Selling vehicles under invoice. How??

[Urch]

Cam someone explain how dealers are able to sell vehicles at invoice or under invoice? Can they do that even if mo trade? I heard they get some money from corporate but how does it work?

 

[6.7CumminsDrvr]

Mark up on trucks is RIDICULOUS, that’s how!

Cost way less than MSRP to build ‘em!

 

[HitchHiker]

Cam someone explain how dealers are able to sell vehicles at invoice or under invoice? Can they do that even if mo trade? I heard they get some money from corporate but how does it work?

While laws state that all dealers pay the same up front invoice price - the law doesn’t control local, regional and national dealer incentives and rebates as opposed to consumer incentives and rebates. There are also volume based incentives that dealers receive called dealer holdbacks. These types of incentives, rebates and holdbacks that are all funded by the manufacturer are what allow dealers to sell vehicles for below dealer invoice on a fairly regular basis, yet still make money.


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[Random_Walk]

"invoice" is an illusion, for starters.

 

[Urch]

While laws state that all dealers pay the same up front invoice price - the law doesn’t control local, regional and national dealer incentives and rebates as opposed to consumer incentives and rebates. There are also volume based incentives that dealers receive called dealer holdbacks. These types of incentives, rebates and holdbacks that are all funded by the manufacturer are what allow dealers to sell vehicles for below dealer invoice on a fairly regular basis, yet still make money.


Sent from my iPhone using Tapatalk

 

[Urch]

Thanks HitchHiker. I used to think that dealers need to make 3 or 4 k on every deal, but that cant be the case, unless a high end vehicle. So how much are these kickbacks from manufacturer. Ballpark.
And another thing, they seem very willing to show you invoice if asked, and would never do that even 5 or 10 years ago. What has changed?

 

[Bigskyroadglide]

Fully optioned high end truck, profit could be up to 20k per vehicle.

Mid option vehicle, probably around 10k.

Used vehicles avg profit 4 to 6 k.

Dealers profit on new car sale and on trade in sell.

Plus they profit on dealer financing,

Plus on extended warranty.

Plus, holdbacks, plus floorplan, plus incentives, plus, plus, plus

That's why they can sell at invoice.

 

[RoadRamblerNJ]

I'm sorry I didn't get a job selling cars 40 yrs ago so I would have known all their tricks. I can't sell squat. I fix things.

 

[KC Cryptkeeper]

Normally a truck's sticker is 15-17% higher than the dealer invoice. But the dealers price for the vehicle is actually 20-21% of the sticker. What dealers want to do is sell at or above that invoice price to guarantee profit. Anytime they sell to a company employee which is 19-20% under sticker the dealership gets a $500 kickback from the company. Remember that a dealership is separate from the company, it's only a franchise. I'm not positive if the %'s are the same at FCA but I know these used to be the numbers for Ford. I can still get A-plan after taking the buy out 12 years ago.

 

[Urch]

So when you start to negotiate what should be the tactic,? Asked for invoice price and go a %age below that or what? Probably separate on trade. Must depend on how long the particular truck has sat on lot.

 

[chrisbh17]

Cars direct or truecar can give you a decent starting target.

I no longer trust invoice, % off sticker, etc because I feel like manufacturers are inflating those numbers to make the "deal" you get seem that much better

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[Casper]

"invoice" is an illusion, for starters.

***
Supermarket analogy: Invoice is the bill before you apply your coupons.
Dealers don't pay retail, they get credits and rebates that lower their cost considerably. Lower cost allows profit at a sales price below invoice.

 

[buddy guy]

While laws state that all dealers pay the same up front invoice price - the law doesn’t control local, regional and national dealer incentives and rebates as opposed to consumer incentives and rebates. There are also volume based incentives that dealers receive called dealer holdbacks. These types of incentives, rebates and holdbacks that are all funded by the manufacturer are what allow dealers to sell vehicles for below dealer invoice on a fairly regular basis, yet still make money.


Sent from my iPhone using Tapatalk

The bucket of discounts seems to go as deep as 35% on new 1500s anyway, every year. They may not want to go there. They will depending on the circumstances.

 

[Musky Mike]

You will never see a true dealer invoice, even if they show a piece of paper that says “invoice” it’s not the true price they paid for vehicle because of other discounts that aren’t on the “invoice”. Plus, they know the game now with all the internet information, the industry has changed how the dealer does invoices, that’s why the price on the invoice isn’t the true dealer price. Hence, they can sell below invoice (and make a profit) and swear to you they are losing money on the deal.

 

[armallard]

that's why internet is definitely worth it. When we bought my wife's car a month ago we looked just within the state and 2 emails, 2 phone calls and a 6 hr. drive less than 40 minutes at the dealership doing paper work we were done..

 

[buddy guy]

In my case it was easy. Only 2-2018s left anywhere near price I wanted and it was feb 2019. Conversation was like:

Me - can you go lower?
Sales Manager- Nope. Bottomed out
Me- OK its a 2018 on the lot for 5 months. Lower?
SM- nope nice try
Me- easy quick sale
SM- nope
Me- ok. Free bedliner, premium vinyl protection at cost, bedliner at cost you eat labour on all
SM- done!
Service & Parts Manager- We hate the sales manager!!!!

 

[1stindoor]

^^Similar to my purchase two months ago, April 2019. A 2018 2500 Mega Cab (which I automatically "assume" got to the lot in the fall of 2017), I went in and basically told them my start point "out the door." I looked at it as a used truck. No matter what they said about it being new...as soon as I rolled off the lot it was used, especially considering they were going to be bringing in 2020s in a few months. After much negotiation...and two weeks. We settled on my out the door price I started with. I have no problem with them making a profit, they have a business to run. I'm just not willing to support the entire dealership.

 

[chrisbh17]

When I went looking for my RAM I found a good deal on the truck I eventually bought. But of course the advertised price was "not what I qualified for" because it included umteen discounts that did not apply to me. I even had a friends and family code (cousin that worked for FCA). Fought with the dealer for a few days and ended up right back at that advertised price (which is what I wanted to pay initially anyway)

I contacted a bunch of other dealers up to 250 miles away with similar vehicles and they were all at least 3K more. So I was "stuck" with my dealer. At least it beat driving up to 250 miles.

Salesman did throw in some free swag so I guess I got a little better than I wanted....not that the under armour hooded sweatshirt was worth the $80.00 they wanted!

 

[Random_Walk]

Cars direct or truecar can give you a decent starting target.

I no longer trust invoice, % off sticker, etc because I feel like manufacturers are inflating those numbers to make the "deal" you get seem that much better

Sent from my Nexus 6P using Tapatalk

Not only can they give you a starting point, they often tell you how long the vehicle has been on the lot (something most dealers will not tell you.) This was how I found my cheapie Rental Ram, went to the lot, and knocked an additional ~$3k of the already low price. I can sum it up with something like this "Lookit - it's been on the lot for nearly a year, you primarily sell Subarus, and I've got pre-approved Credit Union cash I can drop on you right now. I have an appointment at another lot in an hour, and it takes 30 minutes to drive there - you have 15 minutes to figure it out."

They spent a whole 5 minutes decising (likely to make it look good), and 30 minutes after that, I drove home a $22,300 2017 Ram 1500 with less than 20k on the odometer - 12 months and one week ago.

 

[RaftingDave]

I remember walking onto a dealer lot some years ago, and the salesman there told me he'd do a deal at 2% below invoice "all day long, any day, any vehicle on the lot".

That tells ya something.