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Car Salesman makes $200,000 a year

In today's world the title of this post doesn't really happen anymore. The day's of car salesmen or women making big money are pretty much gone.

According to the Bureau of Labor the average car salesman makes $42,150 a year.

There is a trend in the car business to attempt to increase profit by lowering employee expenses (i.e. payroll). A lot of dealers are turning to a salary program. On this program sales people get paid a weekly salary and have to chase unit sales over profit. And, at the end of the month the salesperson will get paid a bonus on the number of units he/she sold.

Here is the good and bad of what we see in the industry at dealerships that utilize a salary program.

Good:
1) Dealer initially increases net profit

Bad:
1) After a few months the dealer's employee turn over rate goes up
2) Total profits go down
3) Unit sales go down (related to turn over)

That's right there is typically only 1 good factor for a dealer when utilizing a salary program for s…

Car Salesman makes $200,000 a year

In today's world the title of this post doesn't really happen anymore. The day's of car salesmen or women making big money are pretty much gone.

According to the Bureau of Labor the average car salesman makes $42,150 a year.

There is a trend in the car business to attempt to increase profit by lowering employee expenses (i.e. payroll). A lot of dealers are turning to a salary program. On this program sales people get paid a weekly salary and have to chase unit sales over profit. And, at the end of the month the salesperson will get paid a bonus on the number of units he/she sold.

Here is the good and bad of what we see in the industry at dealerships that utilize a salary program.

Good:
1) Dealer initially increases net profit

Bad:
1) After a few months the dealer's employee turn over rate goes up
2) Total profits go down
3) Unit sales go down (related to turn over)

That's right there is typically only 1 good factor for a dealer when utilizing a salary program for salespeople.

A dealer who wants to sale more cars and increase profits needs to hire people who are hungry. Like I have always said, I want to hire people who have made big money before and had to borrow gas money just to get to the first day of work. The more drive in a person the more money a salesperson will make and therefore the dealer will make.

NOW, as a consumer, shopping at a dealership that has it's salespeople on salary and be good or bad.

Good:
1) Salesperson does not care what you pay for the vehicle

Bad:
Here's the bad, the salesperson doesn't care therefore he/she is not going to give you the respect of learning more about you and understanding your true needs. All that person is going to do is put you on a vehicle that meets what your wants are, even if it does not match your needs.

We need to go back to the days of people truly caring about the consumer's needs. When we get there then we will start increasing customer satisfaction. And with increased customer satisfaction the profits will come.