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How are car salesman paid? How much money do car salesman make?


Dear Mr. Rudnick:

I have been working at a car dealership for about a year and ½.  I was hired as a salesman and I was required to sign a written pay plan. There are about 30 to 40 salesman and we all required to sign a written pay plan. I am paid by commission, but the dealership adds a pack to each transaction. The same is true for all the pay plans as they all include a pack. I do not have a real issue with this because I agree to this when I was hired in all the salesman agreed to this when we were all hired.

I have only been in the business a short period of time however; I hear many of the other car salesman rumbling that we are being ripped off. I am trying to understand this, but it is not clear. We sell so many used cars and every time I get paid the dealership tells me there is no profit on the scores. It is a mystery to me how a dealership can sell hundreds over the course of the year and not make any money. There is something called a flap. This is the minimum salary/commission that I earned on the sale of the court. Only cars or flats. My commission is a very reasonable 25%. However, it seems that I never received much more than the flat on each transaction.

Let me give you an example. I sold the car a few months ago and we took the car in on trade that we pay $10,000 to acquire. We give the customer $10,000 for the trading. I was fortunate enough to resell this vehicle at a nice profit. A few weeks ago, and sold his car for $15,000. Unfortunately, I received no commission. I was told that the new transaction for the car I previously acquired by way of trade and had no profit. I received a flat of $100.  How is this possible? I sold the car that we made a $5000 profit. The dealership told me there was no profit. This does not seem right.

I am forced to rely upon the profit numbers from my employer. While I would like to trust them, I really do not trust them anymore.

Now you can understand why both myself and many of the other salespeople are having issues with her pay plan. I understand that there was overhead, and the dealer needs to be compensated for turning the lights on. However, we agreed to a written pack of $500 on each used car. This reduces my commission by more than $100 each transaction. This is fair and agreed to this. I am having issues and the entire sales that is having issues with not been paid properly.

Both I and other salesmen have approached management on a few occasions. They ignore my questions and spin me out of their office. This is very frustrating but I’m not getting a clear answer. To make the matters worse we received no significant documentation when we are paid. We receive something called a commission sheet. This is nothing more than a one-page document telling me which car is sold and what the profit was for me and what my commission was before me on this transaction. This cannot substantiate or back up the dealership’s claim of profit on each car sold.
I know there are other documents to which management has access.

There is something called a recap sheets and there are also back screens. The sales that does not have access to the software program access to this information.We are never shown the real cost of a car. Every time I asked about the real cost of the car, they just tell me to sell the car for as much as I can and worry about it later.

The other day I grew very concerned. I was looking over the shoulder of my manager and saw that he had access to screen I had never seen. I can also see that there were many costs added to the vehicle which I was selling. I was never told about these costs. These costs do not appear to be anything more than the dealership’s overhead. I cannot be sure as I do not have a written copy of this screen. I again asked my manager and he refused to answer my questions. I cannot believe that there is additional information which the sales staff does not have access. This is very frustrating. I have been very fair and worked very hard for the dealership. I sell cars and make the money. It now appears that there are any costs to cars which might be made up or fictitious. It also appears that there are other packs added to these vehicles which are not included in the pay plan.

This does not seem fair.

I also overheard the used car manager talking with the owner of the dealership about additional packs and courts to come from auction. I have access to a transactional file were a deal jacket. However, there are no auction receipts or other documents in the deal jacket reflecting how much of the dealership paid for the car. It appears that there is a big secret at the dealership. Nobody at the dealership, either management or ownership will tell the sales staff what the acquisition cost of the car is on any car that we sell.

When we receive a commission be simply tell us what the commission is and represented the total profit on each transaction. This does not seem fair. Each time I asked I never get an answer and I do not receive any access to any computer software program to help me find out what the true cost of the car is. The dealership can hide the cost from me as long as they pay me properly on their acquisition cost. Our agreement is they pay me a profit. Our agreement is that profit would be reduced by fictitious agreed upon pack on each transaction. I do not have a problem with this. However, I do have a problem with the dealership adding overhead to these transactions in reducing my profit accordingly.

This seems to be fraud. This seems to violate the pay plan. This seems to be wrong and improper. This seems to be dishonest and an intentional violation of the pay plan. What can I do?

