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How to Make $100,000 a Year Selling Cars

Updated on March 20, 2012

$8,333.33 Per Month

If your goal is to make $100,000 a year, that means your salary needs to be exactly $8,333.33 a month for 12 months. If you're getting paid by the hour that means you need to get paid an hourly rate of $48.08 based on a 40 hour work week. But if you're selling cars you'll be working on commission which means you don't get paid a salary or by the hour. You'll need to have that same goal of $8,333.33 per month in income to reach $100,000 annually though.

The good news about working on commission, nobody can determine what your worth on an hourly basis. Selling cars isn't a salaried position either (although some dealers do pay a small salary). You get paid a percentage of each and every vehicle that's sold. The more you sell, for higher profits, the more you'll make. That means the sky's literary the limit. That means you could make about as much as you want; $100,000, or even twice that much.


3 Ingredients Needed For Six Figures Selling Cars

If you’ve read a book or two on this subject there are a couple of ingredients that the so called gurus don’t mention to achieve this goal. The first is you need to work for a dealer that knows what they are doing in terms of making profit. In other words, if you’re working for a dealer that is mainly focused on volume (selling vehicles but making small profit margins) and not gross (making big profits) then you’ll a much harder time reaching $100,000 in gross income.

Secondly, the dealership needs to generate traffic with their advertising to drive potential customers to your store. No traffic means less opportunity to sell which means it will make it tough to achieve the six figure goal. You need to be in a store that has plenty of people to speak with on a consistent monthly basis.Thirdly, you need a pay plan that will reward you for units and gross profit.

You shouldn't have to sell 30 units a month to make $10,000 for the month. You should be able to make $8,000-9,000 a month by selling 15 units providing that the dealer is selling units and making gross profit on what they are selling.Here’s what I mean in black and white:

Suppose that you’re working for a dealership that is averaging $1,600 on front end gross profit on all the new and used vehicles sold (the sale of the vehicle non inclusive on what they make on the financing minus pack). Since the salesperson gets paid a percentage of the front end gross profit, we’ll use that $1,600 figure for this example.

Salespersons Pay Plan

Assuming that you're working for a dealer that knows what they're doing in terms of making gross profits, and they are well versed in terms of driving hordes of traffic to the store so you'll have plenty potential customers to sell. The third and maybe the most important ingredient is having a pay plan that you can make money with. Below is an example of a pay plan that rewards the sales person for making sales and making gross:

Unit Percentage:
0-7.5 = 20%
8-13.5 = 25%
14-18.5 = 30%
19-28.5 = 35%
29 + = 40%

Unit Bonus:
10 Units = $500.00
15 Units = $750.00
20 Units = $1,500.00
26 Units = $3,000.00

The goal is to make six figures with the above example. That equates to about $8,300 a month. I’ll work this example backwards so you can see the big picture…With the above numbers and pay plan you’d have to average 15 units a month for 12 months to hit the $100,000 mark. Here’s the math:

Selling 15 units will put you in the 30% category in terms of unit percentage. So the math would look like this: $1,600 profit X 30% = $480 per unit X 15 units = $7,200.00. In addition to the $7,200.00, you’d get a $500 bonus for hitting 10 units and another $750.00 for hitting 15 units or $1,250 in bonus money. That’s $8,450 per month which equals to $101,400 for the year.



More Numbers of the Equation

The next question is, “How many people do you have to talk to in order to sell 15 units per month?” Assuming a 20% closing ratio, meaning that for every 10 people you speak to, you’ll sell two units, that means you need to speak with 70 people for the month (70X 20% = 15).

Using March 2012 as an example month, and assuming that you’d work 26 out of the 31 days, that means you’d need to speak with 2.69 people a day, or about 17 people per week. The next question is, “How realistic is it to see 17 people in a week?”

Saturday is the busiest day of the week, and you could easily see 4-5 people. Sunday’s are also busy days in terms of walk-ins, and you could see 3-4 people on a Sunday. Let’s just go with 8 for Saturday and Sunday. That would mean you’d need to see 9 people in 4 day’s during the week. Pretty doable don’t ya think?

It all boils down to raw numbers, but it all starts with getting in front of somebody to sell a vehicle to. See 70 people; close 20% that equals 15 units sold, and based on the above pay plan that’s almost $8,500 for the month.

Conclusion

You don’t need a degree in Rocket Science in order to make $100,000 a year selling cars. All you really need is a dealership that drives consistent traffic to their store. When the customers make the buying decision, the dealership makes a reasonable profit margin on what they sell. And then they have a pay plan set in place in order to make money with. After that, it’s all about the person. You have to have the right ingredients as a person in order to execute the above numbers. If you don’t, you won’t achieve the goal.

Epiloge

The one thing I didn't mention in the above scenario is you. You don't get paid for just showing up and punching a clock in a car dealership. You get paid for results. You get paid for producing sales. If you don't produce you don't make squat. There are certain ingredients you need as a person in order to be successful in this business. In my next article I'll articulate what ingredients you'd need to bring to the table in order to be successful in the car business.

Comments

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    • profile image

      geno gordon 

      8 weeks ago

      im blessed I have been selling cars 30 yrs I do very well 120,000 a yr for those who are getting into car sales sale yourself be very out going and learn the product

    • profile image

      christian 

      2 years ago

      i want 1000,000,

    • profile image

      Steve 

      5 years ago

      I just got back from Afghanistan and now selling cars in South Carolina. I really love meeting with people and basically selling myself. It a real pleasure to learn everything there is to know about this industry and my goal is exactly what you described in this article. Thanks again for your informed prospective and I also wish you continued success. I will definitely read further reviews from you.

    • sklein profile imageAUTHOR

      sklein 

      6 years ago from Atlanta, Ga

      Thanks for the comment. There are opportunities galore in the car business. Do a little research and find a good store, and I'm sure you'll be successful.

    • profile image

      shootnstar11@gmail.com 

      6 years ago

      You are awesome .... u have anymore advices ... My real estate job sucks... car business here I come and mabe a side job selling insurance to.

    • sklein profile imageAUTHOR

      sklein 

      6 years ago from Atlanta, Ga

      You are so welcome!

    • CreateSquidoo profile image

      CreateSquidoo 

      6 years ago

      Thank you for the information you have posted about Selling Cars.

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