phishie

If i bought the car at invoice price, would the dealer still be making a fair amount of money?

westpak

iTrader: (19)

Dont worry, they have dealer holdback which is like a rebate they get back from the manufacturer usually around 2-3%.

phishie

well, the thing is, i want a base model for 27000 out the door. The dealer is telling me im not allowing them any profit. At 24,100 invoice price, i can't imagine this to be true.

nodeel

At INVOICE price the dealers make money. You forget that "invoice" price has been published for almost 8 years now...so it has become an inflated number just like MSRP's are inflated.

In addition to the holdback mentioned earlier, only the LOWeST VOLUME PIDDLY ALMOST OUT OF BUSINESS dealers pay invoice. THe rest of the larger dealers that have a decent amount of volume get their cars at WHOLESALE PRICE. This is the price thats been "negotiated" between the dealer and the manufacturur based on volume, customer satisfaction, and participation in "manufacturer authorized events" such as sales etc.

Bottom line, even the invoice price is inflated on most cars by around $1500. You can get consumer reports WHolesale cost analysis on any car - but it'll cost you like $10 or so per car....its generally the cost paid by a dealer per region based on volume details etc.

rodH

iTrader: (2)

actually that is only part true (at least in the dealers my family is invloved with-Acura, Honda, Nissan, Infiniti, VW, etc...) they ALL get the cars at the same price "wholesale" then they get a "dealer kickback" basically this is $$ so the dealer can pay for "flooring" (remember the dealer is PAYING for hte car as it sits on the lot and pays for the interest on that financing as well), if the car sits on the lot for a long time, this "dealer kickback" is pretty much all used up in flooring.

THere are other incentives, (especially with American cars), the dealers can get money out of Financing, dealer kick backs and other promotions, but the wholesale price is the same.

if the dealer is saying that they will NOT make $$ if they sell it at Invoice, what they may indirectly be saying is "the Z is a car that we have to get MSRP or close to that price, and if we don't what cars do we actually expect to get MSRP for, we can't let a Z go for invoice that is crazy.

personally, if I were a dealer, I wouldn't sell a Z at invoice, rememeber they are there to make $$ NOT for charity work, then again, maybe that is why I am not in the business.

Chevy Cavalier=sure, take it off my hands at invoice
Z=take a hike, I will get someone walking thru the doors in the next 48 hrs that will pay MSRP for it and buy ALL kinds of accessories.

I am NOT for BIG dealer markups though, that gets me FUMING!!

Dr Bonz

iTrader: (1)

WHAT? Are you saying that a dealer doesn't make enough profit on a Z at MSRP?

Not true. They pay invoice (or as someone said, less than invoice) for the car and if someone pays MSRP the dealer is making several thousand dollars profit on the car!

rodH

iTrader: (2)

I am not sure if that was directed to me, but my answer is Yes, they DO make enough at MSRP, that is why it is called "MSRP" sure dealers go down on some cars just to move inventory and b/c they are harder to sell, BUT the Z isn't one of those cars. If you are making less than MSRP on a Z you have NO clue how to sell cars (as a salesman that is).

btw, the dealer is there to make money (as I mentioned before) to an extend, that is why I said I am Sooooo against the dealer markups, they **** me off.

zland

No, what I think Rod is saying is every product has money makers while other parts of their product line do not make as much. For example, US made manufactures make much more on a SUV such as a Excursion than they do off a Focus. The idea is to stock an entire product line. If you sell a 20 year old a Focus, maybe they will turn into a Ford return buyer thus buy the SUV 5 years from now. The Focus also lets Ford meet their MPG quotas.

As for dealers, Nissan has to carry all of Nissans. Trust me, every Nissan dealer in America would love to double their inventory of Z's or any other product that sells well. So yes, the Nissan dealer is making a killing off of Z's for now and maybe has too many Sentras on the lot sitting.

In the end, it all evens out, supply & demand. If a dealer ask too much for the car, you can do like me, I live in Calif and purchased my car in Wi. because all the Z's were sold out for months how I wanted them in Ca. or the dealers were asking 3K+ over MSRP in Ca.

rodH

iTrader: (2)

thanks for the explaination, if all dealers did was sell cars at invoice, they would be out of business. Sure they make a bit of money, but not enough to make a dealership profitable and out of the RED (remember, you aren't buying a product off of Ebay, they have land, buildings, and employees to pay as well(along with MANY other things).

FLY BY Z

RodH that is correct. Holdback is simply the money the manufacturer gives the dealer to pay for the first "month" of financing. Remember, the dealer is buying the car from Nissan and they finance them, not pay cash. The manuf. normally gives the dealer enough to cover the first month or so of financing. The only way the dealer makes money at invoice is if they sell it before that money runs out and they have to start paying the financing themselves. So if a car has been sitting for more than the alloted time period, the dealer starts to lose money. Another good reason they want to sell you what they have already on inventory before they sell you something they don't have yet.

But in any case, no matter what the MSRP is for any car, what dictates price is supply and demand. Of course the Z will sell for more than MSRP (esp. in the beginning) because of way more demand than supply. If they made more than people wanted, they would sell cheap. Then dealers would make less, and we would be unhappy because everyone would have one. We aren't driving Sentras here...

neohalo1

This is taken directly from Edmunds.com--you can follow the link below for the rest of the article:

Dealer holdback is a percentage of either the MSRP or invoice price of a new vehicle that is paid to the dealer by the manufacturer to assist with the dealership's financing of the vehicle. The holdback itself can't really be used as a negotiating chip. However, knowing about it might help you get a better deal on a new car. How? Well, first, here's a little background:

The total invoice cost of the car is payable by the dealership to the manufacturer when the vehicle is ordered, not when it is sold. Since car dealerships must have an inventory on hand through which the consumer can browse and ultimately select a vehicle, the dealership must borrow money to pay for that inventory. The manufacturer pays for financing and maintenance for the first 90 days the vehicle is on the lot in the form of a quarterly check called a holdback. After 90 days, the dealership has to dip into its own pocket, and into its own profit, to finance the car. Fortunately for dealers, most cars don't stay on the lot for three full months.

This holdback amount is "invisible" to the consumer because it does not appear as an itemized fee on the window sticker. If the car sells within 90 days of arrival on the dealer's lot, the dealer is guaranteed a profit even if the vehicle is sold to you at cost. Because of the holdback, the dealer can advertise a car at $1 over invoice and still make hundreds of dollars on the sale.

http://www.edmunds.com/advice/incentives/holdback/index.html

FLY BY Z

But hundreds on a car does not pay salaries or rent or utilities, etc. The invoice price of a car is not the only cost incurred by a dealer.

As far as holdback, on month, three months, whats the difference?