My, how the times have changed.
The brash, in-your-face car salesmen depicted in Hollywood movies before the turn of the 21st century has given way to a more subtle approach to presenting and ultimately closing the deal on new and used car sales. Has the transformation of the car salesman changed how much car salesmen make?
Let’s take a look.
Car Salesman Job Description
Some things never change, as the primary responsibility of a car salesman is to implement selling strategies for motivating customers to make car purchases. However, what was before referred to as hard sales tactics have changed to a more nuanced approach to selling cars called persuasive skills.
Car salesmen work for automotive dealerships specializing in the sales of brand name models. The main job responsibility of a car salesman involves consummating car sales. However, several other job factors play a role in determining the sales success rate enjoyed by auto sales representatives.
- Show cars
- Plan and supervise test drives
- Negotiate terms of auto sales
- Recommend financing
- Provide friendly customer service
After coming to terms with a customer, car salesmen work with the financing department to seal the sales deal. After receiving approval for financing, car sales representatives complete the paperwork required by law and the dealership to finalize auto transactions.
Job Skills that Influence Compensation
When we discuss the job skills required to become a successful car salesman, we are talking about more than waking up every morning brimming with confidence. Successful auto sales representatives possess strong verbal communication skills. Since the art of closing the deal now involves a more subtle approach to selling cars, car salesmen must be excellent listeners who craft questions based on customer responses. Effective sales techniques still matter, but the techniques have changed to include consistently communicating with customers by text, phone, and email. Mastering the art of negotiation is now more about adapting to customer requests than it is about imposing a car salesman’s preferences. Friendly and knowledgeable customer service goes a long way in determining how much car salesmen make. Many auto dealerships operating in the United States implement some form of Customer Relationship Management software to better engage customers.
What Does a Car Salesman Earn?
Despite the false impression that car salesmen sport fine jewelry while driving luxury vehicles, auto sales representative earn around $40,000 per year. However, the mostly commission based income depends on the state of the local and national economies, as well as dealer reputation. During economic downturns, car salesmen have to offer several buying incentives, which reduces commissions. The average auto sales representative finalizes about 10 car sales per month. If you take the $40,000 annual earnings of a car salesman, that translates to about $330 in earnings per car sold.
However, car sales are driven mostly by the sales skills of auto sales representatives. Although a poorly motivated car salesman with inferior sales skills might sell just six cars in a month, a vastly superior salesman can exceed selling 20 vehicles each month. The sales rep who moves more than 20 cars every month can earn between $6 and $8 grand per month. How much car salesmen make also depends on the condition of the cars sold. Dealerships offer more financial incentives for auto sales representatives to sell used cars.
How Dealerships Affect How Much Car Salesmen Make
Most auto dealerships set minimum commission amounts, which typically range between $75 and $200 per car. The going commission rate for most car salesmen is 25% that is based on the gross profit generated by an auto dealership minus a pack fee. Many dealerships take out inspection and management fees from gross profit, before handing out car salesmen commission checks. As of 2016, the average gross profit earned by car dealerships on the sale of a new car was nearly $2,400.
The Future of Car Salesmen Earnings
The job description requirement that auto sales representatives acquire technical skills to perform their jobs means compensation should increase per vehicle sold moving forward. Many auto dealerships across the United States pay for technical training to ensure auto sales professionals have the digital skills to market vehicles online. The flip side to the move towards more Internet sales means car salesmen can expect a rise in average monthly sales quotas.