Wilma has done her research, haggles with George the Car Dealer, and buys a car. And let’s say that she pays the absolute lowest possible price that George could possibly agree to accept.
Later that day, Betty (who is not good at haggling) comes in and buys the exact same kind of car from the same dealer for $1000 more.
I’m guessing that from Wilma’s sale, George gets a commission of a few hundred dollars.
My question is: from the sale to Betty, does George himself get the basic commission plus the full $1000, or does the $1000 go to the dealership, and George just gets some of it?
George gets a commission based on the selling price of the car. If he gets a 5% commission and the car sold for $10,000, he gets $500. If the car sold for $12,000, he’d get $600.
There are inducements, promotions, etc., but that’s the basic formula.
The commission structure for car sales is usually based on the profit from the sale not the total sale price. For example, if the car sells for $10,000 and the dealership spent $9000.00 on it (dealer cost+freight+maintenance and repair+advertizing+etc) the profit is $1000. The salesman gets a percentage of that $1000, usually in the 30% range. The dealer keeps the rest.
Of course this varies depending on dealer, make, region, etc.
Some sales people earn commissions on the total profit. Others just earn it on the “front end” - the profit on the new car, plus the difference between the trade-in value paid and the actual wholesale value of the trade-in.
The “back-end” profit is finance and insurance, as well as dealer extras such as rustproofing, undercoating, and extended warranties.
The answer to the OP’s basic question is that the dealership gets the lion’s share of Betty’s extra money. The salesman gets his percentage. Of course, individual situations may vary greatly, as there may be promotions, dealer spiffs, goals or contests within the dealership - many different variables.
Several dealerships now are moving to “non-commision” salespeople. They get paid a flat amount for each car sold period. Be it a $19000 econobox or $40000 SUV. Supposedly takes the pressure off the consumer that they might be talked into buying more car than they want/need. AFAIK, every dealership in my small city has moved to that model except 2.
In those cases, the extra $$$ would just go to dealer profit I suppose.