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    Sales Commission on Porsche cars

    Does anybody know what a sales rep at an authorized Porsche dealer (US) makes on the sale of a single car? Say the car's sticker is about $100k.

    A generic defintion I found on the web said that industry wide car sales people earn 20-25% of the PROFIT made on the sale, that is the amount the sales price is above the invoice price.

    So what's the typical margin on a Porsche? And what percent does the sales rep make?

    Thanks much, Chipper

    Re: Sales Commission on Porsche cars

    Here's a SWAG (scientific wild-*ss guess) - sales people likely earn about $4,000 - 5,000 per new Porsche sold. If a salesperson sells 24 per year, they probably earn about $96,000 - 120,000 per year, on average. At times when the cars are selling well, they probably earn a lot more, and when sales are slow, they probably earn a good amount less.

    The dealer probably has a margin, above cost, of about 15 - 20%. They couldn't run a decent operation on less. If $85,000 is the current average price of all new Porsche's sold (again, a guess on my part), then the dealer is clearing, before expenses such as commissions and overhead, about $12,000 - 15,000 per car. I don't know how they could stay in business with less of a margin, unless they sold loads of the cars - which doesn't show up in the numbers (they are likely to sell about 34,000 - 36,000 in the U.S. this year, and the U.S. now accounts for roughly 1/3 of all the new Porsche's sold.

    Again, this is an informed, but certainly not exact, guess, based upon an estimate as to how much a Porsche - Audi dealer has to make to survive, thrive and maintain a decent sales force.

    Jim

    P.S. I am not a Porsche-Audi saleman nor am I affiliated in any way with Porsche or Audi or any other auto firm. I have done some consulting for car dealers in the past; hence, my educated guesses as to what they make on a Porsche.

    Re: Sales Commission on Porsche cars

    Thanks. So it looks like the figure of 20-25% of dealer margin on a car for the sales rep's commission is low. The figure should be more like 30-35%? 30% of $15,000 is $4500.
    That hits the $4000-5000 per car that you mentioned.

    So does that seem right? About $5,000 commission per car?

    Re: Sales Commission on Porsche cars

    Sales Commission plans vary from Dealer to Dealer. One So Cal Dealership has a pay plan as follows:
    $1000.00 "pack" is taken off the top of the profit before the commission is calculated. The pack varies from one Dealer to another.
    For the first 5 Porsches sold in one month the commission is 10% of the net profit. 10k net, 1k commission.
    If the Salesperson sells 6-8 Porsches in one month the commission retroactively increases to 15%
    A Salesperson selling 9-11 Porsches in a single month bumps to 18% as long as He or She sells two Used Cars among the 9+ units. Otherwise the commission stays at 15%
    12 Porsches or more in a single month rewards you with a final commission bump to 20%
    Again, this is one Dealership in the So Cal market and is not meant to imply that it is a standard for the industry.
    A 997 sold at MSRP is going to have at least 10k of profit front end (not including money made on the lease or finance rate if not a cash deal) Cabriolets have a higher profit percentage than coupes. Cayennes, Caymans, and Boxsters - depending on equipment options- will generally show less profit than the 997 line.
    Sort of interesting side note: A 448k Carrera GT had aproximately 26k profit for the Selling Dealer if sold at MSRP. A highly equipped Turbo 996 Cab during that same period would generate an identical profit!

    Re: Sales Commission on Porsche cars

    Thanks. This is very helpful.

    Re: Sales Commission on Porsche cars

    Quote:
    Jim48 said:
    Here's a SWAG (scientific wild-*ss guess) - sales people likely earn about $4,000 - 5,000 per new Porsche sold. If a salesperson sells 24 per year, they probably earn about $96,000 - 120,000 per year, on average. At times when the cars are selling well, they probably earn a lot more, and when sales are slow, they probably earn a good amount less.

    The dealer probably has a margin, above cost, of about 15 - 20%. They couldn't run a decent operation on less. If $85,000 is the current average price of all new Porsche's sold (again, a guess on my part), then the dealer is clearing, before expenses such as commissions and overhead, about $12,000 - 15,000 per car. I don't know how they could stay in business with less of a margin, unless they sold loads of the cars - which doesn't show up in the numbers (they are likely to sell about 34,000 - 36,000 in the U.S. this year, and the U.S. now accounts for roughly 1/3 of all the new Porsche's sold.

    Again, this is an informed, but certainly not exact, guess, based upon an estimate as to how much a Porsche - Audi dealer has to make to survive, thrive and maintain a decent sales force.

    Jim

    P.S. I am not a Porsche-Audi saleman nor am I affiliated in any way with Porsche or Audi or any other auto firm. I have done some consulting for car dealers in the past; hence, my educated guesses as to what they make on a Porsche.



    Good approach....but need to also consider used car sales/spreads; leasing/finance dept profits; parts and svc (esp warranty work) profits....asymmetry btwn/amongst major/minor dealers in major/minor mkts...and value of land that some of these dealers sit on in powerful urban regions.....and fact more and more of these dealers are multi-brand, corporate-owned entities w/lower cost of capital; all kinds of intra-company transfers, etc....to really gain sense of P&L/cash flow dynamics of some of these dealers....

