Each car manufacturer offers their own version of incentives, called "dealer cash" or "dealer allowance", which encourage dealers to sell more vehicles. Not all manufacturers offer a holdback, but most do.Ī major factor that can affect a dealer's true cost are incentives they receive from the factory. They could sell you the car at invoice price and still make a profit of $750. On a $25,000 car, this can be up to $750. The dealer gets reinbursed for this amount by the manufacturer for each vehicle they sell. Holdback is usually an amount equal to 1% to 3% of the MSRP price. The destination fee is always a pass-through cost to the buyer and is not marked up.ĭealer holdback is something that most dealers don't like to acknowledge - because it's basically a hidden profit. ![]() Here is what a typical invoice looks like:Įach option is broken down by invoice and MSRP price. Many dealers will provide you with a copy of their invoices if you ask for it. In order to know the real invoice price, you will need to see a copy of the actual invoice provided by the dealer. These numbers can sometimes be off by several hundred dollars due to small regional variations and price changes throughout the year. Invoice prices for each vehicle model, trim level, and options are easily found on all the major car buying sites - however, I've noticed that not all sites display the same information. ![]() This is not the dealer's true cost - there are many factors that lower their cost, sometimes by several thousand dollars below invoice price. The dealer invoice price is what the dealer actually pays to the manufacturer for the vehicle. The good news, however, is that we can get a very good idea of a dealer's true cost - it simply involves 3 things: Invoice price, Holdback, and Factory-to-dealer incentives. You would need to find out how many days that car has been sitting on the lot, in addition to knowing some other hidden costs and possible kick-backs they receive from the manufacturer. For example, the dealer's financing cost increases by a small amount each day a car goes unsold. There are simply too many hidden variables involved. Despite what you may have read on other sites, there is no way to know for sure what a dealer's true cost is for each vehicle they sell.
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