What Does the Salesman Get?

[Three Cobras]

Just as a rule of thumb, how much would a salesman expect to get if a car sells for MSRP? Fixed amount or percentage of vehicle MSRP? Not looking for a 'to the penny' answer. Want to know what I could reasonably offer him if he loses money by getting me an X-Plan on the GT500. This is hypothetical. I'm not looking for an analysis of whether X-Plan is or isn't available.

[svtbird91]

Just as a rule of thumb, how much would a salesman expect to get if a car sells for MSRP? Fixed amount or percentage of vehicle MSRP? Not looking for a 'to the penny' answer. Want to know what I could reasonably offer him if he loses money by getting me an X-Plan on the GT500. This is hypothetical. I'm not looking for an analysis of whether X-Plan is or isn't available.

 

I read somewhere that it is 30% of dealer profit on the vehicle. I would like to know also what it actually is.

Maybe is is up to the indivdual dealer?

[SVTpower]

Just as a rule of thumb, how much would a salesman expect to get if a car sells for MSRP? Fixed amount or percentage of vehicle MSRP? Not looking for a 'to the penny' answer. Want to know what I could reasonably offer him if he loses money by getting me an X-Plan on the GT500. This is hypothetical. I'm not looking for an analysis of whether X-Plan is or isn't available.

 

 

 

 

Depends, sometimes nothing if they don't 'make' their month. Some places give a salary draw (small amount to keep the sales rep. alive), then their commissions need to cover their draw. If they make their month, the rest is gravy and yes, somewhere around 30-35% commission on the difference between MSRP and Invoice. so for example, if the profit is $5000 on the Shelby, then 35% of $5000. Sounds good but Msrp or any decent profit is tough nowadays in this market. A few hundred dollars per car is more commone. The money to be made is in used cars and often lease deals

[owenkelley]

 

Depends, sometimes nothing if they don't 'make' their month. Some places give a salary draw (small amount to keep the sales rep. alive), then their commissions need to cover their draw. If they make their month, the rest is gravy and yes, somewhere around 30-35% commission on the difference between MSRP and Invoice. so for example, if the profit is $5000 on the Shelby, then 35% of $5000. Sounds good but Msrp or any decent profit is tough nowadays in this market. A few hundred dollars per car is more commone. The money to be made is in used cars and often lease deals

 

 

Generally the dealers will "pack" the invoice of the car and pay the salesman a percentage over the "packed" amount. When I used to sell cars the dealer would pack them $600, this would cover advertising, utilities to run the dealership etc. The difference between MSRP and invoice has dwindled over the years, so anymore when you sell a new car you usually get a minimum comission - $200-$300, or thereabouts. Back when I was selling brand new Dodge Colts had less then $600 between Invoice and MSRP, so the "packed" figure was actually over MSRP! You can't make more than a minimum commision that way! Used cars are usually more profitable to sell, which makes it tought for the salesman to get excited about selling new cars. You have to jump through a bunch of hoops to be "certified" by the Manufacturer, do all the required follow up learn all of your product knowledge for the tests they make you take, all to make less money then you would selling a $4000 used car.

 

Now on the GT500's where they will be selling for considerably over MSRP the salesman should make a very healthy comission - $1500 to $2000 if it sells for $5000 over MSRP. In the ten years I sold cars I never made anywhere near that on a single car, but then we never had anything that generated the excitement the GT500 is generating.

[Five Oh B]

As mentioned above, most dealers pay the salesmen about 30% of the gross profit, less any "pack" that is taken out by the dealer to cover fixed expenses. That works great for the salesman on an expensive car like the GT500, but pity the poor salesman who is selling Taurus's and loss-leaders. On losers, the salesman is typically paid a "mini" by the dealer. Mini's range from $50 to $100, so the salesmen learn to avoid showing those cars (can you say "bait and switch"?).

 

Where I work, our salesmen have no control over the price of any new/used vehicles as we are a "one-price" store (think "no-haggle"). Management pre-sets the price on everything and clearly posts that (hopefully very attractive) price on each car - typically right around invoice on most vehicles with plenty priced below invoice for newspaper and online ads. As the salesperson can't control the profit or loss, he isn't paid a percentage - just a flat fee per car regardless of whether it's a loss-leader, ad special, or a GT500 generating a ton of profit. Keeps the salesperson working for the customer by showing/selling the car the customer wants instead of the money maker.

 

There are very few one-price stores out there, so most still pay on a commission.

[Three Cobras]

Thanks for the gouge. If the dealer I'm working with follows through on the X-Plan I want to ensure the salesman doesn't get stiffed just because they wrote me a good deal to save me money. I'm old school - loyalty goes both ways. I'll find a way to make some payment to him.

[SVTpower]

Thanks for the gouge. If the dealer I'm working with follows through on the X-Plan I want to ensure the salesman doesn't get stiffed just because they wrote me a good deal to save me money. I'm old school - loyalty goes both ways. I'll find a way to make some payment to him.