    And in most major dealers in powerful regions, suspect the old 20-80 rule prevails amongst salesguys...a small fraction of salesguys has the relationships w/major repeat buyers (and their similarly affluent referrals) vs the kid taking Coxster-wannabes on their joyride (AKA "test drive")....and I suspect commission strucs are appropriately tiered....

    Consider also that in many major urban regions....affluent, repeat buyers tend to use dealer closest to their home w/decent svc dept; a veteran salesguy who's their "concierge" for any post-sales issues; and are fine w/paying MSRP (or non-deep-disctd price); dealers in less affluent areas often need to maximize volume as they have less in way of local, repeat buyer base....so often see heavy discts; no salesguys w/repeat relationships; very high salesguy turnover; poor svc dept, etc etc....different philosophies which may each make most profit-maximization sense, dpdg upon local environment....

    Would observe that....aside from "unusual" mkts like NYC/SF/LA/Chic...the wealthiest guys in most towns/smaller urban regions/"back-office" large urban regions often tend to be the car dealers/doctors/real est guys....

    And, from what I understand, owners of car dealers are some of NetJets' best customers....

    Re: Sales Commission on Porsche cars

    Quote:
    WBH said:
    Quote:
    Jim48 said:
    Here's a SWAG (scientific wild-*ss guess) - sales people likely earn about $4,000 - 5,000 per new Porsche sold. If a salesperson sells 24 per year, they probably earn about $96,000 - 120,000 per year, on average. At times when the cars are selling well, they probably earn a lot more, and when sales are slow, they probably earn a good amount less.

    The dealer probably has a margin, above cost, of about 15 - 20%. They couldn't run a decent operation on less. If $85,000 is the current average price of all new Porsche's sold (again, a guess on my part), then the dealer is clearing, before expenses such as commissions and overhead, about $12,000 - 15,000 per car. I don't know how they could stay in business with less of a margin, unless they sold loads of the cars - which doesn't show up in the numbers (they are likely to sell about 34,000 - 36,000 in the U.S. this year, and the U.S. now accounts for roughly 1/3 of all the new Porsche's sold.

    Again, this is an informed, but certainly not exact, guess, based upon an estimate as to how much a Porsche - Audi dealer has to make to survive, thrive and maintain a decent sales force.

    Jim

    P.S. I am not a Porsche-Audi saleman nor am I affiliated in any way with Porsche or Audi or any other auto firm. I have done some consulting for car dealers in the past; hence, my educated guesses as to what they make on a Porsche.



    Good approach....but need to also consider used car sales/spreads; leasing/finance dept profits; parts and svc (esp warranty work) profits....asymmetry btwn/amongst major/minor dealers in major/minor mkts...and value of land that some of these dealers sit on in powerful urban regions.....and fact more and more of these dealers are multi-brand, corporate-owned entities w/lower cost of capital; all kinds of intra-company transfers, etc....to really gain sense of P&L/cash flow dynamics of some of these dealers....

    And in most major dealers in powerful regions, suspect the old 20-80 rule prevails amongst salesguys...a small fraction of salesguys has the relationships w/major repeat buyers (and their similarly affluent referrals) vs the kid taking Coxster-wannabes on their joyride (AKA "test drive")....and I suspect commission strucs are appropriately tiered....

    Consider also that in many major urban regions....affluent, repeat buyers tend to use dealer closest to their home w/decent svc dept; a veteran salesguy who's their "concierge" for any post-sales issues; and are fine w/paying MSRP (or non-deep-disctd price); dealers in less affluent areas often need to maximize volume as they have less in way of local, repeat buyer base....so often see heavy discts; no salesguys w/repeat relationships; very high salesguy turnover; poor svc dept, etc etc....different philosophies which may each make most profit-maximization sense, dpdg upon local environment....

    Would observe that....aside from "unusual" mkts like NYC/SF/LA/Chic...the wealthiest guys in most towns/smaller urban regions/"back-office" large urban regions often tend to be the car dealers/doctors/real est guys....

    And, from what I understand, owners of car dealers are some of NetJets' best customers....



    Yes, indeed, the devil is in the details. I was only making a SWAG, trying to get a rough idea of what kind of margins exist.

    As you correctly stated, there are many other variables involved in pricing flexibility and gross margins.

    But if gross margins (and hence, actual sales prices) differ quite significantly, then there is an incentive for buyers to travel to take advantage of real bargains. With the internet and the ability to get price quotes from dealers, it might well pay someone to evaluate online quotes and travel to order and take delivery of a car. I don't know to what extent this has been done by purchasers (I suspect little thus far), but it could allow those dealers with lower overhead to move a few more cars.

    Jim

    Re: Sales Commission on Porsche cars

    I guess the guy who deals with me has made some money. In last 14 months I have bought 997 C2S cab, 997 GT3, 08 Cayenne Turbo, and four GT3 referrals with confirmed sales. And I don't even like the guy.

    Re: Sales Commission on Porsche cars

    To my knowledge, there's only about 12-15% margin in a new 997, between retail and dealer-cost, depending on options... The more options, the more you swing up from the 12% base-line...

     
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