Do Car Dealerships Employees Get Paid Commissions?

Car dealerships are complex organizations that require a variety of roles to ensure smooth operations. While salespeople are commonly associated with commissions, it's also important to understand how other roles, such as service writers, technicians, and service managers, are compensated. This article will explore whether employees in these different roles at car dealerships receive commissions and the specific aspects of their compensation.

Introduction to Car Dealer Compensation Models

Car dealerships adopt various compensation models for their employees, depending on the role and the dealership's policies. These models range from hourly wages to commission-based systems. Understanding the compensation structure is crucial for employees and potential job seekers.

Commission-Based System

The most prevalent system is the commission-based model, which consists of two primary components: base pay and commissions. This model is widely used in sales positions, particularly for salespeople, service writers, and repair technicians. Below, we delve into the details of how each role receives commissions.

Salespeople

Salespeople at car dealerships play a pivotal role in selling new and used vehicles. Their compensation is typically based on the sale of a vehicle, often in the form of a percentage of the total sales price. This system motivates salespeople to work hard to close deals, as it directly impacts their income. The percentage varies by dealership and can range from 1% to 10% of the sale price.

Service Writers

Service writers are responsible for preparing repair orders, scheduling appointments, and communicating with customers regarding repair services. While they may not receive a direct commission on repairs, they can earn additional income through a combination of base pay and commission. This commission can come from add-on services or additional inspections that the customer agrees to during the service appointment.

Techicians

Technicians and mechanics handle the repair and maintenance of vehicles. They are typically paid on an hourly basis, though some dealerships may offer a small commission for completing certain repair jobs or for upselling services. The main driving factor behind a technician's compensation is their hourly rate, which can vary based on their experience and skill level.

Service Managers

Service managers oversee the entire service department and ensure that customer service standards are met. Unlike the technicians and writers, service managers are generally not eligible for commission-based compensation. Their role focuses more on management and oversight rather than direct sales or service-related commissions. Their compensation is usually based on a combination of base salary and performance-based bonuses.

Additional Aspects of Compensation

While commissions are a significant component of the compensation structure, most car dealership employees also benefit from additional forms of remuneration. These include:

Base Salary: All full-time dealership employees typically receive a base salary, which provides a stable income regardless of the volume or success of their direct sales and services. Health and Benefits: Health insurance, retirement plans, and other benefits are often included as part of a comprehensive compensation package. Performance Bonuses: Some dealerships offer performance-based bonuses for exceptional sales performance, customer satisfaction scores, or improving departmental KPIs. These bonuses can be a significant additional source of income for top-performing employees. Stock Options: In some high-performing dealerships, salespeople may be eligible for stock options, which align their financial incentives with the dealership's long-term success.

Conclusion

Car dealership employees, such as salespeople, service writers, technicians, and service managers, may or may not be eligible for commissions based on their role and the dealership's compensation structure. Salespeople and service writers often receive commissions on sales and services, while technicians and service managers are generally paid on an hourly basis or have a base salary. Understanding these differences can help employees and job seekers make informed decisions about career opportunities within the automotive industry.