What Is the Average Commission Rate for Car Sales?
In 2006, car salespeople working at the largest car dealers averaged $18.91 per hour, according to the Bureau of Labor Statistics website. Although the hourly wage for car sales is higher than in other retail professions, some salespeople make significantly more or less depending on location, expertise and dealership. While some care salespeople earn commission, some do not make commission at all.
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Commission of Profit
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Most dealerships offer salespeople 20 to 30 percent commission of the profit for each car sale. Some dealers have both a used and a new car department, but the commission does not differ. Because new cars have set or minimal mark up, used car sales are the most profitable. Many dealers also offer incentives for selling a certain amount of cars for the month. In this case, the salesperson's regular commission of 25 percent increases to 30 percent if she sells 15 cars for the month.
Consideration
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Before salespeople are paid their commission percentage, the dealer takes out immediate profit from the sale, known as a "pack." This is a set amount of profit the dealership makes regardless of how much the car sells for. The profit after the pack is considered the amount the dealer owns the car for; the commission is based on the sale price minus the dealer's ownership amount. The range for the dealership pack is $400 to $1,200 or more.
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Flats
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Some salespeople, even at large new-car dealerships, do not make commission at all. These salespeople are paid "flats," or a set amount of money per car sale. Flat amounts range from $50 to $250, but rarely more. Dealers who employ this pay method usually offer a different amount per car; a vehicle that sells better than others (or one considered an easy, effortless sale because of popularity) warrants the lowest flat fee.
Other Income
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Salespeople also earn bonuses. Bonuses are offered on a sliding scale (like the increase in commission percentage), starting around 10 car sales for the month. Many offer a higher bonus for every several cars. For example, a salesperson who sells 10 cars for the month makes a $500 bonus, but if he sells 15 cars he makes $1,000 and continues to earn extra money for every 5 more cars sold. Bonus amounts differ by dealer.
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References
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