September 1

How Much Money Does A Car Salesman Make

Last Updated on October 23, 2023

If you have an interest in the world of car sales, then you’ve probably wondered, “how much do car salesmen make?” The car business is a dynamic one, with many factors influencing how much car salesmen earn. Those factors include sales technique, car dealership, even the specific car models being sold. Convincing a buyer to make a purchase is only part of the process. Selling cars involves deep product knowledge, top-tier communication skills, and a knack for sealing the deal. If you hope to join the industry one day, then now’s the time to start following market trends and developing essential skills for the job.

The Role of Car Salespeople

Car salespeople are the first point of contact for customers who come in to buy used or new cars. The first goal is not to make a sell, but to build rapport and establish trust with each person. Each customer is looking to the car salesman to find a ride that is the right fit for their budget and needs. Without a relationship, the sale is less likely to happen. This means how many cars get sold is largely dependent upon an ability to build relationships. And the number of car sales made then influences how much a car salesperson earns.

What Influences a Car Salesman’s Earnings?

In a car dealership, the salesman works with a variety of automobiles, from used to luxury cars. Car salespeople can make good money, especially when they sell more. Simply put, the more cars sold, the more money a car salesman earns. They’re often incentivized with pay plans that reward high-volume sales, encouraging them to sell as many vehicles as possible. The gross profit from car sales is a considerable portion of a car salesman’s income, which is the sales price of the car minus its cost to the dealership.

Here’s a breakdown of several factors influencing how much the average car salesman earns.

Car Salesman Influences infographic

Cars Sold

The primary influence on profit is the number of cars sold. A professional car salesman who sells more cars can expect to earn six figures, while a novice makes less.

Sales Technique

Whether the product is used cars or something newer, communication is required to earn the customer’s trust. Some car salesman get sales through pressure tactics, convincing the potential buyer to lock in to the purchase case. However, the potential cost is a bad reputation for the business.

Car Dealership

The individual dealership’s commission structure also plays a part in earnings. Some car dealerships offer a fixed salary, while others may pay on a commission basis. Commission is usually a percentage of the sales price, providing a steady income stream for salespeople who sell vehicles regularly. Then there are companies that offer bonuses for reaching personal or company milestones.

Car Products

The type of car also matters. A new car brings in more money than a used one. Luxury cars often have an even higher gross profit margin, allowing for larger commission. And few luxury cars need to be sold to make plenty of money. However, there are less customers and the market is harder to get into.

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On the other hand, selling average cars yields lower commission while there is a larger customer base. Furthermore, certain models may be more popular or have promotional deals, which increases the car salesman’s chances of making that particular sale.

Car Salesmen Earnings At a Glance

Based on current data collected from job boards like ZipRecruiter, here are some estimated figures describing more specifically what professionals can hope to earn.

Average monthly income ranges somewhere between $4,000 and $7,000 a month. Average annual income ranges from $46,000 to $85,000

Salary by Dealership

Car Salesman Earnings by Dealership infographic
DealershipAvg. Yearly
British Motor Works$79,000
Nissan$74,000
Honda$59,000

Salary by Location

Car Salesman Earnings by Location infographic
LocationAvg. Yearly
California$104,000
Texas$64,000
Florida$65,000

Pay Structure in the Car Sales Business

Commissions and Bonuses

One key component in the car salesperson’s pay structure is commission. A car salesman’s commission is calculated based on the gross profit of each car sale, and is a significant part of how much money is made. Commissions will vary greatly depending on the dealership and the specific deal on the car.

For instance, if a car salesperson sells a car for a gross profit of $2000 and the commission rate is 25%, the salesperson’s commission would be $500. In addition to commissions, many car dealerships offer bonuses or incentives, such as unit bonuses for hitting certain sales targets or selling certain models.

The average commission for a car salesman might range between 20% and 40% of the gross profit. However, this will change depending on the dealership’s pay plan, the car’s sales price, and other factors.

