to $20,000 a Year
If your car salesman income falls in this range, you just started selling cars or need to find a different vocation. This car salesman’s salary and pay scale are 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 the upper end of this car salesperson’s salary range is not uncommon but lower than average. Car sales consultants working at a used car lot or a tiny new car dealership in a rural area can often be topped off at this level. Often because of showroom traffic and available customers. You must accept your income if you are under $40,000 a year. You either move to a more prominent dealership or start paying attention to the other sales staff members 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 earning more than you.
Average Car Salesperson Earnings $40,000 to $60,000 a Year
This is a range, but if you want to know the average car salesperson’s salary, it comes in at the lower end of this range. Most average salespeople fall in this income range. The good news is that it doesn’t take much to get to the following pay scale. Ask for some referrals, get back to basics, sell an extra car or two monthly, and read articles on this website. You can give yourself a raise with a little extra effort and some car sales tips.
Just Above Average $60,000 to $85,000 a Year
This income bracket of a car salesperson’s salary is very common, and most salespeople 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 new car dealership and sell a mix of new, used, and leased cars. Typically you have been in the business for a year or more. You are selling a few referrals occasionally, but you can sell more. You can quickly move to the next income level by working on your closing percentages, asking for more referrals, and prospecting.
Top Car Sales Salary $90,000 to $250,000 a Year
Congratulations, if you are at this income level, you are a “Car Sales Professional.” This person knows how to sell cars and close deals. They control their income and can give them a raise whenever they want. This kind of car salesperson’s salary is not uncommon. A six-figure income is very common. Salespeople in this bracket usually comprise the top 20% of a dealership’s sales staff. You don’t have to work at a high-line dealership to earn $250,000 annually. I know several salesmen that make this kind of income. They don’t work at Mercedes or BMW. Many achieve this level of earnings on a Honda, Ford, or Chevrolet car salesperson’s salary. You can be a great car salesman too!
Now that you know about a car sales salary and how car salespeople get paid. You should be ready to start your new car sales career, make some changes, and increase your earnings. The business of selling cars is full of opportunity. There is plenty of money to be made in this profitable and rewarding career of being a car sales consultant.
Check Out the Survey “How Much Do Car Salesmen Make”