Commission Earnings of Car Salesmen: Truth and Myths

The commission earned by a car salesman can vary widely depending on several factors such as the dealership, the type of vehicles sold, and the salesman's experience. Understanding the commission structure and earnings can help prospective buyers and salesmen alike make informed decisions about their roles within the auto industry.

Commission Structure and Earnings

Many car salesmen earn a commission based on the profit margin of the vehicles they sell. This can range from 20 to 30 percent of the dealership's profit on the sale. However, specific numbers can vary greatly, with commissions ranging from $100 to $1000 per vehicle sold. This can be combined with a base salary, bonuses, and incentives for meeting sales targets, potentially increasing overall earnings.

In terms of specific numbers, a typical commission can be anywhere from $160 to $260 on average. Some salesmen earn an additional $150 for selling extra add-ons. During tougher market conditions, the commission may drop to around $100 to $150 per sale.

Minimum Commission and Profit Margins

Some dealerships have a minimum commission policy. If a sale doesn't generate much profit, the commission can be as low as $100 to $250. Despite this, some expect that selling higher-priced vehicles means higher earnings, but this is not always the case. A skilled salesman can average around $60,000 per year, while a top-tier performer can earn up to $100,000 to $150,000, though such performers are rare.

The exact commission varies depending on the dealership and pay structure. Commissions can range from as little as $50 to as much as $400 per unit. Some dealerships offer a percentage of the gross profit on the vehicle, which can range from 25 to 30 percent.

The Reality of Earnings

The reality is that many car salesmen do not earn as much as people assume. Over the past 18 years, the typical commission has been around $275 per unit. These earnings are often significantly less than what many believe, and therefore, most salesmen do not stay in the business long term.

Beyond the base commission, some dealerships offer bonuses and incentives. However, these are often contingent on meeting specific targets, and large performance-based bonuses are not the norm. Many car salesmen leave the industry to move into roles that offer better pay and stability, such as performing maintenance or repairs at automotive service centers.

Conclusion

Commissions for car salesmen can vary widely based on several factors. While some earn enticing amounts, the average earnings are often lower than what many people assume. Understanding the commission structure and market conditions can help individuals make informed decisions before entering the car sales industry.