Published by Schmidt & Clark, LLP is not currently accepting these types of cases and has posted this content for information purposes only. We encourage you to seek a qualified attorney, if you feel you might have a case.
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.
The average car salesman earns a commission based on this profit, which can vary significantly depending on the car business and the specific pay plan in place.
How Much Commission Does a Salesman Make Off a $50,000 Car?
According to Indeed, commissions on new car sales fluctuate between dealerships, but the usual range is from 20-to-30% of the profit. So, the average commission on a $50,000 car sale would be between $10,000 and $15,000, depending on the specific pay plan and any additional unit bonuses offered for selling certain models [1].
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 cars. Commission-only pay plans are also why there is such a high turnover rate in the retail car sales industry.
However, for those who excel in selling cars, this model can be lucrative, with thousands of dollars in potential earnings each month.
There is no limit to what a car salesperson can make on this payment plan; the more experienced and talented the salesman is, the more money they make. The average salary can vary widely, with some car salesmen making thousands of dollars per month through commissions and unit bonuses.
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 salesman to apply with a dealership, the company may up the draw to $2,000 or even more. This flat fee acts as an advance against future commissions.
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.
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. In the car business, your success often depends on your ability to sell cars and adapt to the specific pay plan of the dealership.
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.
FAQs
Are there opportunities for bonuses in car sales?
Yes, car salesmen often have opportunities to earn bonuses for meeting or exceeding sales targets, achieving high customer satisfaction ratings, or selling specific models. These bonuses can significantly boost a car salesman’s average salary.
Can car salesmen earn benefits in addition to their salary?
Yes, car salesmen may receive benefits such as health insurance, retirement plans, paid time off, and employee discounts on vehicles and services. These benefits are often part of the pay plan in the car business.
Do car salesmen get paid during training?
Many dealerships pay a lower training wage or stipend during the initial training period, transitioning to the full compensation plan once training is completed. This training period is crucial for new salespeople to learn the ropes of selling cars and familiarizing themselves with the dealership’s pay plan.
How does experience impact a car salesman's salary?
Experienced car salesmen typically earn higher salaries due to their established customer base, refined sales techniques, and ability to close more deals. Over time, this experience translates to a higher average salary and the potential to earn thousands of dollars more annually through commissions and unit bonuses.
Related Articles:
- California Full-Time Hours
- How to Get a Work Permit in California?
- Risks of Digital Odometer Tampering
See all related personal injury lawsuits our attorneys covered so far.
Get a Free Lawsuit Evaluation With Our Lawyers
The Litigation Group at Schmidt & Clark, LLP is an experienced team of trial lawyers that focuses on the representation of plaintiffs in lawsuits. We are handling individual litigation nationwide and currently accepting new legal challenges in all 50 states.
References:
- https://www.indeed.com/career-advice/pay-salary/how-much-does-a-car-salesperson-make