Invoice pricing an industry conspiracy?

fprintf · 02-13-2001, 04:33 AM

My mother-in-law bought a 2001 Accord from a dealer on Saturday, and he readily gave her the invoice price, and told her his deal was $500 over. Not much negotiation, except for how much pin stripes and mudguards would cost (nothing, it turns out). If I was there, invoice price would have come up immediately - being a web addict after all, but he seemed to offer it without any reservation at all.

So it really got me to wondering if dealers are *really* paying invoice for their cars, or if there is some other hidden mechanism for getting the dealer network the profits they used to get. And if there is, it would seem that Edmunds and KBB are playing right into the car manufacturers hands.

There are, of course, factory-dealer incentives, and dealer holdback and marketing incentives, but most of this stuff is available online as well. Surely the dealers are not surviving on $500 per car sold -- that seems really low, or else being a car salesman pays *really* badly.

Thanks for the insight,
Stuart

p.s. I cross posted this onto VWvortex at http://forums.vwvortex.com/vwbb/Forum1/HTML/014368.html but no one there seems to have any industry insight - I know we have a few anonymous dealers here -- can you post what you know without revealing to your specific customers the deal they got by paying $x over invoice?

* Registered users of the site do not see these ads.

LUME · 02-13-2001, 04:49 AM

"Invoice Price" is NOT what the dealers pay for the car. Don't ask me what they actually pay, but I know for a fact that they pay less than invoice. Yes, it is a scam.

-Roy

fellfrosch7 · 02-13-2001, 06:02 AM

Go to www.edmunds.com and read their "How to buy a car" FAQ... I read somewhere that even if the dealer sells the car for "invoice", they still make some money (about $700 for a small, $10k car, ranging up to like $4k for a Jag.)

kyledooley · 02-13-2001, 06:39 AM

Dealers make a pile of cash on PDI (Pre-delivery-inspection) which most dealers do half-as*ed. Also the destination charge is a huge shaft. Its usually something like 500 bucks. The dealer only gets billed something like a hundred per car.

That's like a free 8-900 bucks for them right there.

Kickbacks from banks on financing are also common.

There is money to be had in the car business. Don't forget all the poor saps that they screw with MSRP. That's where the cash is.

One dumbas* can make a salesperson's week.

K.

Jon Bogert · 02-13-2001, 06:39 AM

It's called a holdback. Varies from 0% on Audis to a few %.

02-13-2001, 04:33 AM	#1
fprintf Scooby Newbie Member#: 2984 Join Date: Nov 2000 Location: Cheshire, CT, USA	Invoice pricing an industry conspiracy? My mother-in-law bought a 2001 Accord from a dealer on Saturday, and he readily gave her the invoice price, and told her his deal was $500 over. Not much negotiation, except for how much pin stripes and mudguards would cost (nothing, it turns out). If I was there, invoice price would have come up immediately - being a web addict after all, but he seemed to offer it without any reservation at all. So it really got me to wondering if dealers are really paying invoice for their cars, or if there is some other hidden mechanism for getting the dealer network the profits they used to get. And if there is, it would seem that Edmunds and KBB are playing right into the car manufacturers hands. There are, of course, factory-dealer incentives, and dealer holdback and marketing incentives, but most of this stuff is available online as well. Surely the dealers are not surviving on $500 per car sold -- that seems really low, or else being a car salesman pays really badly. Thanks for the insight, Stuart p.s. I cross posted this onto VWvortex at http://forums.vwvortex.com/vwbb/Forum1/HTML/014368.html but no one there seems to have any industry insight - I know we have a few anonymous dealers here -- can you post what you know without revealing to your specific customers the deal they got by paying $x over invoice? * Registered users of the site do not see these ads.

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02-13-2001, 04:49 AM	#2
LUME Banned Member#: 2641 Join Date: Oct 2000 Location: Bethlehem, PA Vehicle: 2000 Impreza 2.5 RS Dirt and Bird Poop	"Invoice Price" is NOT what the dealers pay for the car. Don't ask me what they actually pay, but I know for a fact that they pay less than invoice. Yes, it is a scam. -Roy

02-13-2001, 06:02 AM	#3
fellfrosch7 Scooby Specialist Member#: 2389 Join Date: Sep 2000 Location: Las Vegas, NV Vehicle: '98 Impreza L Wagon '90 Talon TSi AWD	Go to www.edmunds.com and read their "How to buy a car" FAQ... I read somewhere that even if the dealer sells the car for "invoice", they still make some money (about $700 for a small, $10k car, ranging up to like $4k for a Jag.)

02-13-2001, 06:39 AM	#4
kyledooley Scooby Specialist Member#: 1055 Join Date: Mar 2000 Chapter/Region: MWSOC Location: Romeoville, IL Vehicle: 2005 No legacy for u It's a diesel	Dealers make a pile of cash on PDI (Pre-delivery-inspection) which most dealers do half-ased. Also the destination charge is a huge shaft. Its usually something like 500 bucks. The dealer only gets billed something like a hundred per car. That's like a free 8-900 bucks for them right there. Kickbacks from banks on financing are also common. There is money to be had in the car business. Don't forget all the poor saps that they screw with MSRP. That's where the cash is. One dumbas can make a salesperson's week. K.

02-13-2001, 06:39 AM	#5
Jon Bogert Scooby Specialist Member#: 1133 Join Date: Mar 2000 Location: SE PA Vehicle: '02 996 C4S '95 993 '71 911 3.0 '04 STI	It's called a holdback. Varies from 0% on Audis to a few %.