What Is the Average Commission Rate for Car Sales?

Each year, Americans buy upwards of 17 million cars – and someone's got to sell them. They are the brave car salespeople of America, and they work long hours hoping to move as many units as possible. For a car salesman, commission is the main source of income. Some can even rake in six figures. Unfortunately, the way a car saleswoman may calculate her earnings may seem like a winding road without a test drive.

Job Description

As a car salesperson, commission is the name of the game. Your job is to sell as many cars as possible and take home a percentage of the gross profits. Salespeople generally have a quota of between 8-to-12 units a month unless they're selling for a niche brand like Jaguar, Land Rover or the like. Sell more than your quota, and you may get a commission bump or bonus. Sell less than your quota, and you're at risk of being fired. Some car dealerships even offer bonuses for pushing hard-to-sell cars. Car salespeople frequently work long hours, and the highest performers can earn over $100,000 per year.

Education Requirements

Becoming a car sales man or woman doesn't actually require any education, but it does require business savvy and people smarts. Many universities offer sales training courses which could help an aspiring car salesperson learn how to move more units. In this industry, the more you sell, the more you get paid.

Contrary to popular belief, the average car salesman salary is just that – average. According to the Bureau of Labor Statistics, car salespeople make around $46,990 per year, and none of that money comes easily. Most car seller's pay comes from commission, so there may be days where a salesperson works a full shift and makes no income. It all depends on their skill as a salesperson.

A car saleswoman's commission varies among departments. Most car salespeople make a 25-percent commission on gross profit minus a small "pack fee." This fee is typically around a few hundred dollars. All in all, the typical car salesman pay usually adds up to about $250 or $300 per car. Some dealerships have a minimum commission of around $125 per car.

Industry

Car salespeople work in car dealerships in various departments. Some may work on the floor, selling cars to walk-in customers. Others may work online or run car auctions. According to TIME_,_ consumers are largely turned off by the traditional car dealership experience. As a result, many dealerships are expanding to the internet.

Years of Experience

For car salesperson, it's less about experience and more about skills, department and niche. If you're an online car salesperson, the commission may be zero. On the flipside, a used car salesperson tends to have higher commissions than those who sell new cars, for example, 35 percent instead of 25 percent. You're also going to make a whole lot more selling Lamborghinis than you are Honda Odysseys, but at the same time, there may be more of a market for an affordable car like an Odyssey. It could even out. There's no hard and fast rule.

Young, inexperienced salespeople may get into one major problem – owing their boss money. Some dealerships allow salespeople to advance their commission if they've had a dry spell of sales. This is called being "in the bucket," and some car salespeople may see themselves owing thousands without being able to catch up.

Job Growth Trend

As long as people need to get from point A to point B, they'll always have a need for a car – but the kind of car they buy may change. Previously, luxury cars were thought to be mystifyingly recession-proof even though the 2009 recession contributed to the bankruptcy of General Motors and Chrysler. In 2016, car sales declined for the first time in six years. Though sales saw a minor jump in 2017, sales positions are projected to grow at a slower-than-average rate of 3 percent within the next decade.

References

About the Author

Mariel Loveland is a small business owner, content strategist and writer from New Jersey. Throughout her career, she's worked with numerous startups creating content to help small business owners bridge the gap between technology and sales. Her work has been featured in publications like Business Insider and Vice.