mich800 wrote:
Anyone that believes the invoice price IS what the dealer pays needs to use a service or friend to make their major purchases. It is a reliable number to use for negotiations or to get an idea how good an offer you are dealing with.
Invoice is what the dealer pays for the vehicle. Their floor-plan source is drafted for that amount before the vehicle is shipped. Periodically they also receive hold-back which is 3% of MSRP minus freight if they are a domestic manufacturer dealer.In addition, they receive roughly two hours of their labor rate for dealer prep. They also receive floor-plan assistance which changes quarterly but usually covers 90 days of floor-plan expense.
There are continuous incentives offered by the manufacturer. These can either be directly to the consumer and must be paid to them or they can be to the dealer to use at their discretion. Basically they are marketing funds to make the vehicle more competitive and generally more for the slower moving models and less for the rapid movers. These usually change monthly and can be various amounts changing often.
As well, there can be various contests held throughout the year for the dealers and can be cash, trips, or other incentives. They can involve quotas, competitive groups, sales performance, CSI, or any other variety of criteria dreamed up.
At the end of the day, it is a complicated process and not designed for the consumer to have full knowledge of. It is none of the consumers business and the only industry I know of that has books printed disclosing any portion of the merchant's cost. Dealer's are in the business to make as much profit as possible on every sale and the consumer has the option to shop at as many dealerships as they want to get the lowest price.
