Car salesmen commission, the taboo topic in the auto industry that nobody wants to talk about. It’s a topic that is often shrouded in secrecy and leads to many misconceptions. In this article, we are going to dive deep into the world of car salesmen commission and uncover the truth about how much they really make.
Many people believe that car salesmen make a hefty commission on every car they sell. While it’s true that commission is a significant part of a car salesman’s salary, the reality is that the commission percentage is not as high as most people think. Factors such as the type of car, dealership, and location can greatly affect the commission rate.
So, what is the commission for a car salesman? The answer may surprise you. In general, car salesmen earn a commission of 20% on the gross profit for every car they sell. This means that the higher the price of the car, the more commission the salesman will earn. However, there are many other factors that come into play that can affect a salesman’s commission, including bonuses, incentives, and dealership policies.
If you are thinking about becoming a car salesman or you are in the market for a new car, it’s important to understand how commission works in the industry. In the next few sections, we will explore the dark side of the car sales industry, how to negotiate your commission, and the future of car sales commissions. So, keep reading to discover the truth about car salesmen commission and the secrets that dealerships don’t want you to know.
Discover the Dark Side of Car Sales Industry
Buying a new car can be a thrilling experience. However, what happens behind the scenes may shock you. The car sales industry is known for its unethical practices and hidden fees that leave consumers feeling deceived. Here are some of the most common dark practices in the car sales industry.
The first dark practice is upselling. Many car salesmen will try to sell you additional features and upgrades that you don’t really need, just to make a few extra bucks. Another dark practice is markups. Dealerships may mark up the price of a car above the manufacturer’s suggested retail price (MSRP) to make a larger profit. And if you thought that was bad, wait until you hear about yo-yo financing. This practice involves the dealership giving you a car loan, but then calling you back weeks later to say that the loan fell through and you need to sign a new contract with higher interest rates.
The Practice of Upselling
Upselling is a common practice in the car sales industry. Car salesmen are trained to identify the features and upgrades that will add the most profit to the sale. For example, they may try to sell you a more expensive trim level, or add-ons like extended warranties or paint protection. These upgrades may seem attractive at first, but they often come at a high cost, and you may not even need them. Car salesmen will use their persuasive skills to make you feel like you’re getting a good deal, when in reality, you’re being taken advantage of.
The Markups on MSRP
Dealerships may also engage in markups on the MSRP of a car. This is essentially charging more than what the manufacturer recommends. The markup can vary from a few hundred to thousands of dollars, and it’s often hidden in the final price of the car. The dealership may try to justify the markup by saying that it covers additional features or services, but in reality, it’s just a way for them to make more money off the sale.
The Dangerous Practice of Yo-Yo Financing
Yo-yo financing is one of the most dangerous practices in the car sales industry. It involves the dealership giving you a car loan, but then calling you back weeks later to say that the loan fell through and you need to sign a new contract with higher interest rates. This practice is highly unethical and preys on vulnerable consumers who are often in desperate need of a car. Dealerships use this practice to make even more money off the sale, at the expense of their customers’ financial wellbeing.
- Upselling is a common practice in the car sales industry, but consumers should be aware of the potential cost and necessity of these upgrades.
- Markups on the MSRP can result in consumers paying significantly more for their car than necessary.
- Yo-yo financing is a highly unethical practice that preys on vulnerable consumers, and should be avoided at all costs.
Don’t let the dark side of the car sales industry ruin your car buying experience. Stay informed and know your rights as a consumer. By doing so, you’ll be able to make an informed decision and avoid falling victim to these unethical practices.
How to Negotiate Your Commission with Your Boss?
As an employee in the sales industry, negotiating your commission with your boss can be a daunting task. However, it is important to remember that you have the power to advocate for yourself and your worth.
Here are two key things to keep in mind when preparing to negotiate your commission:
Know Your Worth
- Do your research and find out what the industry standard commission rates are for your position and location.
- Highlight your accomplishments and successes in your current role to show your value to the company.
- Be confident in your abilities and know that you deserve fair compensation for your hard work.
Be Prepared for the Conversation
- Prepare a list of talking points and practice what you want to say beforehand.
- Choose a time to approach your boss when they are not busy or stressed.
- Be open to compromise and willing to listen to your boss’s perspective.
Consider Alternative Compensation Structures
There may be other ways to negotiate your compensation beyond just your commission rate. Consider if there are other benefits, such as more flexible work hours, additional vacation time, or opportunities for professional development, that you would find valuable.
Negotiating your commission can feel intimidating, but remember that it is a normal part of business. By knowing your worth, being prepared, and considering alternative compensation structures, you can have a productive conversation with your boss and achieve fair compensation for your hard work.
Top Secrets Car Dealerships Don’t Want You to Know About Commissions
When you’re in the market for a new car, you’re likely focused on the price of the vehicle itself. But what you may not realize is that the commission your salesperson earns can have a significant impact on the final price you pay. Here are some top secrets car dealerships don’t want you to know about commissions:
First, commission structures can vary widely between dealerships and even between salespeople within the same dealership. Some dealerships offer a flat rate commission, while others may offer a percentage of the sale or a combination of both. It’s important to ask about the commission structure and negotiate accordingly.
- Car dealerships may offer incentives to salespeople who sell certain vehicles or hit certain sales targets.
- These incentives can sometimes come at the expense of the customer, as the salesperson may push you towards a more expensive vehicle or add on unnecessary extras to boost their commission.
Second, the commission your salesperson earns is not the only factor that can impact the final price you pay. Dealerships also have other costs to cover, such as overhead expenses and financing costs. It’s important to understand all of the factors that go into the final price and negotiate accordingly.
