It should be noted that Mohamad has independent operations selling only used vehicles.
We are talking about sales consultants or their supervisers?
$ 500 Salary / $500 Draw against commissions.
3% of the store gross profit front end.( Used Car / Finance)
That way they have "Skin In The Game".
Ben.. I am very curious as to what facts you base your recommended pay plan from? I have never seen a pay play that low for and Independent Used Car dealer. It would be nearly impossible to hire and retain well qualified Sales Managers with such a pay plan. You must pay well to have good people.
Franchise New Car dealers have pay plans considerably higher than that on average and more than likely employ 10 times as many employees and sell considerably more cars per month.
As an Independent Used Car Dealer.. You should be paying your Sales Manager's on a percentage of total front + back gross profit per unit including all packs and any documentation fee's. They should be paid on every penny of profit. To build a trust factor you should show your Sales Managers all appraisal sheets to verify ACV's and auction slips to verify the exact amount paid for the vehicle or allow your Sales Managers to participate in the acquisition of inventory . 100% Transparency is the key so you need to share all information with them. I have seen pay plans range from the 10% of total gross profit range up to 40% of total gross profit range range depending on your volume, number of employees and exactly what their responsibilities are. If they have to sell the cars, as well as manage, and do F&I then I would assume they should be closer to the 40% or higher of total gross profit range.
If you are doing mostly BHPH or LHPH then this pay plan will not work. Can we have more information about your dealership? Such as monthly sales volume, business model (Retail or BHPH/LHPH), number of employees and their responsibilities. That's the only way anyone can possibly recommend an accurate pay plan.
The current pay plan that we use is $48K/year base plus 8% of net (front end.) I was just curious about what's out there. I own three stores selling 300 vehicles per month. We are very transparent, no games. All of our business is retail. I'm even considering adding 1% net of back end to the sales manager.
I assume you have either very foolish or new Sales Managers with little experience. There is not an average to good Sales Manager who who would accept not being paid on the back end so you have no shot at hiring a Superstar Sales Manager who could help you sell 25-50% more cars. That's ridiculous!! The $48K/year is a draw against commission I would have to assume. In today's market you cannot pay off NET profit and you must pay off TOTAL GROSS PROFITS - FRONT + BACK if you want to employee experienced, talented best of the best type of managers, the sales managers should always be paid equally on the front end and back end because they are responsible for F&I profit as well, and you are leaving yourself wide open to legal issues, 8% of front NET profit could be any number you decide to make it and that is exactly why dealers have been forced to pay on total gross profit of FRONT + BACK. Paying on NET profit only opens yourself up to serious legal issues. I have seen several dealers that paid on NET profit and some of their previous employees took them to court and the court forced the dealer to pay every cent of sales pack and documentation fee's to the employees and one of the largest dealers in my state was actually shut down by the Attorney General after auditing their books. If you are paying on NET profit it is a huge RED FLAG that you have an above average sales pack and documentation fee that your managers should be paid on, but they are not. You own 3 stores selling 100 cars each, but imagine if you paid on total gross profit including sales pack and documentation fee like most all dealers now have been forced to do, You would then have a better chance of employing "the best of the best" sales managers and would sell drastically more cars at higher profits. Your pay plan is quite low!