How Much Do Car Salespeople Make?
The stereotype of a fast-talking, never take no for an answer car salesperson comes from the notion that they need to sell to earn money.
While selling is the name of the game, there are several ways that car salespeople earn money, and the salaries drastically differ.
What Do Car Salespeople Do?
A car salesperson is who buyers interact with most at a dealership. They spend most of their time showing customers different vehicles, assisting with test drives, negotiating contracts, and more. Typically the hours are long and may include evenings and weekends since this is when most buyers come to the dealership.
The salesperson commonly greets potential customers with an introduction. They help the buyer assess the inventory to find a vehicle that meets their needs. The salesperson answers basic questions about the vehicles. They also negotiate the car sale and oversee the buying process.
What Is the Average Salary of a Car Salesman?
As of 2021, the average salary of a car salesman is $40,935 per year. The skills of a salesperson will greatly impact how much money they can make.
High-quality, good car salespeople can make substantially more money. The 90th percentile for salespeople is $79,500 per year. The highest-performing car salespeople tend to have the most experienced and exceptional sales skills.
On the other hand, lower-performing salespeople earn significantly less than the average. The 25th percentile earns only $23,000 per year. Salespeople in this percentile may struggle with sales skills or have less experience.
Since luxury car salespeople are selling higher-value vehicles, they tend to make more money. The national average for luxury car sellers is $65,128, with the 90th percentile making $104,500 per year.
How Do Car Salespeople Earn Money?
Most car salespeople work for a dealership. The dealership pays them a small base salary, but most of their money comes from commissions.
Salary
Car salespeople do get a base salary. The base salary is quite low and would not be enough to live off of. The dealership will set the base salary, so it varies.
Commissions
Salespeople receive a commission for every vehicle sold. The commission may vary, but it is based on the dealer’s gross profit of the sale.
Most dealerships set a minimum commission amount, which is the least amount the salesperson can earn from the sale. Most new car sales only pay the minimum commission.
The general commission rate is around 25%. They earn a commission for each sale, so those that sell a lot of cars can earn quite a lot in commissions.
Incentives
Manufacturers offer dealers incentives to sell certain models, especially near the end of the year. The dealerships may also offer incentives to salespeople to entice them to sell more of those models. The incentive could be a bonus or a higher commission percentage on those vehicles.
Bonuses
Most dealerships set a quota for the salespeople each month. Salespeople who perform particularly well and exceed the quota may earn a bonus (or a raise in their commission rate). Dealerships may also set other parameters for giving bonuses to the salespeople.
