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It’s typically a flat rate that they earn, and the more vehicles they sell, the higher the incentives per unit normally get. From there, salespeople earn extra incentives based on how many cars they sell. It starts with a modest base salary or living wage. Some dealers have begun to offer that type of pay plan. Many new salespeople, particularly millennials, don’t gravitate toward a fully rewards-based pay plan but also want an incentive for a job well done. Incentive-based plansĪ relatively new type of pay structure is emerging in car sales, hybridizing the salary and average car salesman commission structures. It’s no surprise that more than half of all new salespeople last fewer than three years in the role. If you aren’t aggressive, other sales staff could try to scoop your customers. Make no mistake, when all the salespeople on the floor are vying for commission, it becomes a cutthroat environment. An entry-level, beginner commission-based salesperson will earn around $2,000 per month while an exceptional salesman can earn more than $10,000 per month on commission. The more vehicles they sell, the more their month’s income will be. It’s common for salespeople to take a “draw” mid-month-that is, collect their guarantee or a portion of it mid-month to help pay the bills.Īlthough car salesman commission has its peaks and valleys, the earning potential with commission is technically unlimited. Dealerships are required to provide a guarantee-typically equal to minimum wage-if a salesman doesn’t make enough commission to exceed that amount. Unlike a salary, there’s no promise that someone will earn a substantial income at the start of any month. Commission onlyĪround half of all car salespeople are paid based on productivity, commonly called “commission.” When a customer buys a car from them, a portion of the gross profit is paid to the salesman at the end of the month. An average salaried salesperson may earn around $3,000 per month-a far cry from the potential earnings on car salesman commission rates. They’re often referred to as “product advisors” rather than “salespeople” since there’s no hassle. On fixed salary, salespeople have guaranteed pay that’s rather modest. If they’re found to be taking it easy or they have prolonged stretches without selling anything, management could put pressure on them to shape up or ship out. On the other side, a car salesperson on salary could be less inclined to fight for every sale since their income doesn’t directly depend on it. In theory, that can translate to more net sales for the dealership.
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The salesman isn’t focused on selling the vehicle that will earn them the most but on finding the right fit for the shopper. For salespeople on salary only, there’s security in knowing exactly how much you’ll collect on your paycheck every two weeks, and it takes the pressure off making the next sale to put bread on your table.įor customers, a salesman on salary rather than commission often results in a lower-pressure experience and higher satisfaction. In fact, it’s an increasingly common way to pay sales staff, although it’s not the standard yet. Some dealerships opt to hire salespeople strictly in salaried positions. There are actually several ways for salespeople to get paid for selling cars. What that looks like depends on the dealership. How do car salesmen get paid?įar and away, the majority of car salespeople are paid based on their efforts to sell cars by receiving a portion of the sales as commission. Read on for a deep dive into the world of car sales economics. Car salesman commission is no exception, despite hundreds of thousands of salespeople in the United States working in 45,000 used car stores and 18,000 franchised dealers.ĭepending on how your local dealer structures things, the person selling you your next car could be in a low-leverage salaried position, a competitive commissioned environment or somewhere in between. Hidden fees, last-minute charges and deceptive sales techniques-the automotive industry isn’t exactly known for transparency.