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Pay plans are one of the most powerful (and dangerous) tools in a dealership. Get it wrong, and you'll bleed gross or lose talent, or both.
But here's the thing, most dealers are still running 2015 employee comp playbooks in a 2025 market.
So, to find out what's actually working, I spoke with dealers across the country who've completely rethought how they pay their people.
And I've distilled three ways smart dealers are modernizing comp to actually work in today's reality…
Shift #1: Dealers are ditching confusing pay plans and opting for more transparency instead.
"They don't make 10 different components in a single pay plan to give the salesperson any advantage. It's confusing for a reason, and that sucks," one pre-owned Ford director told me.
What he means is that traditional dealership pay plans are complex, mixing base salary, commission percentages, volume bonuses, CSI deductions, and gross profit calculations. The more moving parts, the harder it is for employees to understand how to maximize their income.
But some dealers are flipping this entirely.
One Nissan general manager I spoke to has a simple test: "A good pay plan should be easily intelligible on a napkin."
Instead of paying based on gross profit, which creates short-term thinking, he pays salespeople based on customer relationships.
Walk-ins earn $100 bonus
Referrals get $300
Service drive conversions tack on an extra $400
And repeat customers generate $500
His logic: "I think maintaining a relationship with that customer and bringing them back in is more valuable than just some random person walking in off the street."
Corey Henderson, director of operations at Colonial Auto Family takes pay plan simplicity even further.
Instead of complex service advisor calculations, he uses one measure: dollars per repair order compared to manufacturer benchmarks. Beat the average, get +1% commission. Fall below, lose 1%. No internal politics, no moving targets.
Corey Henderson
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Shift #2: In the commission vs. salary war, hybrid approaches are winning.
Traditional dealership pay has always been extreme. Many salespeople live almost entirely off commission with tiny base salaries. Meanwhile, service advisors and other roles get steady hourly pay with (maybe) small bonuses. But it’s mostly feast or famine.
However, smart dealers are finding middle ground.
General manager of North Georgia Toyota Greg Epps is considering moving toward "70-80% fixed component and 20-30% variable."
Greg Epps
But Corey takes this further. He pays salespeople flat rates based on price discipline.
$450 for selling at asking price
$350 for a 2% discount
$250 for steeper discounts.
And his top three salespeople earn "over a quarter million" annually focusing on behaviors they actually control.
Shift #3: Dealers are reengineering comp to reward top performers, regardless of title.
Some of the most innovative comp changes aren't happening in sales—they're happening in service.
In addition to steady wages, Corey pays his service advisors commission based on the actual skill required:
1% commission for internal work (accessory installs, prep work)
1.5% for warranty work (processing manufacturer claims)
4-7% for customer pay work (actual selling to extract customer dollars)
"A service advisor talks to 300 people a month... but in sales, you sell 20 cars and talk to 40 people,” he said.
Translation: Service departments handle 7.5x more customer interactions, and shouldn’t be paid like second-class citizens.
And Corey’s advisors who exceed manufacturer benchmarks now earn an extra ~$20,000 annually. He considers it retention insurance (both for customers and employees.)
The lesson: Rewarding customer-facing performance regardless of department creates sustainable growth.
Bottom line: There is still work to be done.
While other dealers cling to complex pay structures that reward short-term goals, the real winners are building pay plans around long-term relationship value. As margins stay compressed and labor stays scarce, the operators who can attract, retain, and properly incentivize talent will have the ultimate competitive advantage.
What’s the best pay plan you’ve seen out there? Hit Reply and tell me about it.
Missed yesterday’s episode of Daily Dealer Live?
Presented by: CarNow
Brian Benstock on the U.S. dream, Lotlinx CEO on building for car biz, Larry Morgan on legacy
Featured guests:
Brian Benstock, Partner/GM of Paragon Honda and Acura
Len Short, CEO of Lotlinx
Larry Morgan, Chairman of Morgan Family Ventures
This week on the
Car Shopper Report—Why ease of purchase is crashing in Q2 (and how dealers are responding)
Shout out to CDK Global, Lotlinx, and ActivEngage for making this episode possible!
Stream now on:
“This is the worst it’ll ever be”—state of dealership AI and what dealers should be asking
Stream now on:
Three opportunities hitting the CDG Job Board right now:
TradePending: Marketing Operations Manager (remote)
Ed Morse Chevy Buick GMC Muscatine: Finance Manager (Iowa)
Libertyville Lincoln: Sales Consultant (Illinois)