I have spoken to other salesmen who have been at the dealership for many years. They seem to be convinced that the dealership is ripping them off also. However, this is supposition as there is no clear proof because I have not seen a dealer recap, not seen auction receipts and management refuses to make appropriate disclosure. I feel that my observations as to the costs added to the transaction when my manager was looking at a car transaction is a valid confirmation that the dealership was violating the pay plan. I feel that the dealership is intentionally violating the pay plan. Is this a fraud?
There is also something else in the pay plan which must be addressed. The pay plan reflects that I received a profit on factory incentives. The pay plan reflects that I receive a commission on all the dealership profit. I know there are other areas of profit on the sale of the course that I sell for the dealership. However, it does not appear that I am being paid properly pursuant to our written pay plan. It appears that the dealership is not paying me on the profit on the transaction.

I also received profit on the sale of aftermarket products. By way of example when I sell a warranty there is a profit on that warranty. However, the cost seems very high. I have made phone calls to other colleagues at other dealerships who sell the exact same product. They tell me that the cost on the warranty at that other dealership is about 30% less than it is at this dealership. My dealership is bigger and sells more cars. How is it that the cost on the warranty at my dealership which is a much larger and established dealership is higher than the cost on the warranty at the dealership across the street?

Again, I think that I am being misled on the true profit on the aftermarket products. It looks like the dealership is inflating the costs on these products which reduces my commission. This does not seem fair, this does not seem legal. Is this fraud? What are the laws when it comes to properly paying salesmen their agreed-upon commission according to a written pay plan?

I have a family which I support. I do not think that the dealership was paying me cares much about me or my family. I have attempted to address this in a reasonable manner pursuant to company policy and procedure. I have been turned away at every turn and I fear that I might be fired if I pressed the issue. I do not think it would be fair if they fired me because I asked how I was being paid and if I was being paid properly.

I need some help. I would like an attorney consultation to tell me what my rights are as applied to my written pay plan and as applied to the laws as they apply to pay commissions. I think the questions are straightforward and simple, but I am not sure as you are the attorney that sues car dealerships, sues on class actions for car salesman and understands the business.

1.    Should I be entitled to an accounting of all my transactions?
2.    Can the dealership at costs to a car which are not included in my pay plan?
3.    What happens if the dealership intentionally violates my pay plan?
4.    Can I be fired from the dealership if I am let go for questioning my pay plan?
5.    Is the dealership required to give me the recap or the back screens and cars that I sell?
6.    How is it possible that the dealership claims they are not making a money on any car that they sell?
7.    How does the dealership calculate profit on each car that they sell? How does the dealership manipulate the cost on the warranties, if they do manipulate the costs?
8.    Am I entitled to punitive damages if the dealer is intentionally violating my pay plan?
9.    Could management be held responsible if my pay plan is being violated?
10.    If I sue for not being paid my commissions can I sue the owner’s?
11.    Does the wall provide for payment of attorney’s fees if I win?
12.    What is a class action?
13.    Can I sue the dealership on a class action?
14.    I heard there is something called a class certification, what is this?
15.    When we sue, what if the dealership hides or destroy the documents?
16.    What documents do I need to bring to you so you can look at my claim and tell me if I am entitled to any money?

I know this letter is very long, but I have so many questions. I really would just like to be paid fairly and honestly pursuant to the written pay plan. I do not think it is fair with the dealership is doing. I do not know what the law is in this area however, I do not believe that the law can permit what is happening to occur. I feel that the law should provide compensation to me and my family for not being paid. I feel the law should provide compensation for the dealership’s intentional ignoring of the written pay plan and taking money from me, money for my commissions to which I am entitled.

I know that the other salesmen in my dealership would be interested in participating in a class action. I have not spoken to them directly about it but I have heard these other employees talking about a class action against the dealership. We do not speak to loudly when we are speaking about lawsuits are class actions. I feel we would be fired in about 2 minutes.

I would like to make an appointment to speak with you about possibly suing the dealership and receiving compensation for the dealership’s violation of my pay plan. I know other employees also might be interested but I think I would like to talk to you first.


Jon Smith
Car salesman