- Do your research beforehand and know what a fair price for the vehicle is in your area.
- Don’t be afraid to negotiate and walk away if you feel you’re not getting a fair deal.
- Consider getting pre-approved for financing from a third-party lender to give you more negotiating power.
Finally, some dealerships may use deceptive practices to inflate their commission earnings. For example, they may add on unnecessary fees or make false promises about financing options in order to increase their commission. It’s important to read all paperwork carefully and ask questions about anything that seems unclear.
- Read all paperwork carefully and ask questions about anything that seems unclear.
- Be wary of any dealership that refuses to provide a breakdown of fees and costs.
- Consider working with a reputable car buying service that can help you navigate the buying process and ensure you’re getting a fair deal.
Can You Make a Living as a Car Salesman?
Car salesmen have a reputation for being pushy and sleazy, but the reality is that being a successful car salesman requires a unique skill set and can be a lucrative career. However, it’s not an easy job and it’s important to understand what it takes to make a living as a car salesman.
First and foremost, it’s important to have excellent communication and people skills. Car salesmen need to be able to build rapport with customers, understand their needs and preferences, and be able to effectively communicate the features and benefits of different cars.
Understanding the Sales Process
One of the keys to success as a car salesman is understanding the sales process. This involves everything from prospecting and lead generation, to qualifying leads and negotiating deals. Salespeople need to be able to handle objections and work with customers to find the right car and financing options for their budget.
Building a Network
Another important aspect of making a living as a car salesman is building a network. This means developing relationships with customers, colleagues, and other professionals in the industry. Networking can help salespeople generate more leads, stay up-to-date on industry trends, and gain access to new opportunities.
Investing in Professional Development
To stay competitive in the industry, it’s important for car salesmen to invest in professional development. This can involve taking courses or attending workshops to improve their sales skills, staying up-to-date on new car models and features, and learning about changes in financing and leasing options.
In conclusion, while being a car salesman can be a challenging and demanding job, it can also be a lucrative career for those who have the necessary skills and are willing to put in the work to build their network and stay competitive in the industry.
The Future of Car Sales Commissions: Is It Going to Change?
As the automotive industry continues to evolve, many wonder what the future of car sales commissions will look like. With the rise of online car buying platforms and the increasing demand for electric and self-driving cars, there are several factors that could potentially change the way car salespeople are compensated.
One potential change that could impact car sales commissions is the shift towards a more transparent pricing model. Many consumers are now able to research and compare prices online, which could result in dealerships needing to offer more competitive pricing to remain competitive. This could lead to a decrease in commissions for salespeople, as dealerships may need to lower their profit margins to stay competitive.
Factors That Could Impact Car Sales Commissions
- Online Car Buying Platforms: The rise of online car buying platforms could lead to a decrease in commissions for salespeople, as consumers may be more likely to purchase cars without the need for face-to-face interactions.
- Electric and Self-Driving Cars: As the demand for electric and self-driving cars continues to grow, salespeople may need to adapt their skills to sell these vehicles, potentially resulting in changes to commission structures.
- Transparency: As consumers become more informed about car prices and features, dealerships may need to offer more transparent pricing models, which could impact sales commissions.
The Role of Technology in Changing Commissions
Technology is also likely to play a significant role in changing car sales commissions in the future. With the rise of artificial intelligence and machine learning, dealerships may be able to gather more data about consumer behavior, which could help them to optimize their sales strategies and potentially impact the way salespeople are compensated. Additionally, advancements in digital sales tools could make it easier for salespeople to sell cars remotely, which could impact the need for traditional face-to-face interactions and potentially change the way commissions are structured.
- Artificial Intelligence: With the help of artificial intelligence and machine learning, dealerships may be able to gather more data about consumer behavior, potentially leading to changes in sales strategies and commission structures.
- Digital Sales Tools: Advancements in digital sales tools could make it easier for salespeople to sell cars remotely, potentially changing the way commissions are structured.
Overall, the future of car sales commissions is uncertain, and it remains to be seen how technology and other factors will impact the way salespeople are compensated. However, with the rapid pace of change in the automotive industry, it’s likely that we will continue to see changes in the way car sales commissions are structured in the years to come.
Frequently Asked Questions
What is the typical commission for a car salesman?
The typical commission for a car salesman ranges from 20-30% of the dealership’s gross profit on the sale. This means that the more expensive the car, the more commission a salesperson can earn. However, there are often minimum commission amounts that must be met, regardless of the price of the car.
Is the commission negotiable?
The commission for a car salesman is usually negotiable to some degree. It’s important to keep in mind that a salesperson’s commission is often tied to their performance, so negotiating a higher commission may require proving one’s worth through consistently high sales numbers.
What other forms of compensation do car salespeople receive?
Along with commission, car salespeople may receive bonuses for meeting or exceeding sales targets, and some dealerships offer additional incentives such as paid vacations or company cars. Salespeople may also have access to benefits such as health insurance or retirement plans.
Are there any downsides to working on commission?
Working on commission can be unpredictable, as there are no guarantees of income. Salespeople may also experience pressure to make sales, which can be stressful. Additionally, commission-based pay structures may not appeal to those who prefer a steady, predictable income.
Do different dealerships offer different commission structures?
Yes, different dealerships may offer different commission structures. Some dealerships may offer higher commission rates but have more stringent sales targets or quotas, while others may have lower commission rates but offer more benefits or a more supportive work environment.
Are there any differences in commission structures between new and used car sales?
Generally, commission structures for new and used car sales are similar. However, salespeople may earn more commission on used cars due to higher profit margins. Additionally, some dealerships may offer different commission rates for new and used cars, so it’s important to ask about commission structures before accepting a job offer.