Do Car Salesmen Get Discounts? (Explained)

Working as a car salesman or a well-known car dealership is an exciting opportunity. If you’re an auto enthusiast, it becomes fun to work around cars, sell and purchase your favorite cars, and stay up to date with the industry.

Apart from making a good living, there are many other perks related to working as a car salesman. Most auto manufacturers offer employee discounts based on performance, including sales volume and improved consumer return rate and loyalty.

Does every company offer a discount? Is the discount linked to the number of sales? And how do auctions and sales work? I have explained everything in detail for a better understanding.

Do Car Salesmen Get Discounts?

Like every other industry and retail market, auto market employees and dealerships also get discounts. Car salesmen are usually the dealerships associated with different auto manufacturers, that sell their cars. Based on the car’s make and model, number of cars sold, market demand of the vehicle, and overall performance of the dealership, car salesmen enjoy different discounts in the name of bonuses, incentives, rebates, perks, and holdbacks.

Apart from making a profit from the cars sold to the customers, these discounts are separate and are usually in monetary form.

Also read: Is it Worth to Buy Car in December? Is January Better?

What is the Invoice Price and MSRP?

The invoice price is the price at which the dealerships get the cars from automakers. It is the price set by the manufacturer for its dealerships and not the actual price at which you get the cars on the market.

MSRP, also known as Manufacturer Suggested Retail Price, is the actual price that you pay while purchasing a car at the dealership, and it differs from the invoice price. MSRP actually is the invoice price + dealer’s profit and is usually not fixed. It is different for each vehicle and also varies from dealer to dealer. A hot-selling car usually has a much higher MSRP than the one that’s struggling to sell in the market and is usually available for purchase at a discounted price.

Does Salesmen Discount Depend on the Number of Cars They Buy?

From so many avenues to make money as a car salesman, getting discounts based on the number of cars bought by the dealer is one of them. Apart from making money on each car sale, bulk selling (to rental and commercial fleets), bonuses, and other incentives buying cars from the manufacturer is one way to get discounts.

Depending on the number of cars bought from the manufacturer, the discounts range from $250-1,500 based on the make and model and projected sales. The majority of the dealerships offer discounts to salesmen based on the number of cars bought.

Does Every Company Give Salesman a Discount?

As per the norms of the retail and sales industry, be it a car dealership or an apparel brand, almost every company offers its salesmen a discount. A car dealership is a very dynamic business entity, with different avenues for making profits and earning incentives.

In the auto industry, it is called the employee purchase program, and based on the number of cars bought by the employee (salesman), the company offers a certain discount to the particular employee. It is important to realize that there is a very limited number of cars an employee can buy and get a discount.

This discount also varies from company to company and where one entity might be paying plenty of discounts, to enhance its sales. Some other dealerships might not offer such a plan to their employees at all.

Also read: Is Buying a 10-Year-Old Car Worth it? The Truth…

Do Car Dealer’s Discounts Depend on the Dealership?

Every company has its own policies regarding rebates and discounts, and there might be some governmental rules and regulations influencing these policies as well.

While a dealership in one state might be offering a percentage discount on every car sold, some dealers might offer the applicable rebates after precisely determining the discount and profit ratio on the specific model and year of the vehicle.

In some states, the rules govern that these discounts and rebates are applied before the addition of the tax while in other states, they are added after the tax inclusion.

Are Dealership Employees Covered Under the Manufacturer’s Employee Purchase Programs?

Although there are legislative laws that defend the implementation of any such policy, an employee purchase program is practiced by most dealerships. Under the manufacturer’s employee purchase programs, an employee can usually purchase different vehicles well below the invoice pricing set by the company. Moreover, the salesmen also enjoy extra manufacturer incentives driven by the consumer response, but there are even more discounts involved in such programs as well.

Some dealerships also offer a lot of discounts on the lease of the vehicles as well, with some manufacturers offering up to 20% discount on the overall lease program as well. Such programs usually span over a period of 2-3 years and turn out to be very fruitful for car salesmen and their families.

Why Do Dealers Get Discounts on their Purchase of Cars?

Apart from a few handfuls of automakers, the majority of the car companies operate through privately owned dealerships and rely on their performance to achieve good sales volume and get their backlogs cleared.

A dealership is a link between a car manufacturer and customers, and apart from reliable aftersales services, sales and production volume are in the hands of the dealerships. When a dealership purchases cars in bulk, the automaker offers a substantial discount in order to encourage increased sales volume, and enhance the footprint in the market.

These discounts and incentives are a great way to lure new customers and get a good number of sales each month, making way for the new inventory.

How Do Dealers Compete with Other Dealers at Auctions?

Auto dealers usually jump at auctions to make the best of the opportunity. It is that one time when quality cars are available to acquire and that too, in big numbers. Getting a chance to upgrade your inventory and restock all the used and new cars is an event like no other.

Dealers usually face strict competition during the auctions, and only those come out as winners who have planned in advance and aptly sorted their things out.

Getting the License Timely – only the dealers with a license and permit can take part in car auctions and auto dealers usually get their paperwork sorted out in advance, to avoid any hassle. Usually, only the new dealers suffer in this regard who do not know the procedure or haven’t experienced the auctions in real life before.

Smart dealers have their licenses and permits ready just in time and are ahead of others.

Exploring the Inventory Online – online auctions are the new norm of the industry and with announcements done timely, smart salesmen check the available inventory timely and pick the relevant cars in advance, to fight away the competition from other dealers.

Making Timely Contact – processing the deal and completing the formalities are the most important steps. If not managed properly, can keep the deal lingering for days or even weeks, allowing the competitors to snap away with important deals.

Bulk Purchasing – Purchasing a whole batch of vehicles saves a lot of money upfront and allows the dealers to make good profits. Smart dealers always go for bulk purchasing, instead of individual cars and make handsome profits even before selling those cars.