How Much Do Car Salespeople Make? The Pay Structure Explained

If you know what you're doing and hit your stride, you can easily make over six-figures a year selling cars, but it's also an industry where the wealth pendulum can swing far to the other side with little warning. There can be weeks or months where sales are horrible and you don't make much at all. So just how much can a car salesman make? 

Data from Indeed shows that the average base salary for a car salesperson in the U.S. is just under $83,000 a year, but this number is bull for a couple of reasons. 

Indeed includes a disclaimer which says it's "based on 180 salaries submitted anonymously to Indeed by car salesperson employees, users, and collected from past and present job posts on Indeed in the past 36 months." These salaries can easily be inflated by whoever submitted them and the data can vary widely depending on where you get it from.

ZipRecruiter, for instance, shows average car salesmen salaries in California are just over $38,000 a year with a national average of $38,680. On the other hand, Glassdoor shows a huge range for salaries of California car salespeople, with pay ranging from $106,000-$178,000 per year; that number gets a bit lower when viewed nationally, dropping to $82,974-$129,464 per year.

As someone who has been in the car sales industry, the reality is that you really can't pin down an average salary. Higher salaries rarely happen right off the bat; it can take quite a bit of time to start making annual salaries approaching or breaking the six-figure mark. Some will get lucky and make $80,000 a year right out of the gate. Most will have times like this: you sell three to five cars in a single day. Your commission off those sales is nearly $3,000. The rest of the week, nothing, which often means you are working for no pay. You get a few people who come in, some walk ups, but no sales. You're just at an hourly wage. And you don't get that hourly plus the commission, you get either or. It all depends on your people skills, sales skills, the quality of your employer and their stock and plain old dumb luck.

Pay structures vary but the most common is one of the more bogus pay structures around: the draw system. Say you first got hired at a dealership. The dealer cuts you a check for $2,000. You do well your first month and manage to make $3,000 in commission off your sales. Once pay day hits, you won't see that $3,000 in commission. Remember that $2,000 you got when you first started? The dealer wants it back. So they take it out of your commission and give you the difference, leaving you with a check for $1,000. Basically, the dealer loaned you that $2,000, to keep you afloat until pay day. At least that's how they want you to think of it; they're helping you out. What's really happening is that, once you learn how the system is, this is all just another incentive to keep you on your toes and selling. To beat the system, you have to constantly move units to maintain a commission check of at least a couple grand.

Dealers also love to dole out money in segments, especially if the payout is big. Say you have $10,000 in sales. You won't get just a single check for that $10,000. The dealer will pay it out over time and this can be frustrating as hell. For instance, the dealer I was with would pay that $10,000 out in five parts: $3,000 paid over a month's time and then the remaining $7,000 would come in a single check the second week of the next month. I never understood why it was that way, that's just the way it was. Personally, I always just thought it was some kind of control tactic.

Some dealers have a tiered pay structure that increases the amount of commission you get based on how many cars you've sold. For instance one to five cars would be $200, six to ten cars would be $275, ten to fifteen cars would be $300 and so on. But then that pay can vary because some dealers will base the commission off the age of the vehicle sold; new cars will be 20 percent of gross while used ones will be 50 percent (used cars usually have more equity in them and often bring bigger commissions, which is why that gross percentage is higher.) None of this includes things like small commission bonuses such as spiffs. These can be paid out daily by doing something like selling a car that's been on the lot for awhile or selling a certain number of cars during a sales event. These can also include bonuses for getting something as simple as a customer to fill out a credit app; my dealer used to pay $25 a customer for these during the week and would up it to $50 on weekends.

Ultimately, this all can be pretty annoying and confusing, especially if you're like me and you just simply wanted to be paid for the work you do without all the games. Because of this wide and varying pay structure, you'll often encounter salespeople who have bounced around to a lot of different dealerships. These types of sales people are usually driven but only in pursuit of where the grass is greenest.

So that brings us back to the original question, how much do car salesmen make? The answer is needlessly complicated. Just know that if you are prepared to take a dive on a career in car sales, make sure you understand what you're getting into. Because the twists and turns of these confusing pay structures can easily get you taken advantage of.