How Do Car Salesmen Make Money?
Most car salespeople work on commission, beyond a minimum-wage base salary. These employees typically receive a percentage of a car dealer's "front-end gross profit" as commission. Front-end gross profit is the difference between the dealer invoice and the selling price.
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How Much Commission Does a Salesman Make Off a $50,000 Car?
Commissions on new car sales fluctuate between dealerships, but the usual range is from 20-to-30% of the profit, so the commission on a $50,000 car would be between $10,000 and $15,000.
Commission Only Car Salesman Plans
Many traditional car dealerships pay their salespeople on a “commission only” pay plan, which means they do not get paid if they do not sell a car. Commission-only pay plans are also why there is such a high turnover rate in the retail car sales industry.
There is no limit to what a salesperson can make on this payment plan; the more experienced and talented the salesperson is, the more money they make.
What is a Draw Check?
A typical draw check is a minimum wage at a 40-hour workweek, no matter how long the employee worked for the week. To entice a car salesperson to apply with a dealership, the company may up the draw to $2,000 or even more.
Previous commissions a car salesman earns from the month before are usually paid around the 15th of each month. The dealer will calculate the accumulated total commission, bonuses, and spiff money. The draw amount, taxes, and other deductions will then be subtracted from the balance.
Is Being a Car Salesman Hard?
Like any career, car sales jobs run the gamut from low to high-end gigs, in venues ranging from rural roadside used car lots to high-end luxury vehicle showrooms in major metropolitan areas. Earning potential also varies from one dealership to the next.
Lower-end operations usually require less training and experience than high-end dealerships. While money-making opportunities are better in luxury car sales, there’s greater competition for the roles, which can be a disadvantage for people seeking a job in sales.
How Much Do Car Salesmen Make?
As of February 2023, the average annual pay for a Car Salesman in California was $38,862 per year, which works out to be about $18.68 an hour. This is equivalent to $747/week or $3,238/month. The average pay range for a car salesman varies greatly, which suggests there may be many opportunities for advancement and increased pay based on skill level, location, and experience.
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