# Car Sales



## DayTek (Sep 26, 2013)

My husband has been looking into a job in car sales. He's worked the last decade as a machinist, but the trade has lost it's luster for him. He's very much a people-person and has wanted to explore a career working with the public. I think he would be pretty good at it - He's very patient, level-headed and enjoys being social. He's never worked in sales or retail before...I did it for almost 9 years, so he's heard the pros and cons from myself.

The job he is looking into pays a base salary + a commission + full benefits. 'Ups' (which I guess is a term for potential buyers) are rotated fairly among staff, so it's a less competitive and more a team-based environment. It's at a Nissan dealership that sells new and used cars. He had a long interview with the sales manager last night and will have another with the dealership owner by next week. If all goes well, he could start the beginning of June.

There are some financial concerns I have, being the 'Chief Financial Officer' of our household. We sat down when he got home last night and did some budgeting. We figured out that if he sold 9 cars a month, plus his salary, he'd be earning a little less than the income he's at right now. 10 sales and he'd be earning more because he'd be retro-paid back a bonus from all the other sales. The dealership requires a minimum of 10 sales per month or your out, which makes sense because he'd quit if he couldn't sell more than that consistently...It wouldn't be worth his time. 

The most challenging thing is that I am used to working a weekly/bi-weekly budget with consistent pay (most people are). I'd have to go to a monthly budget as I don't know the time frame of when he gets paid out his salary + commissions...And they will be variable depending on his commissions anyway. Any extra money he earns during "very good months" would have to be stored away as back-up for less profitable months (they said the winter months can vary, but some are surprisingly busy).

I want to be supportive of this. My husband was laid off from a machining job he loved for 7 years back in 2011. Since then, he has worked at at least 1/2 dozen other shops and has either been on contract work, laid off or the hours are terrible (straight afternoons doesn't work for us, we couldn't stand seeing each other only on the weekends). He's found a place in town right now that pays well and it's on a straight day shift, but he doesn't enjoy the work there. So while I have reservations about him taking this job, I want him to be happy in his work. 

The benefit he has is that if he tanks a car sales, he's a licensed machinist and can always go back to the trade (the job he's at right now has taken people back who have quit several times! So he said he'd go back there if need be).

Is anyone here employed in car sales? What was/is your experience and how do you handle your finances when your income fluctuates? 

Thanks all!


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## SkyFall (Jun 19, 2012)

I was a car salesman for Subaru, average was 2-3 cars a week.... that's average... some period during the year is very tough.... nothing for weeks. The dealership allowed us to have an internal account, meaning from your comission you take out what you need and you keep the rest in the dealership virtual account, which is an easy way to make a regular stream of income (you have to build your virtual account first so first few months was tough).

Second, I don't know about your dealership but mine was a 9 to 9 schedule with one evening and one afternoon per week. For some people the 9 to 9 is hard especially if you come in and you don,t get to see any client. 

To me car sales was more than liking to work with the public it's really another ball game, you need to be a closer you need to be sharp as a tack! I don't know if it's because of my dealership's thinking that changed my view maybe I am just bias.

Last, mine Subaru dealer was the top in Canada, which mean we had massive clients but the problem is that we were sold out on the popular cars.... the waiting time was approx 6 months... the way at our dealership was you get the comission ONLY when you deliver the car, which mean first months WILL BE VERY TOUGH!

anyways sales was awesome if you love the sale! it hlep also if you like cars  best of luck!


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## pnky (Jul 16, 2012)

I am not in car sales but based on what you have written, I think your husband has everything that he needs - the will to succeed and a supporting family. With these, he can overcome any and all challenges that he might face. Good luck !


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## Mortgage u/w (Feb 6, 2014)

I am not in sales but I would imagine a reserve account would be necessary in order to have a steady stream of income - especially during the quieter months. 

I find the move from machinist to car salesman a little drastic. Why not consider a position in the parts or service department of the dealership? Income and hours would be more steady and he can somewhat apply his experience there.


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## DayTek (Sep 26, 2013)

Hours for this dealership are 9-8 Monday-Thursday, 9-6 Friday, 9-5 Saturday and closed on Sundays…Overall, not bad hours. He'd be required to work 2 evenings through the week and 9-5 the rest. He'd get a day off through the week in lieu of a Saturday worked.

