Based on data from the National Automobile Dealers Association (NADA), the average gross profit margin on a new car sale for a dealership is around 3.9%. This means that for a $30,000 car, the dealership's gross profit would be approximately $1,170.
Understanding Commission Structure
Commissions are often calculated as a percentage of the gross profit from each sale. For example, if a car is sold for $30,000 and the dealership's gross profit is $5,000, a salesperson might earn a commission rate of 20%. This would yield a commission of $1,000.
They generally earn through commission rates which depending on the dealership company, can range between 20% to 40%. So how much money do car salesmen make per car? If you sell about 10 cars in a month and on average you make about $40k per year, you will be earning $330 per car.
However, industry estimates suggest that a successful car salesman may sell anywhere from 10 to 20 cars per month on average. It's important to note that this figure is just an approximation, and there is no definitive benchmark for success in car sales.
Car salesperson salary
Commission bonuses typically account for a large percentage of the salesperson's earnings and can boost or hinder personal income. Greater experience in the industry might also boost your earnings, as you learn more about how the sales process works and what customers expect.
Dealers mainly act as middlemen to connect their clients with banks and credit unions. In the process, they earn either a flat fee for every loan referral, a percentage of the loan amount, or a share of the interest. While some auto loans earn a dealer relatively little, most generate thousands of dollars in profit.
Yes, it is possible to make $100,000 or more as a car salesman. Your salary may depend on your location, base pay, the car brand being sold and how many cars you sell each month.
profit margin of 1-2% on new vehicle sales. It's pretty pitiful. Gross margins, however, run between 8 and 10% for most full-line automakers, and luxury cars often earn 10-15% margins. Depends on the vehicle, market conditions, etc.
Automakers generally have separate discount purchase plans for employees of suppliers, friends and (extended) family, and employees of the automaker or its dealers. Employee pricing is occasionally available to unaffiliated consumers as part of a limited-time sales promotion.
Commission-Based Pay: Many car salesmen earn a significant portion of their income through commissions based on the number of vehicles they sell and sometimes on the profit margin of those sales. Commissions are often calculated as a percentage of the vehicle's selling price or as a flat rate per sale.
They make more money on used cars. This is due to less competition. For example, two Honda Accord EXes with the same interior and exterior colors are identical when new, yet after three years their odometer miles and general condition will make them different.
General Sales Manager
It is not an easy job, but they can make between 120K and 500K a year. The job is demanding and requires a great deal of energy, but the pay can be great.
Since the dealership only profits from the actual sale, they will rarely agree to bargain down the price and often waive other incentives, like cashback rebates. Stripping away rebates helps them make their money back. Because of this, a no-interest loan could cost more than the savings you'd get negotiating on price.
Inside Sales Representative / Recession/Pandemic Proof Industry. Our top reps make over 500K a year, our average sales rep makes over 100K a year with an average tenure of over 15 years at GGR. Once you get in, you'll never leave. If you are in car.
For decades now, car salespeople have constantly gone to “talk my manager” for permission to negotiate during the sales process. This tactic, paired with countless other dealer antics is very frustrating for customers. If you're unfamiliar with your salesperson saying “let me go check with my manager,” you're lucky!
California car salesmen classified as non-exempt employees are not entitled to an hourly wage. Most are paid on a commission basis or at a “piece rate,” though some also make an hourly wage in addition to commissioned earnings.
The average automobile salesman sells between 200 and 1,000 cars per year. Most average over one per day. Although many salesmen work partially for salary, many include "commission on sales" as a significant part of their compensation, placing them under some pressure to sell cars.
The dealer, salesperson, and manufacturer get no part of your downpayment. Your down payment means the lender (the bank your loan is through) makes less money off you due to less overall interest.
Most people assume that telling a car dealer that you're paying in cash is a negotiating tactic and will get you a better price. Here's the truth: it doesn't. Saying that you're paying with cash kills your negotiating power.