 

 

 

You won't have any control of payment to sales people. When you're talking any 'Plan', dealership will pay him/her a flat fee so something for the effort. Flat fees are also common when they sell promotions such as high volume cars..................10 cars at $200 = one at $2000 right?? just more work but sometimes nature of the business

[Three Cobras]

SVTPower -

Roger that. I only meant I can do something on the side - not part of the car transaction. A dinner, tickets, whatever. I'll figure something out if I feel it's warranted. Just wondering what the rought ballpark might be.

Thanks.

[ColdwaterHotrod]

Just as a rule of thumb, how much would a salesman expect to get if a car sells for MSRP? Fixed amount or percentage of vehicle MSRP? Not looking for a 'to the penny' answer. Want to know what I could reasonably offer him if he loses money by getting me an X-Plan on the GT500. This is hypothetical. I'm not looking for an analysis of whether X-Plan is or isn't available.

 

 

 

Based on what a close friend of mine told me who works at my local dealership, My "X Plan" discount when presented to the dealer has to except it & re-submit it back to FORD to get the mony back at a later time. So if the dealers are not losing money & just having to wait for it 3 months later, what's the problem?

 

GREED that what!

 

Maybe Five O can add to this since he's a west coast dealer? how about it Five O? is he right or wrong & feeding me crap?

[Five Oh B]

Based on what a close friend of mine told me who works at my local dealership, My "X Plan" discount when presented to the dealer has to except it & re-submit it back to FORD to get the mony back at a later time. So if the dealers are not losing money & just having to wait for it 3 months later, what's the problem?

 

 

 

 

When we do an X-plan deal, Ford does not give us the lost money back. The dealership will receive a commission for doing an X-plan deal, but it is a far cry short of the lost revenue/profit potential. For example, let's look at a $30K MSRP vehicle that has an X-plan of roughly $28K. X-plan is about the same as the invoice total. Sell the car at X-plan and the dealer makes roughly $0, but will receive a commission from Ford later for about $800. Sell that same car for MSRP and the dealer makes about $2,000 right now. If you can easily sell that car above MSRP, X-plan is a loser all the way around.

 

We happily honor X-plan on everything we sell except the Ford GT, Escape Hybrid, and the Shelby GT500. That leaves 99.5% of our vehicles as fair game for X-plan (and A/D/Z plans, as well).

[Three Cobras]

Once again to clarify my situation regarding the X-Plan. I have a Powerlease Option, one of about 300 or so folks from what I have heard. That option allocates a car to me by name. That allocation does not count against any dealer. I have the flexibility to go to any dealer and work my deal. I am entitled to X-plan and have used it in the past - no scam here. After calling others, I found an SVT Focus dealer locally who was willing to deal. His perspective is that this is one more car to sell that he would not have sold otherwise. They appear to be willing to take less on this deal because it is still more in the long run than they would have had. They are also interested in generating a future customer - me! They are most definitely NOT going to sell the cars in their allocation this same way as far as I can tell. As Five Oh B makes clear above and elsewhere, that would be un-businesslike (ergo - stoooopid). Nor are other dealers, sleazebags or not, stoooopid for not doing the (fill in the blank)-Plan just because we are True Blue or Ford makes it available. Fact of Life - they make less than they have to make at this point if they do it.

Since I have the Powerlease, I have essentially been paying on the new car for two years to buy into this position. So, every advantage has its price. And until I drive the car off the lot for a price I'm willing to pay, all of this is just speculation. But, if you're a Powerlease person, go for the Gold. If you can't find a dealer to work with, my dealer says he'd love to sell more Powerlease allocation cars.

[Five Oh B]

As Five Oh B makes clear above and elsewhere, that would be un-businesslike (ergo - stoooopid). Nor are other dealers, sleazebags or not, stoooopid for not doing the (fill in the blank)-Plan just because we are True Blue or Ford makes it available. Fact of Life - they make less than they have to make at this point if they do it.

 

 

Your PowerLease option is unique - I was not saying that it is stupid for a dealer to do an X-plan deal for a guy like you. Your deal is incremental and beyond the dealer's allocation so it is not taking away any opportunity for the dealer to make money - it is only adding to their opportunity to make money. We would gladly handle a PowerLease option here for that reason.

 

What I was referring to is the average Joe that walks in looking for a specialty car like the GT500 that gets X-plan. We have a list 73 people long for this car and we'll get 5-8 of these cars if we're lucky. Why would we intentionally throw away thousands of dollars to sell this car to an X-plan guy when dozens of other non-plan customers are already being told we can't get them a car?

