Car Price Research Starts With Finding the Car Dealer Invoice.
The
dealer invoice is the
car price that the manufacturer charges the dealer for the car. The
Manufacturer's Suggested Retail Price (MSRP) is the
new car price that the manufacturer suggests that
the car dealers charge you. The difference between the MSRP and the dealer invoice represents
the dealer's profit...or does it?
Car Prices and Car Dealer Invoices Fluctuate with Added Options
The
car invoice price and the MSRP not only apply to the car, but they also apply to any options you add to
your new car order. The more options you add when you purchase your car, the more ways the dealer can jack up the
car price and profit
from you.
Finding Car Invoice Prices Online
Visit the following websites to view the dealer invoice and the MSRP without entering any
personal contact information:
Car Prices Don't End with MSRP and Car Dealer Invoices
Make a note of the
dealer invoice price (may be listed simply as invoice) and the MSRP.
You would naturally assume that the difference between the
dealer invoice price and the MSRP is
the dealer's profit. But WAIT, it's not! In real life, you'll find that the
car price for the dealer is usually far below the
dealer invoice price and you,
the customer, pay quite a bit more than the MSRP and that's called the
car's sticker price. How does
this happen, you ask?
Dealer Invoice Prices Don't Include Extra Incentives
For example, the dealer may receive a dealer incentive. This
is a discount on the
car price the dealer pays and is extended to the car dealer for purchasing a specific make and
model at a specific time. This savings may or may not be passed along to the customer
(hint: probably not). There is another term you may not know: Dealer Holdback.
The manufacturer will usually offer a small percentage (2-3%) of the
car
invoice price or the MSRP to the dealer. The dealer
receives the dealer holdback when the
new car price is paid by the
consumer. That's $400-600 on a $20,000 car in built-in, invisible profit. The
car dealer
invoice price less the dealer incentive and the dealer
holdback is the car dealer's true cost.
What Your New Car Price Includes
Consider the MSRP the base
car price. Add to this any dealer prep charges.
You'll probably find that the
new car price probably includes a destination charge and something called a market adjustment. The
destination charge is added by the manufacturer and it's a fixed cost regardless of the
distance between the factory and the dealer. The market adjustment is
something that the auto dealers add to your
new car price...just because they can. When
a
new car is selling well, they'll add to their profits by adding a market
adjustment to the
car's sticker price. Think of this as a demand premium.
Car Prices Increase with Added Options
This is where the car dealers see the greatest percentage of profit. For example,
they may try to sell you an extended warranty at an inflated
car price when you
can simply visit
WarrantyDirect.com and find the same extended warranty for less.
Another popular add-on to
new car prices that nets a high percentage to the car dealers is VIN etching.
They will charge you several hundred dollars for something that you can do yourself for
less than the cost of a dinner. Visit
VinEtcher.com for a do-it-yourself VIN etching
system.
Negotiate Your Car Price BELOW the Car Invoice Price!
If you're the least bit flexible, you'll be able to set your
new car price
for much less money by incorporating the tips in this article.
