Commission-Based Earnings in Used Car Sales: Insights from an Average Dealership

When considering a career in used car sales, one of the most critical factors to understand is the earning structure at an average dealership. This article delves into the details of how much money you can expect to make and whether the earnings are split on a commission-based model.

Earnings Variation in Used Car Sales

The pay scale for used car sales can vary widely, ranging from a minimum of $40,000 to over $150,000 annually. At a typical dealership in a smaller to medium-sized town, you might expect an annual salary ranging from $50,000 to $75,000.

Factors Influencing Earnings

Several factors can influence your earnings:

Dealership Size and Region: Larger and more established dealerships in urban or suburban areas tend to offer higher salaries, often starting around $70,000 or more. Experience of Other Salespeople: If you are starting in a small dealership with experienced salespeople, competition may be fierce, as they may have a substantial clientele base. Difficulty of the Market: In a market with limited internet leads and low repeat customer referrals, it can be more challenging to earn a high commission. Number of Vehicles Sold: Sales volume significantly impacts earnings, with each sale potentially bringing in a commission ranging from $150 to over $800.

Commission Structure

Most dealerships operate on a commission-based model. Commission is typically a percentage of the profit from the sale of the vehicle, with a minimum rate of 50%.

Start-Up Earnings

Starting earnings can be relatively low, around $40,000 annually. However, experienced salespeople can earn much more, with some making over $100,000. The average earnings for a used car salesperson can range from $50,000 to $65,000, depending on the dealership's structure.

Commission Earnings Breakdown

The commission earned can vary based on the type of vehicle sold:

Used Car Sales: You can earn anywhere from $150 to $800 per sale, with some exceptional cases reaching $1,500 or more. Retail Vehicle Sales: Earnings from new vehicle sales are generally lower, typically no more than $300 per sale.

The markup on used cars allows for higher commission percentages, often ranging from 15% to 25% of the mark-up price. This structure means that while used cars provide higher commission opportunities, they may also come with a higher workload.

Flat Rate vs. Commission

Some dealerships do offer a flat or fixed payment, which means a consistent salary regardless of the number of cars sold. However, this model is less common and often seen in more established dealerships with experienced sales teams.

For those still driven by commission, understanding the intricacies of the commission structure is crucial. Earnings can fluctuate based on individual performance, market conditions, and the dealership's specific policies.