 

As I mentioned, we sell anything on X-plan except the rigs that Ford doesn't even offer X-plan on (GT, Hybrid, and F450-750's) and they have not announced X-plan privileges for 2007 products yet so the GT500 is not even an option on X-plan yet. Even when (and if) Ford offers X-plan privileges for GT500's, we will satisfy demand for non-plan customers first, then sell any extra GT500's to plan customers if there are ever any extra ones to sell.

[Three Cobras]

I added my two bits worth on Powerlease to show that if my information is correct, X-Plan will be available early on the GT500. The big BUT, though, is that it's only likely to be done by the dealer under some very special circumstances such as mine (maybe as many as three hundred cars in the whole of the 07 production run). FIVE OH B, we're both saying the same thing. Sorry if you thought I was refering to you when I used the word stoooopid, but I wasn't. My central point was that a dealer who doesn't want to give any kind of discount on his allocated cars early in the sales run isn't automatically dirt. Some appear to think that he is.

I also keep hitting the Powerlease bit because I keep seeing Powerlease folks here and on some other sites who get talked out of their claim on a car by the dealer who says he won't honor it. We earned what we've got - it didn't come free. Several Powerlease guys seem to feel they have to sweet talk the dealer to cash it in. BS. With all the deals reneged upon we all have been reading about, this is a deal that should be bullet proof because it does not depend upon the dealer's mood.

I will, again, throw in my usual caveat: until I drive off the lot with my GT500, view everything I say with reasonable skepticism. But don't let that keep you from going to the mat for what's been promised.

[ColdwaterHotrod]

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QUOTE(Five Oh B @ Mar 6 2006, 08:32 PM) 4591[/snapback]

When we do an X-plan deal, Ford does not give us the lost money back. The dealership will receive a commission for doing an X-plan deal, but it is a far cry short of the lost revenue/profit potential. For example, let's look at a $30K MSRP vehicle that has an X-plan of roughly $28K. X-plan is about the same as the invoice total. Sell the car at X-plan and the dealer makes roughly $0, but will receive a commission from Ford later for about $800. Sell that same car for MSRP and the dealer makes about $2,000 right now. If you can easily sell that car above MSRP, X-plan is a loser all the way around.

 

We happily honor X-plan on everything we sell except the Ford GT, Escape Hybrid, and the Shelby GT500. That leaves 99.5% of our vehicles as fair game for X-plan (and A/D/Z plans, as well).

 

 

 

Thanks for clearing that up Five Oh B....

 

But why would Ford allow me to be rewarded with a discount for being a parts supplier but punish the dealer for selling it to me?

 

We are all connected to Ford in a small way & dealers shouldn't pick & choose who gets a "A, X or Z" plan discount on what models. Granted, Ford does set the rules on some of the vehicles but this would tun me off if I was a Ford dealer.

[Five Oh B]

 

But why would Ford allow me to be rewarded with a discount for being a parts supplier but punish the dealer for selling it to me?

 

We are all connected to Ford in a small way & dealers shouldn't pick & choose who gets a "A, X or Z" plan discount on what models. Granted, Ford does set the rules on some of the vehicles but this would tun me off if I was a Ford dealer.

 

 

I used to sell cars for our dealership. It was really cool when someone would visit and sheepishly ask if we would honor their X-plan on a regular vehicle. I would tell them "of course we do, and we're very happy to do it for you." Often, they would explain how they just visited 4 other dealers and the salespeople either laughed at them or turned and walked away from them. It was an easy new friend for me (and a sale) every time.

 

Ford sets X-plan very close to the invoice total amount. Many vehicles are being sold for around invoice these days, so X-plan is a blessing in most cases anymore as we end up with a commission from Ford for handling the X-plan transaction. X-plan hurts us, though, on a vehicle whose market value is waaaaaay above invoice (llike the GT500) as the X-plan commission from Ford is peanuts vs the profit that can be earned on the sale.

 

Here's a real world example of my own D-plan purchase of my 2003 Mach 1. MSRP was about $29,700. Invoice Total was about $27,500. D-plan (employee price) was about $26,200. We sold our last few new Mach 1's for Invoice, so the dealership made virtually nothing on these. When I bought mine, it was about a $1,300 loss for the dealer, but the D-plan commission from Ford was about $1,700 so the dealer made about $400 more from me than the general public. Therefor, they were happy to honor my D-plan purchase. Luckily, I got a $3K rebate that lowered my price even more to about $23,200 (rebates don't affect dealer profitability as they come from Ford - not the dealer). Conversely, the early Mach 1's easily sold at MSRP, so the dealer was making about $2,200 on each one - much better than selling an employee one on D-plan and making just $400 after the commission was paid by Ford. This is one of the reasons that I could not get an early Mach 1 and waited til the end of the first model year.

 

Incidentally, D-plan (and A/Z plans) get a bigger commission from Ford than the X-plan as they are much bigger discounts off the price than X-plan.

 

Hopefully this illustrates why and when a dealer may like or dislike selling on a plan-price.