Commission on Cars?

Question

Can someone tell me how commission for car salesmen works? When they sell a car, what do they get commission on, the whole amount? I'm very confused by this. Please give me an example with an answer. Take a $20,000 car for a example or something. PLEASE.

Answer 1

All dealerships have varying pay structures. The most common would be the following...

Say the Vehicle cost was $18,000.00 for the dealership. They are selling it to you for $20,000.00 but you say you want an accessory that costs $400.00. The Dealerships cost is now $18,400.00. There is a front end gross profit of $1600.00. A sales person will get paid on that profit figure, however, most dealerships ad a pack. That means they redusce the gross profit by a specified dollar amount on all vehicles. Its common for the pack to be upwards of $500.00. So now, the commission is based off of $1100.00(1600.00 less 500.00). A salesperson will be paid a percentage somewhere around 20%. So there commission on this deal would be $220.00 and the dealerships net profit on it is $1380.00. Now keep in mind that this only accounts for front end profit and does not alot for back end product i.e. service contracts, gap insurance, credit life, finance reserve ect. It pertains to the finance person that you deal with, most dealerships do not pay commission on back end product to a salesperson.

Hope this helps

Answer 2

No way to really answer your question....each dealership have different pay plans.......most however pay a percentage of the amount over the cost that the salesperson sells it to you for........that is the most common.......the price of the car has absolutely nothing to do with it.....of course unless they sell it to you for the sticker price......then they maxed the gross over the cost and you must have been a "Larry" (a laydown).....good luck in your shopping....do your research on the Internet prior to going in order for you to get a fair deal.......we all have to make money or in your case....save it....but research first and then be "fair".........good luck........if you are asking this to think about coming into the business........DON'T!!!