Car Salesman Pay Plan Lawsuits

What Is The Cost of a Used Car?

March 3, 2008 | Jonathan Rudnick

You would think that this was an easy question. But when the answer is in the context of calculating salesman commissions you might be amazed at how the dealer calculates the answer. The answer should be simple: what is the cost at which the dealer acquires the car? The dealership has already been reimbursed for overhead and expenses by charging a “pack” on each deal to each salesman. BUT the dealer adds money to the acquisition price of the used cars, sometimes known as “ups” or “ads.” What is either the need or the justification for this? Usually the pay plans are based on profit for the sale of each car, as agreed by the salesman and the dealer. These ups are usually not disclosed to any of the salespeople since it is “none of their business.”

If you work in either sales or finance at a car dealership you should start asking some questions about the COST of the used cars that you are selling and how the dealer gets these numbers.

The Law Office of Jonathan Rudnick litigates these cases against car dealerships, located at 262 HWY 35 Red Bank NJ 07701, 732-842-2070

Car Salesman Getting Ripped Off? Part I

February 21, 2008 | Jonathan Rudnick

Guess what? In the car business dealer stake as many liberties with their employees as they do with the customers. There are two basic profit centers: the front end and the back end. The salesmen get paid on the front end only. This is the “cost” of the car, as compared to the selling price. Some people think the cost is the invoice of the car, better known as tissue. The higher level employees get paid on the overall profit of the dealership, which includes all the items considered after market, warranties, etc.

The problem occurs when calculating the cost for calculation of the gross commisionable proceeds for the employees.The dealers add costs to the acquisition price of the car. Some dealers call them “ups.” The dealers increase the cost by the amount of the ups to reduce the commissions.

Usually the pay plans are based on the costs of the products. The dealers take liberties with increasing the cost of the vehicles without disclosing this to the staff, because they exclusively control access to this information.

New Jersey Car Salesmen: Pay Plan Fraud

October 2, 2007 | Jonathan Rudnick

Many car salesmen are also victim of dealership fraud. They have a pay plan that is in writing. Despite the simplicity of the pay plan (commissions as a percentage of profit), the dealership inflates the cost of vehicles to reduce their pay. They will add on various questionable costs to the “cost” of the car. Much of this is hidden from the salesman: pack, used car kitty, lot fees, bruise fees, dent fees.

Dealerships will also claim that a product such as GAP or ETCH cost a certain amount, which is false.

Car salesmen are left with few options because they risk being blackballed out of the industry. Turnover is very high at most dealerships, and this is part of the reason.
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