Fixed Salary vs. Commission-Based Earnings

While some dealerships provide a fixed salary to their salespeople, others pay on commission. A fixed salary guarantees a steady income stream regardless of sales, which can be particularly beneficial during slow sales periods. On the other hand, a commission-based pay plan could lead to higher earnings during peak sales times. Some salespeople prefer the potential to make more money, even if it comes with a degree of uncertainty.

Whether a car salesperson is paid hourly or has a fixed salary, these are typically just base pay. Commissions and bonuses offer the potential to earn significantly more. Some seasoned car salesmen can even pull in more than six figures a year!

Here’s a comparison of the salary car salespeople make.

Car Salesman Salary infographic

Fixed Salary

  • Hourly rate
  • Steady income
  • Great for slow sales periods

Commission-Basad Salary

  • Fluctuating income
  • Potential for higher earnings
  • Great for peak sales periods

Sales Quota and Making Money

Car salesmen are typically set a monthly quota. If they fall short of this target, commission is lower. Conversely, exceeding the quota means more money in the form of bonuses and higher commission rates.

Many dealerships offer a minimum wage guarantee to their sales staff, especially new salespeople still learning the ropes. This ensures a basic level of income even if they don’t make many sales initially. Over time, as the car salesman becomes more experienced and starts selling more cars, they can start making money primarily through commissions and bonuses.

Net Profit and the Dealership’s Role

The dealership’s net profit also affects a car salesman’s earnings. This includes front end profit which comes directly from selling cars. Also included is back end profit from finance and insurance products, service contracts, and accessories. Although the latter usually goes to the dealership, it can sometimes contribute to a commission.

Key Skills and Education

While having a college degree, such as a bachelor’s degree, may provide a competitive edge, it’s not a requirement for becoming a car salesman. This profession values practical skills over academic qualifications. Some of the most successful car salesmen do not have formal education beyond high school, but they possess a strong understanding of effective sales techniques and exceptional people skills.

Here are some key skills to have:

  • Product Knowledge
  • Confidence
  • Active Listening
  • Negotiation
  • Critical Thinking

If you have interest in becoming a car salesman and want to hear from someone in the field, there are a myriad of current and former professionals offering their own personal tips and stories about there experiences. Here’s one example:

FAQs About Car Salesmen Earnings

Now that you know more about the world of car sales, let’s look at some frequently asked questions about car salesmen earnings.

Do car salesmen really make a lot of money?

The earning potential for car salesmen is high, particularly for those selling luxury cars or working in high-volume dealerships. However, the actual income can vary widely based on factors such as sales skills, the pay plan of the dealership, the number of cars sold, and the type of cars sold. Some car salesmen earn six figures annually, while others may make less.

How much commission do most car salesmen make?

The commission that car salesmen make typically ranges from 20% to 40% of the gross profit on each car sold. However, this can vary depending on the dealership’s pay plan and the specific deal on the car. Additionally, some car salesmen also receive bonuses for hitting sales targets or selling specific models.

What is the highest paying car sales job?

Selling luxury cars at high-end dealerships is the highest paying job in car sales. These positions require a high level of expertise and experience, but they offer the potential to make a six-figure income.

Is becoming a car salesman hard?

Becoming a car salesman can be challenging, as it requires strong sales skills, product knowledge, and the ability to build relationships with customers. Car salesmen also often work long hours, including evenings and weekends, and they can face pressure to meet sales quotas. However, the job can be rewarding, both financially and in terms of job satisfaction, especially for those who enjoy working with people and have a passion for cars.

Conclusion

In the end, the key to making good money is selling more cars. As you break into the industry, continue to grow and develop your skillset. You don’t have to be an average car salesman making an average salary. Work for a good dealership. Get to know your clients. Get paid based off not just your product, but what you bring to the team.

If you’re contemplating a career in car sales, it’s worth browsing vehicle auctions, studying market trends, and understanding the commitment involved in this profession. Get your first glance at an auction through Municibid. We offer a wide array of automotive types, cars, trucks, and all from varying brands!


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