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Is this True/False?



I am a commissioned salesperson.
I get paid a commission every time I sell a car. My commission is a percentage of the profit. At the dealership where I work, I get paid 25 percent of the “front-end” profit and 5 percent of the “back end.” The front-end profit is made on the purchase price of the car. The back-end profit is found in financing and anything else we sell you, such as extended service contracts or GAP insurance.
For example, if I sell a car for $25,000 and there is a $1000 profit, or “gross” on the front end, I’m paid a $250 commission. If the customer finances through the dealership and we make $1000 on the back end, I get another 5 percent, or $50. Total commission before taxes: $300.



I think most people understand this, to some degree. What they don’t understand is that I only get paid if I sell a car. If I don’t sell a car, I don’t get paid. I make nothing. So if you come in and ask me to test drive a few cars, and I work numbers with you, and you take up three or four hours of my time, but you leave and don’t buy a car . . . I have made nothing. I am not compensated in any way for the time I just spent with you. I just poured three hours down the drain.
Prior to getting into car sales I had always been paid a salary or on an hourly basis. If I worked 40 hours a week, I was paid whatever the hourly wage was, times 40 hours. When I was salaried, I was getting a fixed amount each month, as long as I did my job. But after my first week in sales I realized I had just given up 50 hours of my life and hadn’t made one red cent. Because I hadn’t sold a car that week.
Let me tell you, that is a strange and sobering thought. And it changes your perspective completely. The following is a slight exaggeration: Imagine that one day civilization collapses, and all the grocery stores close, and you suddenly realize that if you want something to eat, you’re going to have to go out and hunt it down and kill it. Otherwise you’ll starve. That is what commissioned sales is like.
If you pull into my lot and get out to look and I don’t greet you, I might have missed out on the only chance at a paycheck I’ll have that day. Do you think a lion sitting there in the veldt, who hasn’t eaten in days, looks up and spots an antelope grazing in the grass a few hundred years away and says to himself, “Naaah, I’ll let that guy go, and get the next one?” A hungry lion doesn’t care if the antelope is “just looking.” He’s going to run it down and eat it. It’s a matter of survival.
This is what motivates the salesman. Hunger. This is what makes us put up with the long hours and the obstacles and the delays the average customer throws our way. We don’t eat — or get paid– unless you buy.
And how much are we paid? Theoretically, the sky’s the limit. If you can sell 20 or 25 cars a month, and “hold gross” (make a big profit) on each of them, you can make more than six figures annually. And there are salesmen out there who have done even better than that. There are the Joe Girards — who once sold 18 cars in one day — and sales expert Grant Cardones, and people like them who make more than some CEOs. But by and large these people are the exception. Not everyone can be a Michael Jordan or a LeBron James, no matter what they say in sales meetings.
Most salespeople do not sell 25 cars per month, and holding gross on a new cars is virtually impossible these days. So at every dealership there’s what’s known as a minimum commission, or “mini deal.” That’s the minimum the dealership will pay you when a car deal makes no money. At my dealership, a mini deal is worth $125. Now think about that.
How many cars would you need to sell at $125 a pop to make a decent living? Do you think you could sell 3 cars a week? That’s about 12 a month — not too bad. That works out to $1500 a month. Or $18,000 a year before taxes. Hardly rolling in dough.
At my dealership the average commission is around $550 a car. That’s new and used combined. So if you’re an average salesman and you sell 10-12 cars a month, which is the national average, and each car you sell is a $550 commission, what have you made? $6600. Or $79,200 a year before taxes. Not bad, depending on where you live . . . but hardly the life of Donald Trump. When you consider the hours needed to make those sales, it’s even less impressive.
So what keeps people in car sales, if the money isn’t spectacular? Well, it’s a matter of perception and personality, in my opinion. One day you may sell nothing — and make nothing. The next day you may hit a home run and make $1000. Then you make another $100, and later on get a bonus from the manufacturer and make another hundred, for $1200 for a few hours work. Not too bad. That’s what keeps the car salesman going: the hope that next time, he or she is going to hit one out of the park. It’s a gambler’s mentality. But if you’re in commissioned sales, you have to have a bit of the gambler in you.

I once sold a car to a man in his early 20s. He came in with a buddy of his and wanted to test drive an older Mustang we had, a Mustang that had been on our lot for quite some time. But he didn’t buy that day. He came back a few days later with the same friend, but I was busy with another customer at the time, so a friend of mine who is my “floor partner” helped him.
At that moment the deal became what is known a “split deal,” which means that my friend and I would have to split the commission 50/50. Well, this young man was a tough negotiator, and it took us something like four hours total to close him. And we lost our butts on the deal. We sold the car for less than we had in it, because it had been on the lot for nearly 60 days and we were just about to send it to auction, which would have meant taking an even bigger loss.
After it was all over, the young man asked us “How much did you guys make on this deal?” I asked him if he really wanted to know. He said yes. “How much do you think we made?” I asked. “Oh, probably 2 or 3 grand each,” he replied. He honestly thought that my partner and I had pocketed $6000 in commission on a $14,000 car. The truth was, it was a mini deal, and split two ways we had each made a whopping $62.50. When I told him that, a big smile grew across his face, like we were pulling his leg, and he said “Oh, no way! No way, man! You couldn’t make a living like that!!”
Tell me about it.
 

