Money matters, let’s be honest. Beyond the essentials like health and family, financial security is a significant motivator for most people. Drawing from Maslow’s hierarchy of needs, once our basic physiological needs are covered, safety and security, including financial resources and employment, become paramount. This naturally leads to the question for anyone considering a sales career in the automotive industry: what is the average Car Salesman Salary and what earning potential does the job truly offer?
Having spent years in automotive sales management, I’ve witnessed firsthand the full spectrum of incomes. Some salespeople under my leadership significantly out-earned me, reaching into the multiple hundreds of thousands of dollars annually. Conversely, others struggled to make ends meet. The reality of car sales, like many sales professions, is that income is directly tied to performance.
So, how much can a car salesman actually make? Let’s delve into the factors that determine a car salesman salary and explore the earning potential at different levels of performance.
Car Salesman Income is Directly Tied to Effort and Skill
A car salesman’s income is intrinsically linked to their dedication and sales expertise. Newcomers to the car sales industry might begin with a salary-based compensation plan, often for an initial period of around 90 days. These fixed salary arrangements typically offer a stable monthly income, perhaps in the vicinity of $3,000, during the initial months of onboarding and training. However, the standard pay structure for car salespeople generally transitions to commission-based after this introductory phase. Interestingly, a growing number of dealerships are now experimenting with hybrid compensation models that blend a base salary with commission incentives. This shift aims to attract a more diverse talent pool, including college-educated individuals, to the retail automotive sector.
The degree to which a salesperson invests in honing their skills – whether through dealership-provided training programs or through actively practicing customer interactions – directly impacts their earning potential. Think of sales professionals as akin to athletes; continuous improvement requires consistent practice. There’s a common adage that amateurs practice until they get it right, but professionals practice so they never get it wrong. Exceptional car sales professionals are dedicated to consistent practice and refinement, ensuring they minimize errors and maximize their sales effectiveness.
What Salary Does a Lower-Performing Car Salesman Earn?
Salespeople who neglect skill development or lack proactive customer engagement often find themselves at the lower end of the car salesman salary spectrum. Sadly, some salespeople adopt a passive approach, waiting for customers to walk in rather than actively seeking out opportunities. This less proactive approach typically translates to monthly earnings in the $2,000 to $3,000 range. While “bad” might be a harsh descriptor, “unmotivated” or “inexperienced” might be more accurate. Regardless of the label, the financial reality is that their annual income is unlikely to exceed $40,000, making the prospect of a six-figure salary seem distant.
What is the Average Car Salesman Salary?
An average car salesman, defined here as someone selling approximately 8 vehicles per month, typically earns between $3,000 and $4,000 monthly. Salespeople who perform above average, moving 10 to 12 cars each month, can expect to earn in the $4,000 to $6,000 per month range. While selling 8 to 12 cars monthly won’t lead to extreme wealth, it provides a stable and respectable income. Furthermore, the transition from an “above average” performer to a “top performer” can unlock a substantial increase in earnings, often pushing them well into the six-figure income bracket.
What is the Salary of a High-Performing Car Salesman?
Top-producing car salespeople, a relatively small segment of the sales force, who consistently sell between 25 and 50 vehicles monthly, often achieve annual incomes ranging from $150,000 to upwards of $500,000 or even more. As the saying goes, “that’s not pocket change, that’s serious money.”
Remarkably, this level of income doesn’t require a college degree. The key to success lies in dedicatedly honing your sales skills. This involves actively participating in training opportunities, embracing a mindset of continuous learning, leveraging social media to build a personal brand, and consistently practicing and refining sales techniques. Crucially, “correct” effort involves nurturing relationships with your existing customer base and prioritizing their needs and perspectives in every interaction.
The most successful car salespeople understand that building rapport and establishing genuine human connections are foundational to long-term success. Cultivating trust takes time, a principle easily overlooked in the fast-paced sales environment. Many newer salespeople focus intensely on securing the next sale. In contrast, the top earners, those making $500,000+ annually, prioritize building lasting relationships and cultivating referrals from satisfied customers. If your aspiration is to earn a six-figure car salesman salary, focusing on relationship building is a proven path to achieve it.
In conclusion, car salesman salaries can range dramatically, from modest earnings to surprisingly high incomes that might make you exclaim, “You’re kidding me! People make that much selling cars?” This wide income range is precisely what makes the car sales profession so appealing and dynamic.
Understanding Car Salesman Pay Plans
Over my extensive 42+ years in the retail automotive industry, I’ve encountered a vast array of car salesperson compensation plans. Despite the variety, these plans share a common objective: to maintain total salesperson compensation within the industry standard benchmark of 18% to 22% of dealership expenses (more detailed information available here).
The vast majority of compensation plans, approximately 98%, adhere to these industry benchmarks. Whether a salesperson earns 35% of the gross profit or 15% on a vehicle sale, various factors are incorporated into the pay structure to ensure overall compensation aligns with the 18% to 22% range.
How is this consistency maintained across different commission percentages? The answer lies in elements built into compensation plans that reduce the commissionable portion of a sale’s gross profit. One common element is the “pack.”
“Pack” refers to a predetermined dollar amount subtracted from a vehicle’s gross profit before commission is calculated. This “pack” is designed to cover dealership operational expenses such as advertising, inventory management software, utilities, and salaries for non-revenue-generating staff like administrative and accounting personnel.
Dealerships with higher overhead costs typically implement a larger “pack” amount.
For example, in a dealership offering a 35% commission rate, the “pack” might be set at $1,500. This means $1,500 is deducted from the gross profit of each car sold before the salesperson’s 35% commission is calculated.
Conversely, a dealership with a 20% commission rate might have a lower “pack,” perhaps $500. However, regardless of the stated commission percentage and “pack” amount, the end result is that salesperson compensation generally falls within the industry-standard 18% to 22% of expenses.
Interestingly, when all aspects of a car salesperson’s compensation are factored in – percentage of gross profit, unit bonuses, manufacturer incentives for specific models or sales targets – the average commission earned per vehicle sold tends to consistently fall between $400 and $500. While the precise reasons for this average remain somewhat unclear, my 42 years of experience have shown this to be a remarkably consistent outcome for the majority of salespeople I’ve managed.
Does Selling Luxury Cars Increase a Car Salesman’s Salary?
An additional factor influencing car salesman salary is the vehicle brand they represent. Luxury brands often offer the potential for slightly higher commissions. This is primarily attributed to the higher gross profit margins typically associated with luxury vehicles compared to volume brands like Chevrolet, Toyota, or Honda.
I recall my time managing a Pontiac dealership (yes, Pontiac was a brand) in the mid-1990s. Two of my salespeople earned over $150,000 annually selling Pontiacs, while my own salary as their Sales Manager was less! I’ve also worked with salespeople representing high-end luxury brands like BMW and Porsche who consistently earned between $400,000 and $500,000 per year. These top luxury car salespeople often even hired their own independent contractors to assist with customer follow-up and relationship management, further demonstrating their commitment to client service.
If your career goal is to achieve a six-figure car salesman salary, pursuing opportunities with luxury dealerships can be advantageous. However, it’s worth noting that the barrier to entry at luxury dealerships can be higher; they often have more selective hiring processes.
Ultimately, as this overview demonstrates, the retail automotive industry offers significant earning potential. A car salesman salary is not capped, and with dedication, skill development, and a customer-centric approach, substantial financial success is achievable.
