If you’ve thought about selling cars, you might have some questions. The most common we see is – how much does a car salesman or saleswoman make? We’ve pulled the numbers from car dealerships all across Canada, from Vancouver Island to PEI, to give you some insight into the life (and earnings) of a car salesperson.
Selling cars can be an extremely rewarding career path. Let’s discuss the pros and cons of working in vehicle sales. We’ll also talk about how much you can earn working at a dealership, what you need to get into the business, and finally, how you can be one of the greats!
What Are Some of the Perks of Selling Cars?
There’s a lot to love about working in car sales. Depending on the dealership, here are some of the advantages of a career in auto sales:
- You’ll receive a free “demo” car to drive every few months, or you’ll enjoy very generous staff price reductions.
- Almost all dealerships have excellent benefits plans.
- You get to determine your own income. You can easily make over $100,000 in your first year selling cars (and you don’t have to be a superstar to do this.)
- You get to dress sharply. If you’re a fan of fashionable suits and formal wear, you’ll love a career in sales.
- You get to talk about cars all day and drive all kinds of brand new models. If you’re an auto enthusiast, you’ll be in your element.
- Typically, a university degree is not required. Some of the skills you’ll pick up on the sales floor can’t be learned in a classroom.
- You get to help people. When it’s all said and done, connecting a customer, couple, or family with the right vehicle and financing can be an immensely rewarding experience.
What Are the Downsides of Selling Cars?
There’s a lot to like about being a car salesperson, but there are a few negatives too. There’s a very good reason this job has such a high turnover. It’s one of the only industries where people walk away from jobs paying over $200,000 per year because they dislike it that much. Some of the disadvantages of selling cars include:
- Extremely high pressure. Manufacturers apply huge pressure on the owners to sell vehicles, and that pressure is applied all the way down to the sales staff.
- Working late and on weekends. You can plan on working every Saturday and almost never having two days off in a row. In most markets, dealerships are open at least six days per week (sometimes seven), and Saturday is the busiest day of the week so everyone has to work. And at the end of the day, managers will ask you to stay until well after closing time if customers are still at the dealership.
- Car dealers generally have a bad reputation that’s unwarranted. Even if you’re the most helpful, knowledgeable, and laid back person in the world, many prospective customers come in with their guard up and will distrust you from the getgo.
- Uncertain paycheques. This one is especially true for new and inexperienced salespeople.
- Customers calling you 24/7 when their car breaks down. You must be a mechanic too, right?
What Does a Car Salesperson Do?
The car salesperson meets and greets customers when they arrive at the dealership. The salesperson helps the customer select their vehicle by answering questions about any model’s features and benefits. Other responsibilities generally include organizing the test drive, negotiating price, and helping the customer with trade-in and finance application paperwork.
How Much Does a Car Salesman Make?
For a car salesman or saleswoman, the typical wage is low at about $2,000 per month. The pay structure is based almost entirely off commission and bonuses. The average commission is about 25% of the gross profit made on the sale of the vehicle. For example, if the dealership made a profit of $1,600, the salesperson would make $400. This would represent the average commission on a vehicle sale. It may be slightly lower on cheaper brands and slightly higher on luxury brands such as BMW or Mercedes.
Bonus structures are set up to reward high performers. For example, the top two or three salespeople probably earn all of the bonuses. The average salesperson sells about 8 vehicles per month and makes about $3,000 per month. Top performers sell over 20 vehicles per month and make $12,000 – $15,000 plus per month with bonuses.
What Does the Auto Finance Manager Do?
Once the customer chooses a car and fills out an application, the finance manager oversees their financing options. They’ll usually run a credit check to determine the customer’s rate of interest and come up with an agreement that the car buyer is happy with. The finance manager’s role is to ensure that the dealership abides by all regulations while boosting revenue with extended warranties, protection packages, and other customizable extras.
How Much Does an Auto Finance Manager Make?
Pay plans vary significantly from dealership to dealership, but typically pay plans are based on the amount of profit generated on the “back end”. Backend profit includes the sale of extended warranties, protection packages (undercoating, leather protection, etc.), life and accident insurances, administration fees, etc.
The finance department is one of the major profit centres in a dealership. A typical pay plan may be 20-25% of the profit that the finance manager generates. Typical averages are between $1,000-$1,200, while top performers tend to average over $2000 per deal.
The average finance manager probably oversees 30-60 deals per month. Because of the huge impact one person can make on the owner’s profit, top finance managers are paid extremely well. Average finance managers make between $8,000-$12,000 per month and top performers can earn over $20,000 per month.
What Does a Sales Manager Do?
The sales manager works on the floor with customers and oversees the sales team. All haggling and price negotiations that go on at the dealership ultimately go through the sales manager. The sales manager is usually responsible for hiring and training all salespeople, setting sales goals for his team, and monitoring budget and inventory.
How Much Does a Sales Manager Make?
Pay plans vary significantly but are typically structured as a percentage of the total gross profit generated by the sales and finance departments. Average salaries for a sales manager are about $8,000-$10,000 per month with top performers earning over $15,000 per month.
Becoming a Car Salesperson in Canada
To be considered for an entry-level car sales role with a dealership, you usually must have (at a minimum):
- A high school diploma
- Good computer skills
- Experience in retail sales
A license to sell cars is not something that you need to be hired, but you will need to obtain it before you can start selling. Every province has its own motor vehicle dealer laws, and the rules and procedures to become registered and licensed vary depending on where you are. There is usually a mandatory certification course that you’ll have to take. The course teaches you about the car sales industry and your legal responsibilities and requirements.
How to Be a Great Car Salesperson
In the world of auto sales, what traits or behaviours separate the good from the great? Here are a few things to keep in mind if you want to excel in the car sales business:
- Do your homework. You need to know everything about the cars on your lot, what each model features, the trims on offer, and the financing deals available. You also need to know your customers. That’s why it’s important to ask the right questions. The right questions will help you determine where in the funnel your customer is and what solutions you can offer them. Which brings us to our next point...
- Be the problem solver. If someone walks through your doors or inquires online, they’re looking for a solution. Your job is to help your customer hone in on what that solution is. Also, if there’s something preventing a potential customer from committing to a sale, you need to have the answer. Bad credit? No credit history? No savings for a down payment? You need to be prepared for curve balls at every stage of the buyer’s journey and find a solution for every issue or obstacle that crops up.
- Get organized. Set yourself up for success. The right workspace environment can make a dramatic difference. An appointment board or calendar in plain sight will help keep you motivated and on your game. Excellent filing and smartsheet tracking will help you prioritize and make it easy to separate hot and live customers from lukewarm and cold leads.
- Keep a positive mindset. As a salesperson, you are going to face with objections, declines, last-minute pull-outs, and even ghosting. You need to know when to persist and when to cut your losses and move onto the next lead. And you cannot carry your disappointment over to your next customer. When you’re around a potentially interested buyer, your enthusiasm and positivity need to shine through.
One way to make a car sales job easier and less stressful is to eliminate the worry about where your next car buyer will come from. Canada Drives is Canada's premier lead generation company, providing dealerships and their sales teams with high intent car-buying prospects.
Contact us today to learn more about how Canada Drives can help you excel at selling cars.