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Like I give a shit.

I aint buying a car because I want to pay their salary. If a deal takes hours, so be it. If I dont buy it because the numbers dont work, they can stuff it up their ass. They dont have to pedal cars if they dont want to.
 

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Carmax people get a salary not commission

But if I recall, they get a cut of the up ticks like extended warranties
 

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Yep and well that's part of life. I worked a 100% commission job. It sucked. I put in a lot of hours that didn't pay me when I wasn't selling anything. I moved on. If you can't deal with it don't take the job.
 

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Pay plans are different all over.
 

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Learned quick that old guys dropped their wives off at the mall and went to the local dealership to waste a couple hours. Got expert at filtering those paycheck fucking killers out. 14 years of that was enough for me. All the little dealerships are being gobbled up and they have one way to approach customers, and I hated it.
 

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Carmax also sells vehicles ABOVE full retail value and DO NOT negotiate at all on price.

That's how it is here in Florida anyway.

What ever the price is posted on the vehicle, that's the sale plaice. End of negotiations.

I wouldn't buy a piece of gum from a gum all machine in their lobby.


Carmax people get a salary not commission

But if I recall, they get a cut of the up ticks like extended warranties
 

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WHAT NOW ?
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Carmax also sells vehicles ABOVE full retail value and DO NOT negotiate at all on price.

That's how it is here in Florida anyway.

What ever the price is posted on the vehicle, that's the sale plaice. End of negotiations.

I wouldn't buy a piece of gum from a gum all machine in their lobby.
TRUE DAT^^^
 

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I've always been really really good at buying and selling the shit out of used cars, etc on craigslist. I've been told many times i should give the business a try but i've never been willing to try it out. It's different when you dont rely on it to make a living.
 

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Carmax also sells vehicles ABOVE full retail value and DO NOT negotiate at all on price.

That's how it is here in Florida anyway.

What ever the price is posted on the vehicle, that's the sale plaice. End of negotiations.

I wouldn't buy a piece of gum from a gum all machine in their lobby.
They really screw young ones.. new to credit, ding or two gets em high interest on car/truck that is already above blue book. Oh wait that's any car dealership that has used vehicles.... You just don't get to negotiate with CarMax like the other used car sellers..
 

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I paid salesmen a bit differently when I ran my used car lot until a few years ago.

7% of the final sale price with a min of $100.00 and a max of $1,000.

Made life easy as most don't trust a % of the profit due to most dealers have many little "costs"

Salesman knew what he was making as soon as the deal closed, didn't have to worry about getting "penciled"
 

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I've spent 44 years in this business, as a commissioned salesman, partners in a franchised GM dealership and since 1997, operating as a used car dealer. And you know what? I don't like pushy used car salespeople any more than anyone else.

Here's what happens, and it's a damn shame because the success of a dealership depends upon that first contact with the buying public - the salesman. You can't imagine how big-city dealers train their people - tactics that would cause most people to just get in their cars and drive away, if not actually start a fist fight. Salespeople have to be somewhat aggressive...a simple "If I'm able to meet your terms, would you buy this car from me today?" is the least a salesman should be prepared to ask....but crap like "sorry, we've already sold your trade-in" actually happens, and there's people out there who actually fall for it.

Back to how most new car stores run their operation - a store that averages 100 units a month will hire 30 salesmen. Of course, all but the top 5 or 6 who are 25-year employees with a clientele list a mile long, are going to starve to death, after they sell their family members and their friends. So they leave, and the dealer brings in another fresh crop...wash, rinse, spin, repeat....90 days later, the new bunch is starved out - and only the 6 longterm people make a respectable living.

So why not just keep the 6 and not hire any more? Because the other two dozen will sell SOME cars - the numbers all add up - and the expense to the dealer is minimal, since they're all on commission anyway. It's bullshit, and it's the primary reason for salespeople being so overly aggressive - most of them can't even pay their electric bill. When I was involved with a Chevrolet store, I put 4 new and 2 used car salespeople on the floors...40-hour shifts and not this 6 days a week bell-to-bell shit that most dealers require....and everyone made a nice paycheck.

As to the opening post, making $6K on a new car sale is an absolute myth, unless it's an exotic that's not discounted, like an Aventador or something. Too much competition thanks to the internet; there's virtually no car that can't be bought for 'invoice', which isn't true cost but that's what the salesman is paid off of. Used cars is a bit different...no two are exactly alike and there's no 'window sticker' to limit the asking price. A $6000 'gross' is rare but $2500 is normal - and it's what keeps a new car store alive. They'd all starve if they had to depend on new car sales. That sounds like a ton of money but a big dealer has a hell of a lot of legitimate expenses.

Point being, it pays all of us to work our best deal, but don't begrudge the dealer a livable, reasonable profit. They all have to eat, too. After all, whoever you work for, be it someone else or yourself, is making a profit, or you wouldn't have a job.
 
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