How Much Do Salesmen Make On Each Sale

This is a topic that I have avoided talking about, but have had many questions about it, so why hide it! How much does a Sales Person make on the sale of a vehicle? You may be surprised. I have had customers think that I made thousands of dollars per sale. This is just not the case.

Sales people, are paid a percentage of the profit, whether it is a new or used vehicle. The percentage may differ from dealership to dealership, but the average is 30% on primary customers and 25% on secondary customers. A primary customer is one that is easy to finance, for instance, financing with GMAC, Ford Motor Credit, etc. A secondary customer is one that has to bring check stubs, phone bills, electric bills, etc. The reason for the decrease in percentage on a secondary customer is because of the time it takes for funding to take place, or for the dealership to get their money. If you want to make sure you are getting the best deal on your purchase, try using Yahoo! Autos
to get a free invoice price quote.

Now, look at new cars. Since I sell GM, we will say selling a new G6 which has a base price of around $17,000. If I sell a G6 for list price, it may have a markup of approx. $600. At list price on a primary customer, I will make around $180. For every $100 dollars that I discount the car, $30 dollars comes out of my pocket. Now, you see why there are so many games played. An average sales person sales between 8-10 cars a month. On the more expensive cars, say a Yukon that lists for $45000, there may be $1800 markup.

Now, lets look at used cars. On average used cars are marked up $3000-$4000 dollars. Now you have some room to work, and still make money. Many customers will not buy a used car though and it is very hard to survive selling only new cars.

GM may have shot theirselves in the foot will value pricing. Value pricing lowered the markups of vehicles over past years. Not only do customers not believe there is so little markup, sales people cannot survive selling new cars. Many sales people try switching to used cars any chance they get. I do not believe this is what GM had in mind when they implemented value pricing.

So, the next time you are negotiating with your salesman, give him a little break. You can tip your salesperson, and they will fight for your best deal. Not a bad idea to tell your salesperson that you are going to tip them if they can get you a great deal. I have had customers tip me upwards of $100 dollars, just because I gave them a great presentation and was not pushy.