Car salesmen typically earn their income primarily through commissions rather than a fixed salary. The commission is usually a percentage of the dealership's profit on each car sold, rather than a percentage of the car's sale price.
Commission Rates
- Commission rates generally range from 20% to 40% of the gross or front-end profit on each car sale, with 25% being a common figure
- For example, if the dealership makes a $2,000 profit on a car, a 25% commission would yield $500 for the salesman
- Some dealerships offer a base salary plus a lower commission rate, but many salespeople work strictly on commission
Average Earnings
- The average commission per car sold tends to be between $400 and $800 , depending on the dealership and the profit margin on the vehicle
- A typical car salesman selling around 8 to 10 cars per month might earn between $3,000 to $4,000 monthly in commission alone
- Annually, the average car salesman in the U.S. earns about $58,000 to $83,000 , but this can vary widely based on location, dealership, and sales skills
- Experienced salesmen, especially those selling luxury vehicles, can earn six-figure incomes , sometimes exceeding $100,000 per year
Factors Affecting Commission and Earnings
- Type of cars sold : Luxury and high-end vehicles often yield higher commissions due to greater profit margins
- Sales volume : Meeting or exceeding monthly sales quotas can lead to bonuses and higher commissions
- Dealership policies : Some dealerships structure pay with a base salary plus commission, while others rely solely on commission
- Location : Earnings vary by region, with some cities offering higher pay due to market demand
In summary, car salesmen usually make between 20% and 40% commission on the profit of each car sold, translating to an average commission of $400-$800 per car. Monthly commissions can reach several thousand dollars, and top performers, especially in luxury car sales, can earn over $100,000 annually
