A car salesperson often makes more money from bonuses and other add-ons such as undercoating. Bonuses arise where a salesman sells a certain number of vehicles in a month. A good salesperson might end up with as much money from selling add-ons as from the commission on the sale.
What does a car salesman do?
A car salesman says hello to customers and avail themselves for any inquiries the customers have. They explain different features of the models and brands the customers have expressed interest in and explain financing options and warranties. This means that they must always have enough knowledge about every vehicle and answer any questions customers ask.
In the case where a test drive is involved, they accompany the customer on a test drive to determine whether they are comfortable with the particular model. Salesmen are also in charge of negotiating car prices and trade-in values. They know the dealers’ price so they know the margin they have on trade-in prices, and sales.
They are employed in both used car dealerships and new car dealerships.
How Commission Structures are set up
Minimum commission amount: Almost all dealerships set a minimum commission amount which is the least amount a salesman can make from the sale of a car. The minimum commission is also called a ‘mini’.
25% commission rate: Most dealers pay a 25% commission rate to their salespeople which is gross profit minus ‘pack’ fee.
Salespeople have relatively low quota of about 8 to 12 units per month. Those who fall below quota are hard to keep around
Pack fees will be different for new and used cars, as will commission rates.
Salespeople who exceed their quota by 20% or more increase their base commission rate. For instance, if your quota is 8 cars and you sell 11, commissions for the month increase from 25 to 30%.
Car sales are designed for tough chargers. If you’re not willing to work over 50 hours a week, not aggressive enough to ask for a sale or not polished enough to convince buyers to buy, you’re not going to make any money.
How much commission does a car salesman make?
Car salesmen are mainly paid in commission. Commissions on new cars differ from one dealership to the other, but the usual range is between 20% and 30% of the profit. A good car salesman can easily make over $50000. Salesmen commissions are drawn from only the sale of the car and not from the financing.
A car salesperson most times makes more money from bonuses and other add-ons such as undercoating. Bonuses arise where a salesman sells a certain number of vehicles in a month. A good salesperson might end up with as much money from selling add-ons as from the commission on the sale.
Car sales is a difficult job and not many people are cut out for it. It requires aggression, persuasion and people skills to make good money from it. Otherwise, being an average car salesperson won’t earn you much money.