The recession has kept many Americans from purchasing new cars, and car salespeople who have traditionally depended upon commission sales have felt the pinch. In their scramble to ramp up meager profit margins, auto dealers have had to use inventive means to both remain profitable and keep their car salespeople happy. One way they’ve done this is to rethink the old commission pay scale used at many locations. Automotive News reports that the previous model of commission sales where 20 percent of gross profit is shared simply isn’t enough anymore. In order for car salespeople to earn a living, base plus commission is necessary.
Car salespeople: Not just a job, but a profession
Experts within the automotive industry have seen the turnover in car salespeople positions, particularly during tough financial times when commission sales positions are less attractive for bright professionals who require enough pay to support a family. Paul Stowe, director of the consulting firm NCM Associates of Overland Park, Kan., told Automotive News that “Traditional pay plans are being challenged, tweaked and reinvented to do one important thing: keep the sales position a true profession as opposed to a job and the associated turnover.” A recent expose by Edmunds (video summary below) offers further proof that the caliber of people willing to work as car salespeople has definitely been impacted by both the transient nature of the job. Add a recession into the mix and the pool of dedicated talent becomes increasingly diluted.
Keeping car salespeople without giving cars away
The newly devised method to pay car salespeople features a five-pronged approach:
- Base plus commission sales and bonuses
- Commission on total dealer gross
- Finance and insurance commission
- A flat fee per car sold
- Customer review bonuses
Minimum sales required
So long as auto salespeople meet the minimum requirement for vehicles sold per month, a straight salary option can even be effective, says Joe Verde, an auto dealer from Capistrano, California. Buddy Stasney, owner of Buddy Stasney’s Buick-GMC in Lincolnton, N.C., told Automotive News that his auto salespeople must average at least eight vehicles sold per month under his straight salary option. In general, anything over the minimum sales figure each month earns auto salespeople a flat bonus per vehicle.
Auto salespeople: shrinking salaries
According to the U.S. Bureau of Labor Statistics, the annual mean wage for auto salespeople has trended downward during the recession. While 2006 showed a brief spike, the 2009 mean wage is lower than it was seven years ago – a trend that does not bode well for auto dealers who want to attract top-tier sales talent:
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I had a question. To what extent do car salespeople generally get bonuses based on working together with other departments? You mention "Commission on total dealer gross" & "Finance and insurance commission" but are these signficant amounts of money compared to individual sales commission and is it common for dealerships to offer these types of commission?