Considering used-vehicle gross profit as a pool that can be tapped when calculating commission payments on individual cars has helped a Michigan Ford dealership retail more used cars and keep its sales reps invested in selling any model on the lot.
Roy O'Brien Ford in St. Clair Shores, Mich., in 2020 turned up its efforts to increase used-vehicle sales from an average of 60 cars a month, according to Sean O'Brien, the dealership's used-vehicle manager. That summer, he received approval to stock more used vehicles, going from around 50 cars on the lot to 90. He also rethought the used-vehicle commission pay plan, which paid an undisclosed percentage of a vehicle's gross profit.
O'Brien wanted sales staff to sell based on a customer's needs, not cherry-pick the vehicles most likely to boost their paychecks more. So for the purpose of calculating commission payments, dealership managers now have the flexibility to essentially borrow proceeds from a vehicle sale with a high gross profit and assign it to another vehicle sale carrying a lower gross profit. The practice has helped balance out the range of commissions paid on used vehicles sold, and reps seem to like it, O'Brien said.
The revised approach is paying off.