This dealership considered itself 'busy'. That would be need to be seen, I guess. However, my husband said that they sold 2 cars alone while he was in the interview…On a Tuesday night…LOL. The Sales Manager showed him the sales numbers for the month of May so far…Out of four salespeople, top seller had 8 and the bottom had 6. So even playing fields are good.

My husband LOVES cars. It's more than money to him…He likes being around cars and talking about them (a passion I do not share for the most part…haha). For the selling part, they will offer coaching.




Mortgage u/w said:


> I am not in sales but I would imagine a reserve account would be necessary in order to have a steady stream of income - especially during the quieter months.
> 
> I find the move from machinist to car salesman a little drastic. Why not consider a position in the parts or service department of the dealership? Income and hours would be more steady and he can somewhat apply his experience there.



I agree the change in career seems drastic, but if you knew his personality, he is pliable like that. He enjoyed his time in aerospace machining and after his place moved to Mexico he hasn't been able to find machinist work in that field since. Aerospace machining was cleaner work and most others are very dirty. That is why he didn't consider mechanic because it's just as dirty. He's a pretty clean-cut guy and the idea of wearing a tie to work is appealing.


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## the-royal-mail (Dec 11, 2009)

OK, maybe this is simply a case of "try it and see what happens". And yes, you will need a float in your bank account of at least a couple of months as it could be a while before his paycheques start rolling in. Emergency fund will also be important for you as in a local downturn of car sales (there are always bad months) he could be out. That's the problem with sales. Easier to get those jobs as there is little to lose for the dealership if you do not perform and sell. Not for me but if his personality is suited then it may be a risk worth taking. Sometimes you have to take risks to get ahead but don't hold us liable if it doesn't work out!


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## blin10 (Jun 27, 2011)

if he doesn't want to lie and/or screw people over in terms of making the most from a car sale and give as less discount as possible to the client then he will not be able to do it... I've seen many car sales people, 99% of them are sleazy lairs that will sell their mother if they had to, obviously there are exceptions but they are very rare


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## fraser (May 15, 2010)

I suspect that it may be similar to many commission vocations-the 80/20 rule. Eighty percent of the commissions are earned by the top 20 percent producers.


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## Rusty O'Toole (Feb 1, 2012)

I'm not in sales but I understand you need to build up your repeat business by taking care of your clients and their friends, and by doing your own marketing. They used to call it cold calling but today more like emails and social media.

Also leasing is better for the sales person than selling, and also leads to more repeat business. A good salesperson who builds up a client list with repeat lease business can do very well.


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## BC Eddie (Feb 2, 2014)

I feel for you and admire your support of your spouse. I wish you both the best.

My Dad was in card sales, my brother-in-law(BIL) started out as a salesman decades ago and now has his own business and my step-daughter(SD) tried car sales last year.

Sales are tough and when the economy tanks, so does your income. From what I have learned from my BIL and SD many (most?) dealerships are out to rip off new salespeople. They pump them through to get them to generate sales from friends and relatives and then get rid of them when they dry up. Many dealers say you get a salary but if you make a sale your "salary" is deducted from your commission until any backlog is paid off. If you sell used cars then the dealer deducts from the profit (and your commission) any costs associated with the sale (e.g., required service on vehicle) and these "costs" can often be inflated to boost the dealership's profit not yours. When my SD would get her cheque she had to go over it with a fine tooth comb to make sure the dealer (Large Toronto Ford dealership) was not ripping her off.

My SD ending up quitting after going through the dealer and manufacture's (Ford) training and working at sales for over six months. She liked the sales/meeting people aspect but could not take all the dealership nickle and dimeing even though she was selling her quota. 

It is also true what previous posts have said. The key skill you need if you want to be financially successful is to be a "closer". You need to get the customer to sign and commit their money. At times you may need to be ruthless if you really want to make the sale. Or you could watch weeks of work contacting, researching, negotiating, walk out of the showroom. You can make money at it, but you need to be with a successful brand (hard to sell unpopular cars) that has good supply (you don't get paid until car is delivered) and the regular, good-money, will probably only come after a number of years of building up a repeat clientele (and it is hard to get repeats if your clients eventually feel ripped-off). 

After all the time she put in (working many more than 40 hours week) at the end she was just getting minimum wage so she quit and went back to her previous job. She could have made more money and put in less hours by working as a food server.

I am sure there are honest dealers out there but go in with your eyes open.


