Car Salesman Confidential: How much do we make?
A reader suggested that I lay out the details of two or three car deals in a row to give everyone an idea of how much a dealership makes.I will do you better.I'll give you a month's worth of information so you can see what I made and what the dealership made.
Let me assure you that these are real numbers.I hope I don't let anyone down, but I'm not one of those guys who make $200,000 a year working 15 hours a week with two full-time assistants.I'm not that guy.I'm a regular schmo with tired feet and a big mortgage who works and writes to make a living.
This month, my dealership put $300 "flats" on every new model.The salesperson was guaranteed a $300 commission even if the deal was lost.To make way for newer models, we had to sell our remaining '13s.
For the first time in "Car Salesman Confidential" history, I am using actual customer names for added authenticity.So here we go.
I lied.I'm a car salesman.Those are not actual customer names.I changed all the names because Motor Trend wouldn't cover my legal fees.The numbers are drawn directly from my paysheet.
I sold 11 cars that month and my total commission was $2319.85, which is the national average.I was able to work my pay plan and hit two bonuses.I earned an additional $250 for selling 11 cars.I earned $500 for selling the most new cars at the dealership.I didn't get the third bonus of $1000 for selling 10 new Zorches.It really sucks to miss out on a thousand bucks by one unit.I made $3069.85 before taxes and deductions.If the deal had gone through, the rat bastard would have bought his wife a Ford instead.I'll be making about $36,838 this year if this is an average month.Not bad...Not by a long shot, but not Bill Gates territory.
The amount of money a dealership is willing to lose on certain sales is the most interesting thing about this chart.I knew we were losing our dogs when Cupid bought her convertible...Is it a negative $6292?I don't think the customer realized that it was that much.It was worth losing that much to get it off our lot before the '15s arrived.
Front-end losses are usually offset by back- end profits made by the Finance Department.On Doc's deal, we lost $722 on the front end, but made $608 in the back, almost canceling out the loss.We more than doubled our profit in the Finance office.It should work that way.
One of the couples we made the most money on was Mr. and Mrs.Happy were the most satisfied customers.These people were so happy that they sent me a card and gift certificate to a local restaurant.The fact that people who pay the most are always the happiest is one that every salesperson can attest to.
Without those bonuses, this would have been a bad month.I only made money on three deals if you took out the $300 flats and unit bonuses.A "mini deal" is a minimum commission deal.If those bonuses hadn't been in place, I would have only earned $1694.85.
For most of the time, the dealership lost money on the cars I sold.Every deal would be making thousands of dollars in profit if you asked the average customer to create a chart like this for the salesperson.The reality is not the same.
I wasn't the top salesman that month.Two guys were better than me.Only four cars were sold in the month.Four cars for the entire month.He's a good salesman.Let's assume it was the worst case scenario, with four mini deals, because I don't know what his paycheck was.He made $500 for an entire month's worth of work if that was the case.
If that isn't bad enough, consider this.He didn't make a dime.He had to pay the dealership money.That's not a mistake.How is that possible?
It's called the draw.The law requires the dealership to pay you minimum wage for being there.The average salesperson's commission is usually greater than minimum wage, so this never factors into your paycheck.If your commission is less than minimum wage, they pay you less...You can deduct what they've paid from your next paycheck.
Based on his hours, my buddy was paid around $1400 this month.He still owes the company $900 even though he made $500 in commissions.If he makes $2000 in commissions in the next month, they'll take back $900 and leave him with $1100.Let's say he has another bad month and only sells a few cars.He ends up owing the dealership more due to the fact that the draw at many dealerships is month to month.