Invoice, how much less?

[v6]

I know invoice is the amount the dealer pays for a car... but i was curious... how much less do they pay than what is posted as the MSRP? Online i saw it shows the invoice like a thousand below the MSRP.. This seems false... I kind of want to get an idea before i go to the dealership to get my car, or to even talk getting a car. So i can come up with enough money and know what i will be paying and such.

[dutchnrican]

invoice is NOT what the dealer pays for the car. take a look:

[v6]

err, then what is it?

[dutchnrican]

says it right there in the pic I posted. That sheet lists MSRP, invoice price, dealer price, and GM preferred price for the 2012 camaros.

[v6]

no, i mean what is your definition of invoice

[REDXIIIDave]

Invoice means nothing to the customer. Buying under invoice still means the dealer is making a profit (usually, depending on HOW MUCH under invoice). I bought my car for well under "invoice", and the dealer still made a good profit.

[Mr_Draco]

Originally Posted by dutchnrican

invoice is NOT what the dealer pays for the car. take a look:

To go more into depth and actually explain it;

When a dealer first buys a car the dealer pays GM the invoice pricing. After they sell the car, the dealer then gets a kickback from GM for selling the car. This ultimately lowers the dealers actual cost. Now kickback varies from car to car and from trim to trim. As you can see the kickback on a LS is about $700 while on a 2ss Vert is $1,200. I've seen kickback on suv's as high as $3-4,000.

Also another trick to get below invoice is to finance with the dealer. Dealers get kickbacks from banks and if you finance though them they are more willingly to take a small loss on profit now to gain more later.

[PatsRS]

I have heard various stories about what you should pay, what the dealer pays, etc.. At the end of the day the only thing that matters is that you are happy with the car for the price you paid. As long as its a payment you are happy with and can afford that is all the car is really worth.
Trying to figure out how much the dealer pays or what they make is not the way to buy a car IMHO. Because there are so many factors that go into it. My only advice is NEVER pay sticker and get the best financing rate you can.

[Faulkner]

The dealer pays invoice for the car. The dealer price is what a gm employee pays for the car. It used to called GMS pricing. The GM prefered price is what gm suppliers pay for a car. It used to be called suppler pricing.

[Solocus]

Does Dealer Cost take into account the "hold back"? And how does the Regional Advertising Fee (RAF) play into invoice?

Invoice is as stated above, but what is included or not included in that number. When you buy you need to add Destination charges (DFC) and RAF to invoice. DFC is usually non negotiable but RAF can be even though it is a legit charge in many cases.

What really blows my mind is that no one has a handle on pricing and dealer profit. Someone has to know for sure how this works.

[GB EB]

ordered my 2011 2ss/rs and got it for $2,500 under msrp.

[clg_98ta]

Originally Posted by Mr_Draco

To go more into depth and actually explain it;

When a dealer first buys a car the dealer pays GM the invoice pricing. After they sell the car, the dealer then gets a kickback from GM for selling the car. This ultimately lowers the dealers actual cost. Now kickback varies from car to car and from trim to trim. As you can see the kickback on a LS is about $700 while on a 2ss Vert is $1,200. I've seen kickback on suv's as high as $3-4,000.

Also another trick to get below invoice is to finance with the dealer. Dealers get kickbacks from banks and if you finance though them they are more willingly to take a small loss on profit now to gain more later.

edmunds.com is your friend... Their invoice pricing is closer to the actual dealer cost because they do not include the advertising fee that appears on the sheet the dealer shows you. They omit it because it varies regionally, plus the dealer is reimbursed by GM anyway.

[MiracleAces]

Far too much misinformation on this subject. Everyone thinks they know what dealers pay and how they get paid. I have no problems with someone knowing the invoice, but there is so much misinformation it actually hurts the customer. I have seen customers walk away from amazing deals because they dont understand how the invoice is structured. Then they are too proud or embarrassed to come back and we actually see them pay more down the street (yes, dealerships get to see what other dealerships sold and for how much). I will do my best to explain how the invoice works.