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## Westerncanada (Nov 11, 2013)

Very curious to hear how this turned out? 

Is he doing well?


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## indexxx (Oct 31, 2011)

It's a tough gig on some levels- my dad did it his whole life. He was one of the rare honest car dealers (not just saying it because he's my dad!)

The money can be good but you have to have a thick skin- you get all manner of idiots chiseling you for every dime and pulling all kinds of stuff. If you're in a good dealership where it's not you out there in the cold sweeping cars off and getting abused by your employer then it can be OK.

BTW Jimmy Pattison had a policy that every month the salesman with the lowest sales got fired. What a dick.


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## DayTek (Sep 26, 2013)

*Update*

A little update:
My husband decided to not go into Car Sales (at this point in his life).
After more discussion surrounding it, we decided that financially it would be too insecure. I never doubted that he would be good at it, but we are planners, and with that kind of income fluctuation, it's hard to plan. Trips and extra mortgage payments would be out - You'd need a constant safety net of saved earnings, so any "fantastic" months you had could be wiped out by a few bad months and my income can not support us.

My husband has been looking into getting into the financial sector, so we're investing in him getting his IFC. I've been in banking for 9 years and he's always been interested in it. So he will continue his machining job and will work towards getting his IFC and CSC after that.


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## SkyFall (Jun 19, 2012)

Well at least in the banking industry it's more stable (speaking of paycheck to paycheck)..... I just did my IFC, wish him all the best!


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## Westerncanada (Nov 11, 2013)

DayTek said:


> A little update:
> My husband decided to not go into Car Sales (at this point in his life).
> After more discussion surrounding it, we decided that financially it would be too insecure. I never doubted that he would be good at it, but we are planners, and with that kind of income fluctuation, it's hard to plan. Trips and extra mortgage payments would be out - You'd need a constant safety net of saved earnings, so any "fantastic" months you had could be wiped out by a few bad months and my income can not support us.
> 
> My husband has been looking into getting into the financial sector, so we're investing in him getting his IFC. I've been in banking for 9 years and he's always been interested in it. So he will continue his machining job and will work towards getting his IFC and CSC after that.


I appreciate you sharing the update.. and likely agree the unstable income is not worth the risk for that type of field. 


All the best to both of you!


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## sags (May 15, 2010)

We were at the local dealership on Saturday morning.

It was a nut house there. All the salesman were signing up purchases........and the parking lot was full of people wandering around looking for an available salesman. I was standing outside and a guy asked me to sell him a car..............A lot of incentives were due to end on June 1st.

It is a big GM dealership and for certain vehicles.......they can't keep them on the lots.

Chevy Cruz and the Equinox.......being 2 of the big sellers.

If your husband wants to get into "finance".......look at big GM dealerships........they seem to be really busy and with offerings of 84 months at 0%........you have to beat off the customers with a stick.


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## FrugalTrader (Oct 13, 2008)

How much commission do car salesman make? It is a percentage of the sale?


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## indexxx (Oct 31, 2011)

sags said:


> you have to beat off the customers with a stick.


...god, THAT would hurt... is that in the job description??:cower:


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## sags (May 15, 2010)

FrugalTrader said:


> How much commission do car salesman make? It is a percentage of the sale?


They earn commission, but have a "float" they can draw from if they have a slow week or so.

The margins on new cars are a lot less than people think. The salesman makes more money selling the "add on" products such as rustproofing, extended warranties, tinting..........etc. than on the car sale itself.

Like real estate sales, it always seems that a successful car salesman becomes more successful as people gravitate towards them. More sales means more referrals and return customers. 

It is a tough business for a new sales person until they build up a customer base.

The 84 month financing sells cars..........but keeps people out of the showroom for a longer period of time.

It is a "catch 22" situation...........sell a car and say goodbye to a customer for 7 years..........or lose a sale to a competitor.

Personally, I would rather be in the financing end of car sales........as all the sales funnel through one or two "finance specialists" at the dealership...........and they are almost always kept busy.


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## FrugalTrader (Oct 13, 2008)

Yes, when I did a search on car cost canada, it appears that most mid-range cars/suv's had a 7% dealership markup from the factory invoice cost. However, I've already read that the factory "kicks back" a certain amount to dealership as well.


