Almost every new car dept loses money, every month.
Average per copy(per unit) is $1000-$1400 in Detroit but again, it’s a niche market w/ lots of money to play with.
I’d be amazed if the national average wasn’t lower when you consider the coastal cities.
Salespeople are largely, well, poor. Most do not make it 12 months, let alone 36(which is how long it generally takes for your first clients to come back(also not likely now w/ the glut of 84 month purchases now)).
Car sales folk really have to be wise in picking their brand, store and location to make money in today’s world. I’m sure you can guess that most do not.
That pay plan I posted above is actually the catalyst for my leaving the retail side of the business. That plan is designed for gross, in an employee market, that is volume driven.
Salary depends on the store and location. I believe california is now forcing stores to have some sort of base salary as opposed to draw (which is a per month amount you pay back w/ sales).
I cut draw off as soon as I could as I didn’t want to be held to X hours per day/week if it wasn’t advantageous. It’s also probably why I enjoy my current work as it allows me somewhat of a flexible schedule.
TLDR: Car people rarely make money. The old saying of 20/80-80/20 applies. 20% of the sales force makes 80% of the money - 80% makes 20% of the money.
(this isn’t every store - some have solid management and payplans that keep people their entire ‘career’ in carsales)
Not sure what you mean by this. The financials for publicly traded dealers are available for anyone to see. Lithia, for example, over the years has reported new car sales as being responsible for around 20-25% of gross profit.
Employees being paid poorly is a separate matter. But the business itself can be profitable.
I know you’ve brought this up before, and I don’t know how they report their numbers either, but it’s fascinating to me that many publications also point to what Ben is saying, and New Cars are the losers, used cars, F&I and repairs are where the money is made, yet somehow Lithia can make money in new cars, and even more so than used. That’s also showing Gross margins and not Net, which are 2 separate things, as I know you know already. I suspect they are getting some hefty kickbacks based on volume, being a multi-state conglomerate.
Nobody really breaks down net profit per segment, as it’s much harder to allocate all the SG&A and everything below gross profit that applies to an entire company (salaried corporate employees, marketing and advertising, R&D, depreciation, amortization, interest expense on debt, taxes, etc).
Volume kickbacks are part of the biz model. It’s part of what allows new cars to be a profitable business (at least of a gross basis), along with the guess that the average consumer pays more than you or me or most hackrs.
The other part that sucks about car sales are the hours, if you didn’t put in at least 50 hours a week you weren’t part of the 20% making 80%. And you always end up coming in on one of your days off because you didn’t want to split a big deal or a potentially big deal. Oh and so other people could have a day off, one of your days was always a ding to dong, ie open to close(10 to 12 hour day). Oh how I don’t miss it, I’m reminded of this every time I sit in a dealer waiting for the stupid F&I guy to load all his crap in the computer that I’m not buying.
As a car enthusiast, I’d think it would be the perfect job…until you learn all of the pitfalls (hours, cut-throat, many many tire kickers, low base pay, etc…). Doesn’t seem worth it to me. Although, I suppose, if you’re a hustler, and get into the right dealership, you can make a good living, which is the minority of car salesman.
It’s great for people who couldn’t afford to go to college or had to drop out of school. I met allot smart people in the car business that had no formal education, tons of street smarts too.
This! Yessir, I’ve always had people tell me that successful car salesman often times have that natural street smarts/ability. They’re tough to acquire over experience!
There is no profit in most Mercedes Benz models, not for the Salespeople at least. Everyone is hoping to get better than invoice and once you past that threshold, you are making a flat commission.
An adult would have said “there is little to no correlation between the type of car you drive and amount of money you spend on it with how much you earn.” I’m sure we all know millionaires who drive a 15 year old Camry and folks making 40k a year that are driving a Maserati while living in a box.
Also unclear the relevance here to car sales, but what do I know.
Take home also means little if one maxes out 401(k)/Roth IRA contributions, pays medical coverage for the whole family, long/short term disability etc, and the other one does nothing like this. In general, not talking about these 25 year olds
