Buying and selling cars is a potentially lucrative career, with the typical salary coming in just under $100,000. The range is very broad, however, with some car dealership owners making less than $20,000 a year and others earning millions. The automotive industry is highly competitive, and car salesmen must continually strive to attract new customers while maintaining their existing customer base.
Car dealerships make money through the sale and leasing of new vehicles, used vehicles or both. They may also have a parts department or service department providing vehicle maintenance and may earn commissions by selling extended warranties and other incentives and add-ons.
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Car dealership owners are responsible for the strategy, growth and overall operation of the dealership. This includes hiring and managing staff, ordering inventory, setting prices and handling customer complaints. They must also ensure that their dealership complies with all state and federal regulations. To be a successful car dealership owner, you must be an effective salesperson, have strong business acumen and be able to effectively manage both your staff and inventory.
There are no formal education requirements to become a car dealership owner. However, many successful car dealers have significant experience working in the car sales industry before they open their own dealership. A passion for cars is great, but it's more important to understand what makes a great deal, whether that involves new vehicle sales or trade-ins. You must have the business skills necessary to run a successful dealership.
The average salary for a car dealership owner in the United States is $97,790 per year, according to the salary comparison website Comparably. However, earnings can vary greatly depending on the size, location and average gross profit of the dealership as well as the owner's experience and ability to grow the business.
Many car dealerships are part of a larger automotive group or dealership chain. These groups often have multiple locations and offer a variety of services, such as car sales, car auctions, financing and repairs. According to the National Automobile Dealers Association, there were 16,676 franchised light-vehicle dealerships in the U.S. in 2021 that sold nearly 15 million vehicles. Other car dealerships are family-owned businesses that have been passed down from generation to generation.
Auto dealerships are typically open from Monday to Saturday, with longer hours during the week. Some dealerships are also open on Sundays. However, the hours can vary depending on the location and target customer base of the car dealership business.
Job Mobility and Career Growth
The salary of a car dealership owner does not necessarily rise with time and experience. That's because their income is largely dependent on the dealership's profit margin, and that depends on many factors, such as whether the dealership is a used car dealership, whether it sells new cars, if it specializes in repossessed vehicles and the average sticker price of the inventory. Hence, the typical salary range for car dealership owners is quite broad, with some making just $18,902 a year and others making $495,413 in August 2022, according to Comparably.
Car dealership owners make the most in San Francisco at $147,548, which is 51 percent higher than the national average.
To increase their earnings, car dealership owners can try to grow their business by expanding their inventory, adding new services or opening additional locations. Car dealership owners can also move up to become part of a larger automotive group or dealership chain. This can lead to higher earnings and more responsibilities, such as managing multiple locations. According to the U.S. Bureau of Labor Statistics, a sales manager in the automotive industry made an average annual salary of $135,140 in May 2021.
The job outlook for car salespeople is positive. While the U.S. Bureau of Labor Statistics does not keep data specifically for auto dealers, it projects that the number of jobs in the retail sales industry, including automotive sales, will grow by 7 percent through 2030. This is about as fast as the average for all occupations. Job growth is due to an increase in the number of car buyers and the fact that auto sales typically take place in person rather than online.