How Much Does a Car Salesman Make a Year?

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Usually, the first person a customer interacts with before or after entering the dealership, a car salesman has the important duties of building a connection with the customer, providing information to suggest the right car purchase, encouraging the sale and assisting with the financing and closing processes. Being outgoing, confident and a strong seller are needed for making car sales, and since many car salesmen rely on commissions for all or part of their earnings, these qualities become even more essential. How much a car salesman salary is will depend on the individual's selling skills and the dealership's payment structure, which may include only commission or a combination of a base salary with bonuses and commissions.

TL;DR (Too Long; Didn't Read)

According to the Bureau of Labor Statistics, the average car salesman income is $44,720 a year as of May 2017. Factors such as your experience, selling skills and the dealership's pay structure all impact your earning potential.

Job Description

A car salesman's job is to guide customers through the vehicle sales process, which can initiate online, over the phone or at the dealership. The process begins with connecting with customers by greeting them, asking about their needs and carefully considering which vehicles may be a good fit. Car salespeople need to be confident, knowledgeable about vehicle options and able to connect to customers personally to gain customers' trust and increase the chance of a sale. They also should be able to showcase a vehicle's features and encourage customers to take a test drive to increase interest in the car.

After answering vehicle questions and helping the customer find a suitable vehicle, a car salesperson assists with the qualification and financing processes. This typically involves asking customers to provide identification and proof of income, entering their information into the dealership's database and working closely with financing professionals to obtain approval. The financing process requires a lot of negotiation where the customer, car salesman and finance professional work to agree on a vehicle price, trade-in value and money down if applicable, and the monthly payment.

Depending on the customer's credit history and financial situation, the salesperson may either successfully close the sale, lose it or help the customer find a vehicle that is more affordable. Additional work for closing a sale may include compiling reports, finalizing contracts and other documents, obtaining the keys and manuals for the vehicle and following up with the customer to learn about the car-buying experience.

Education Requirements

A car salesman does not need a college education and can get started with a high school diploma. Rather than focusing on formal education, dealerships look for candidates with a set of sales, communication, marketing, finance and computer skills for the role. This includes knowing how to build rapport with customers, listen carefully to their needs, work with the dealership's financial professionals, enter data into computer systems and interact with customers face-to-face, over the phone and through email. Being able to present vehicles and emphasize how they meet customers' needs is important to market and sell them successfully.

Aspiring car salespeople should also have a broad knowledge of the car models sold at the dealership, but they aren't expected to know every fine detail. Knowledge of popular models and options is necessary for answering customers' questions and making recommendations without having to look for a manager or other salesperson to get help from. Since new models are released each year, dealerships look for salespeople who are adaptable and willing to keep up with advancements.

To gain these essential car sales skills, some aspiring car salesmen seek formal car sales courses on their own, but most others learn through the dealership's on-the-job training program. The duration and comprehensiveness of this training can vary by dealership. While some dealerships might have a new salesperson shadow an experienced salesperson for a few days, others have formal programs with introductory-through-advanced training modules. Such thorough programs might spend a week on product knowledge and the sales process, continue with practical experience through role-playing exercises and working under advanced salespeople, building additional skills with specialization training and end with formal exams and certification.

In addition to having the right skills and training, aspiring car salesmen also need to obtain any state license for selling vehicles that may be required. This process typically includes showing proof of a valid driver's license, having a criminal background check and filling out a license form with information about the salesman and dealership, the salesman's work experience and questions assessing one's criminal history and intended use of the license.

Industry

The BLS estimates that around 6 percent of all retail salespeople worked for automobile dealerships in 2016. Car salesmen might work at dealerships focused on new and used cars of a specific brand, such as Ford, Volkswagen or Chevrolet, or they might work for specialty dealerships that focus on used, classic, luxury or exotic cars. Much of their time is spent on their feet working with customers and interacting with other sales and finance professionals. Working outdoors is required to personally show vehicles to customers, although the qualification and financing processes usually take place in the showroom.

Car salesmen are usually expected to work a flexible schedule that can require spending time away from their families on holidays and working weekends and late evening hours. While there are part-time sales positions, some may work long hours to make sufficient sales from commissions to reach the dealership's sales quotas. Work hours can vary based on demand, where high-traffic periods require longer hours.

Years of Experience and Salary

Car salesmen earnings can vary widely due to how dealerships use different pay structures, and an individual's sales performance also impacts wages. Some dealerships only give salespeople a commission based on the profit the dealership makes from a car sale. Others, however, pay car salespeople a base salary, provide commission for each sale and offer bonuses for meeting or exceeding sales quotas. While bonuses and commission structures vary by dealership, Edmunds reports that a minimum commission on a vehicle often ranges from $50 to $150.

Based on the May 2017 BLS salary information, the average pay of a car salesman (including any commission and bonuses) is $44,720 a year or $21.50 an hour. This is significantly higher than the $27,460 a year ($13.20 an hour) average wages for retail salespeople in general. The BLS also reports a $23.89 per hour median hourly wage for retail salespeople working for car dealerships, meaning half make more than that and half make less. This compares to a much lower median wage of $11.16 an hour for retail salespeople in general.

As of November 2018, PayScale offers a more detailed view of a car salesman's income broken down into salary, bonus, profit sharing and commission. It reports that the total pay for car salesmen ranges from $23,695 to $95,702. This figure includes base salaries ranging from $18,377 to $84,018, bonuses ranging from $515 to $30,410, profit sharing of around $2,035, and the car salesman commission falling between $5,000 and $73,978.

PayScale's data also shows that more experienced car salespeople make more money. The average pay of a car salesman as of November 2018 is $40,000 to start, $57,000 with 5-to-10 years in the field, $59,000 with between 10-and-20 years of experience and $54,000 with over 20 years in the field.

Job Growth Trend

Growth in car sales is dependent on how well the economy is performing, so car dealerships generally seek more car salespeople when there's a high demand for car sales. The BLS reports that the retail salesperson occupation is expected to have a slow growth of just 2 percent between 2016-and-2026. This stagnant growth is due to customers making their purchases online rather than visiting physical stores where they'd interact with salespeople.

However, the BLS does note that car salesmen have better prospects due to the traditional car sales process. While buying a car entirely online is now possible through websites such as Carvana, most customers still follow the route of looking at cars in person, doing a test drive and completing the sales process at a dealership. To take advantage of online sales, traditional dealerships have placed their car inventories online and made it easier for customers to get in touch with a car salesman through phone, email or online chat, even before having to visit in person.

Aspiring car salesman should have good prospects for finding a position with or without experience. The high turnover in this sales role creates opportunities for those who have the sales, communication and interpersonal skills needed to be a successful car salesman. Those who want to work for luxury car dealerships, however, likely need some experience to stand out for positions.

References

About the Author

Ashley Donohoe started writing professionally about business topics in 2010. Having eight years experience running all aspects of her small business, she is knowledgeable about the daily issues and decisions that business owners face. She also has earned a Master of Business Administration degree with a leadership and strategy concentration from Western Governors University. Some other places featuring her business writing include JobHero, LoveToKnow, PocketSense, Chron and Study.com.