How much commission do car salesmen make?

How much commission do car salesmen make?

When it comes to purchasing a car, many buyers are curious about the commission structure for car salesmen. Understanding how much commission a car salesman makes can provide insights into negotiating a better deal. Let’s take a closer look at this topic, addressing frequently asked questions to shed light on the earning potential of car salesmen.

1. What factors influence a car salesman’s commission?

The commission earned by a car salesman is influenced by several key factors, such as the dealership’s commission structure, the type and price of the vehicle sold, and the individual salesperson’s performance. It’s important to note that commission structures can vary widely from one dealership to another.

2. How is a car salesman’s commission structured?

Commission structures differ, but they generally fall into two categories: a flat fee per car sold or a percentage of the vehicle’s sale price. In some cases, salespeople may receive a base salary plus a commission, providing a level of stability alongside earning potential tied to sales performance.

3. Are there different commission rates for new and used cars?

Yes, commission rates may vary depending on whether the vehicle sold is new or used. Typically, used cars have higher commission rates as their profitability margins tend to be greater compared to new vehicles. Sales volume may also impact the commission structure.

4. Do car salesmen work on a draw system?

Some dealerships operate on a draw system, which provides salespeople with a guaranteed minimum income. The draw amount is usually subtracted from future commissions. If a salesperson’s commission exceeds the draw amount, they receive the difference as a payout. However, if commissions fall short of the draw amount, the salesperson may owe the dealership the difference.

5. Can car salesmen earn bonuses or incentives?

Yes, many dealerships offer bonuses or incentives to motivate their sales force. These incentives can be based on meeting specific sales targets or selling certain models. Achieving these milestones can significantly boost a car salesman’s overall earnings.

6. Is there a typical range for a car salesman’s commission?

The commission range for car salesmen is quite vast. On average, a car salesman can earn anywhere from 5% to 20% of the vehicle sale price. For example, if a car is sold for $30,000 and the commission rate is 10%, the salesman would earn $3,000. However, it’s important to consider other factors such as bonuses, incentives, and customer satisfaction scores, which can impact a salesman’s overall income.

7. What skills or qualities can help a car salesman earn higher commissions?

Several skills and qualities can contribute to a car salesman’s ability to earn higher commissions. Strong negotiation skills, product knowledge, effective communication, and building long-term customer relationships are all important. Exceptional customer service and a genuine passion for helping customers find the right vehicle are also factors that can lead to increased commissions.

8. Do car salesmen earn ongoing commissions?

While some dealerships may offer ongoing commissions for maintenance services or additional purchases made by customers referred by the salesperson, it’s less common. The majority of a car salesman’s commission is earned from selling the vehicle itself.

9. Are there any industry statistics on car salesman commissions?

According to the National Automobile Dealers Association (NADA), the average gross profit per new vehicle sold in 2020 was around $2,049. This indicates the potential for commissions of several hundred dollars or more per sale, depending on the commission structure and other factors mentioned earlier.

10. How can buyers use knowledge of commissions to negotiate a better deal?

Understanding the commission structure gives buyers valuable insight when negotiating a better deal on a vehicle purchase. Knowing a salesman’s motivation to close a deal and the potential range of their commission can empower buyers to negotiate a fair price while simultaneously benefiting the salesman with a reasonable commission.

11. Are there any well-known quotes about car salesman commissions?

“Your most unhappy customers are your greatest source of learning.” – Bill Gates

This quote reminds car salesmen that providing excellent customer service and focusing on customer satisfaction can lead to repeat business and positive reviews, ultimately influencing commissions.

12. Are there any ethics involved in car salesman commissions?

Ethics play a crucial role in the automotive sales industry. While commissions are vital for a salesperson’s income, it’s important for salesmen to prioritize customer needs and trust-building over excessive focus on personal monetary gains. Long-term customer relationships built on trust can lead to referral business and a more sustainable career.

13. Can car salesmen earn high six-figure incomes?

While some exceptional car salesmen may earn high six-figure incomes, it is not typical. The industry average income for car salesmen tends to be in the range of $40,000 to $60,000 per year, though high performers can earn significantly more.

14. Can car salesmen negotiate their own commission rates?

In some cases, experienced car salesmen with a proven track record may have the ability to negotiate their commission rates with dealership management. This negotiation power often stems from consistent high sales performance and a strong reputation within the dealership.

15. How does the choice of dealership affect a car salesman’s commission?

The choice of dealership can significantly impact a car salesman’s commission potential. Larger dealerships with higher sales volumes may offer higher commission rates but have more fierce competition among salespeople. Smaller dealerships, on the other hand, may offer lower commissions but provide a more relaxed sales environment with potentially higher sales-to-salesperson ratios.