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How much do car dealers make

How much do car dealers make?

It is always interesting to know how much do car dealers make? The average holdback is between 2 and 3 percent of a vehicle’s MSRP or invoice price. On average that means they make between $2337.00 for a used car and $1959.00 for a new car.

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How do car dealerships make money?

The number one way that car dealers make money is to sell a car for more than they paid for it. Now, this may sound oversimplified but it is the best way to guarantee that you are going to make money. Now there are a few more ways to make money and I will list them here.

Service and parts department

The service and parts department can be a great way for dealerships to make money. The margins are good for parts and the manufactures are going to pay a fixed rate warranty work. You will still make a regular profit from the vehicle you sell if it needs maintenance over time.

Finance and Insurance

It’s no secret that a lot of money is made by offering financeing and insurance to car buyers. Some dealerships earn more on financing than they do on the margins of a vehicle, you can also add in gap insurance, extended warranties, and packages that are designed to increase your margins. You can increase revenue for your dealership by providing add-ons at the moment a vehicle is purchased.

Margins on vehicles

The margin is the difference between what you pay for a vehicle and what you can sell it for. On average a used car brings in more profit than a new based on the margins, but you have to add in the holdback that manufactures pay dealers for selling their vehicles.


A holdback is a percentage that vehicle manufactures pay to dealers for each vehicle they sell. Most manfactures are going to pay either a percentage of a MSRP price or the final invoice price.

Thankfully, many producers provide holdback. This means that, depending on the manufacturer, you may receive a specific portion of the invoice price or the MSRP when you sell one of their automobiles. If a manufacturer provides a holdback, figure on it being around 2%.

However, you often won’t receive this cash at the moment of the sale. Most manufacturers release their holdback funds once every three months. Nevertheless, this might be a really good way to bring in some extra cash to meet your living expenditures, such as your wage. In reality, some auto dealers decide to collaborate only with suppliers who provide holdback.

Custom Add ons

This is going to be things like, truck bed covers, ceramic coatings, specialized interiors, and upgraded rims and tires. This stuff can be pure profit and if you can figure out a way to add it in you should.

Extended Warranties

Extended warranties can have a bad reputation thanks to the increase in robo calls that everyone is getting, but they still work. Everyone wants piece of mind that if something expensive breaks they will not have to pay out of pocket for it.

How much do car dealers make an hour?

As of November 2022 the average hourly pay of a car dealer was $21.63 per an hour according to zip recruiter. The best salesman can earn up to $54.09 while the lowest percentile is only $9.13. It can be hard to come up with an hourly wage because almost all car dealers are commision based. This means that they only make money when they sell a vehicle.

How much do car dealers make a month?

How much do car dealers make a month? According to zip recruiter the average monthly pay of a salesman is $3,602.00

How much do car dealers make per new car?

The typical holdback is between 2 and 3 percent of a vehicles MSRP, This can vary based on supply and demand and the manufacture.

How much does a car salesman make per a car?

A car salesman can earn a commission on new cars sales range from 20-30 percent of the profit per a car. This can vary from dealership to dealership base on how many cars you can sell each month.

How do car dealerships make money?

Car dealerships make money from three primary areas of their operations; Sale, service and parts, and Finance and Insurance. Sometimes the most money is made from the service and finance department because the margins can be better.

Do car dealerships make a lot of money?

The average car dealership makes $97,790.00 according to comparably. This put them just above average for owner compensation.

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