Pay Plans for Car Sales:

I put this section together to help give you some more insight into the car business. You will also be able to see the motivation of your sales person when they are selling you a car.

 Sales people are paid by commission only. They get paid for what they sell. No hourly pay, no guaranties, just commission. (at least most dealers work that way) That is one of the reasons why there is so much turnover. You could work a whole week of 50 or 60 hours and not make a penny. (don't cry for us yet)

 Depending on the dealership, I have seen sales peoples commissions based on anywhere between 25% to 40% of profit after pack. (pack-see lingo) Usually the percentage of commission changes based on the amount of vehicles sold.

example:
sell 1 to 5 cars 25%
sell 6 to 10 cars 30%
sell 11 to 15 cars 35%
sell 16 cars and up 40%

There are many minor variations on the above theme throughout the industry. On top of the above commission there is usually a car count bonus that is a predetermined amount of money based the amount of cars sold. I have seen that amount vary from dealer to dealer. It may start at 8 cars and go up from there. For example $50.00 per car sold. So if you sold 14 cars for the month you would get a $700.00 bonus. I have also seen the month end bonus get paid in steps.

example:
sell 8 cars-$400.00 bonus
sell 12 cars-$800.00 bonus
sell 16 cars-$1200.00 bonus
sell 19 cars-$1600.00 bonus
sell 22 cars-$2000.00 bonus
sell 25 cars-$2400.00 bonus
sell 28 cars-$2800.00 bonus......and so on.

 Wait, there is more. I can still sell you Add-Ons.
 If I sell you some extras such as a Tow Hitch, Roof Rack, Alarm System, Remote Start and anything else I can think of, they will be added into the deal and impact my commission.

 Yes, still more. Don't forget about your Rustproofing, Undercoating, Paint Protection and fabric Protection. You are making a large investment here, I am sure you would want it protected. Right. There is such a large potential profit in these add-ons there is usually a special bonus for selling them. I could potentially pick up an extra $100.00 to $200.00 depending on what I sell you.

 Now, let's say that I sell you a car (you, the educated buyer) for invoice. By the sales persons commission structure at the dealership I get paid a "Mini" or "Flat". A Mini or Flat may pay me $50.00 to $100.00 depending on the dealership. Then you do not purchase any add-ons, or if you do you get them at a greatly reduced price. Maybe I make $60.000 to $75.00.

Now lets go back to selling you a car, but you have not read www.Smart-Car-Buying.com and done your homework.

 example: I sell you a new car and I have convinced you this is a Hot Model. I sold it to you at close to List Price because you made your decision based on payment. I then worked on you until I got you to accept $1000.00 less than the value of your Trade-in. It is near the end of the month and I already sold 16 cars this month. I also sold you a Remote Start, Rustproofing, Undercoating, Paint and Fabric Protection. The dealer just made $3500.00 on the Front End and I made roughly $1200.00 + $200.00 for Add-Ons. Since I already sold 16 cars this month my commission goes to 40%.

 Now it is time to go to the Finance Office for your paperwork. There you are educated on the benefits of an Extended Warranty, and they got you an Interest Rate higher than you qualify for. Now the Dealer may have made an extra $3500.00 on the Back End. Wow....potentially $6500.00 profit on your deal. (cha-ching) (the dealer still has to pay commissions for Sales Person and Finance Manager from that profit)
 See the difference a little homework and education can make.

The average dealer sells cars everyday and can make a loser/breakeven deal or a 6.5 pounder as shown above and everywhere in between. These were just examples, but I have seen it go just that way many times.

Remember, It is Your Money, and I am happy to help you spend it.

Joe Slick