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## fraser (May 15, 2010)

A friend who was a salesman told me he got paid on gross profit. The more profit for the dealership, the more commission he made. He also said he rec'd huge commissions on the add ons-specifically undercoating, extended warranty, and bank financing (though this may have dried up with lower rates). The latter are all VERY high margin products. For smaller cars with less room on margin he told me that he made more money by upselling those extras than he did on the vehicle itself. Not certain if this is still true. The invoice price from the manufacturer that we sometimes see if bogus. Often times there are manufactures rebates, advert rebates etc. that do not show up on this document for obvious marketing reasons.

I was told by a senior exec. in the industry that the car dealership's used car lot and the service bays provide more profit than the new car sales.


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## sags (May 15, 2010)

FrugalTrader said:


> Yes, when I did a search on car cost canada, it appears that most mid-range cars/suv's had a 7% dealership markup from the factory invoice cost. However, I've already read that the factory "kicks back" a certain amount to dealership as well.


That is about right.

I took delivery of a new car on Saturday, and as a GM retiree our employee price is the dealer invoice price, which is about 7% less than the MSRP price. We also don't pay the administration fee. GM kicks back a small fee to the dealer for the sale. Probably a good negotiator may be able to get the same discount by haggling........but I am not good at that.

We can check the actual invoice price on a GM employee website........so we know if we are charged the right price at the dealership.

GM had a Loyalty program until June 2, 2014 which meant I got $1500 (for any discontinued model) plus $300 (scrap value) for a 2005 Pontiac Wave with a blown motor.

They also added on a free 40 cents a liter discount for 800 litres of fuel at Petro-Canada, free "connectivity" package, free Onstar for 6 months, 4 years of free oil changes, free XM radio for 3 months, and 0% financing for 84 months.......free money :biggrin:

I bought a bunch of add-ons..........because I wanted them......tinting, rustproofing, life insurance, GAP insurance and extended 7 year comprehensive warranty.....and because I figure the sales staff and finance people have to make a living too. They had to process the sale very efficiently to get it ready and delivered before the deadline for the deals to expire on June 2nd. I felt a little guilty.....I suppose.

They weren't making much off the car, if I didn't buy some extras.


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## sags (May 15, 2010)

fraser said:


> I was told by a senior exec. in the industry that the car dealership's used car lot and the service bays provide more profit than the new car sales.


The dealerships have a love/hate relationship with 0% financing for long terms such as 7,8, or 9 years.

They sell a car......but the customer may not buy another one for 7-9 years.

As you stated.......the dealerships make most of their money on warranty work and servicing. New car sales are often just keeping the factories rolling and the dealerships with a stock of cars to service or fix..............where they do make good money.

I remember a quarterly meeting where the GM execs told us they made money on the big SUVs, trucks and luxury cars.........but lost money on every compact and sub-compact (Cavalier at the time) car they sold.

They wanted the market share and hoped the small car buyer would buy a bigger vehicle the next time.


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## RBull (Jan 20, 2013)

fraser said:


> A friend who was a salesman told me he got paid on gross profit. The more profit for the dealership, the more commission he made. He also said he rec'd huge commissions on the add ons-specifically undercoating, extended warranty, and bank financing (though this may have dried up with lower rates). The latter are all VERY high margin products. For smaller cars with less room on margin he told me that he made more money by upselling those extras than he did on the vehicle itself. Not certain if this is still true. The invoice price from the manufacturer that we sometimes see if bogus. Often times there are manufactures rebates, advert rebates etc. that do not show up on this document for obvious marketing reasons.
> 
> I was told by a senior exec. in the industry that the car dealership's used car lot and the service bays provide more profit than the new car sales.


Yes, car salespeople are paid a % on gross profit. The invoice prices are available (for a fee) on sites like Car Cost Canada, which can be compared to the dealer/manufacturer invoice. In my experience these invoices are true. However they do not reflect the 2-3% rebate all manufactures return to dealers upon warranty registration. This is also not included in Car Cost pricing but is explained in their process. This rebate allows a small profit for the dealership and normally is calculated in the salesman's gross. Special rebates, financing deals etc may be paid by the manufacturer or shared with the dealer, and normally considered outside of the regular "factory invoice".

Typically cars can be bought for 2-5% above factory invoice (or better), although supply, demand, timing are among some of the variables that affect this, along with cash vs trade involved. 

The back end (parts & service) is where profit is usually made at the dealership. Normally the front end (sales) is expected to break even or ideally make a small profit with a good used car center.


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