The invoice IS what we pay for the car. However, an invoice wont be the same amount for each dealer even for the exact same car. The bigger dealerships do pay for an advertising fee which on a Camaro can be as high as $700. There are other fees, but those are generally the same for each dealership. Edmunds.com does not know these fees. Now, as I said we do pay invoice plus the fees for these cars. The profit is already pretty small before any discounts. So GM (same with Ford and ChryslerDodge Jeep) pays the dealership 3% (holdback) of the invoice no matter what the car is sold for. Also, there are quarterly goals a dealership can reach that pays them a bonus from GM.

On a side note, we all know that a dealership can trade with another dealership if they have a car they want to sell. The dealership who has the car gets to keep the 3% holdback. So if dealership A needs dealership Bs Camaro. Dealership A will not receive any of the holdback.

[Miraclewhip]

Close Miracle, but not quite.

- MSRP is what a dealer asks (except for some who still think it is an acceptable practice to mark up prices above that price. This is done with an addendum sticker which is near, but not legally touching the msrp sticker)

- Invoice is what a dealers open flooring account is charged for a car. This number WILL vary depending on whether or not a dealer is part of his or her local advertising group. For example when you hear a radio ad that states "go see your southern california chevy dealer" those advertisements are paid for by the "so cal dealer group" that group addends an invoice on the car between 1.5 and 3%. That group is NOT all bad, as it will pay for special incentives for your area as well. If the group agrees to take X amount of malibus from the manufacturer, GM will agree to run a "so cal special lease" with 0 drive off, and pay each clients drive off ( this is better for the customer, as that customer is saving more than his invoice is raised as not all customers will lease etc etc.)

So while MOST dealers adhere to their local ad groups, some dealers choose not to be part of their ad groups. They do not pay into the advertising, and incentives of the group and so their invoice is lower.

That dealer loses other benefits as well (more GM accomodations type things, hey our customers car blew up at 36,500 miles can we fix it anyways, accomodations like that are relative to a dealers standing with its manufacturer. think, your survey, their profitability, the ad group standing, overall sales, and past history with the dealer) but ultimately his base invoice cost for the car is lower.

- Holdback, credits refunded to the dealer upon his monthly statement of his open flooring account. This amount is the total of all holdbacks the dealer sold cars to earn. This amount is also a % of invoice, and IS the same at every dealer.

A few years ago this was considered sacred money, YES this money is profit, but were ANY of you aware that a dealerships flooring account is charged RENT PER CAR. So while you may get....700 to 1200 bucks back on a flooring account, you may pay a couple hundered dollars a month per unit on your lot. So while Tahoes, Suburbans, Avalanches, Trucks, Colorado's, 3 dozen wierd used cars and an assortment of whatever else you have on your lot are sitting for 6 months or a year...you have basically paid all of the holdback on them back to flooring company already, and if you think about what product is cold right now...it is A LOT, and if you choose simply not to order the product, you lose not only accomodations form the factory for not taking the 4 purple avalanches they want you to take....but you lose customers...because you have an empty lot and when a guy wants to see a 4 door stick shift crew cab colorado....you better have one or you are gonna be "PLAYIN GAMES LIKE EVERY OTHER DEALER!!!11" and thats going to cost you sales.

So your holdback is to pay flooring rent. the closer a guy gets to invoice its to pay his salespersons commission, the million bucks a year a dealer pays to keep his employees with benefits, his million bucks a year he pays into the pension plan for his shop employees, and to ensure the dealer can keep the lights on, his facility painted, his car insurance (which at a dealership is insane dollars as well) The closer you pay to invoice it is also to pay to keep cars clean, pay the frontloaded nearly 180,000 dollars it took to certify his dealership to be able to even carry the chevy volt so you can stay competitive, oh and now its to completely remodel your facility as required by GM if you want to still be getting cars in 3 years.


- Conclusion, 2 years ago 500 over invoice was what you did for new clients, 250 over was repeat, 100 was for your family, and now id say that dipping into the holdback a hundered or two is for the family, friends, internet shoppers who are going to give you a bad survey and cost your dealership more than your making anyways......and somewhere between 400 over and 100 under is MORE than fair.