Dealer Invoice

[FLUXEMAG]

Does anyone here work at a car dealership at a mgmt level?

I have a suspicion that the invoice has little or nothing to do with how much the dealer is making. It's kind of like the new sticker price. You see the sticker, they offer you a price well below if you deal.

With an invoice, people somehow feel more comfortable with what kind of deal their getting. Like ha- the dealer only made 500 on me. What if the manufacturer gives them a rebate, or a commission. Then the true invoice cost of the car is much lower than the pronted invoice they show you. Either way, I seriously doubt the dealer would show you his invoice price if it were the true cost.

Not to mention the finance department cherade of gap insurance, lojack and all the crap they try to sucker you into. What a game.

[MikeATL]

I work for the company that does all the wholesale software for Toyota, Nissan, Mitsubishi, BMW, etc....

Anyway, I don't know of any dealers that just buy cars in full from a distributer. That would mean dealers shelling out hundreds of thousands of dollars every time they get a new load of cars.

Its called floorplanning, and every new car a dealer gets is basically a loan. Depending on the bank or captive that creates the loan, the dealer has a certain amount of time to pay the loan off. The dealer wants to sell the car as soon as possible because like any loan, there is interest.

The amount a dealer makes on any one car varies from car to car depending on rebates and incentives as well as how long the car has been on the lot. Someone who actually works at a dealer might be able to tell you about how much they make under or above the invoice, but in reality, there are a lot of factors that figure into the dealers bottom line.

[stockae92]

that's exactly what i heard

[linmk2]

I guess you could say this is from "the horse's mouth". I worked in dealerships as a Comptroller (head of the accounting department, so I saw and paid every invoice), including Toyota, for almost 25 years. Here's the story. To a point the invoice is indeed what the dealer pays for the car. But. You knew there had to be a but! All American car companies and some non-USA give the dealer back money that is known as "holdback" that amounts to about 3% of the invoice cost. The money is paid back to the dealer in most cases every three months, however the dealer can delay the payments longer if they wish. A mention was made of floorplanning. When a car is sold, the dealer must pay off the factory invoice to the flooring source. The dealer pays the invoice cost. But when you factor in the "holdback" the dealer gets some of his money back. In other words a car that costs the dealer $30000, and he sells it for $32000, the dealer has to pay off $30000 to the floor source. At first blush it appears that the dealer made $2000 profit. Nada. When you plug in the "holdback" which on a car in that price range is about $800, then the dealer made $2800! There's more! Car companies sometimes give dealer incentives on cars that are not moving. The is not a rebate. The customer will never know if a car has an incentive on it. The dealer uses this incentive money to lower the cost of the car. Using the example above, lets say the factory gave the dealer $300. The profit is now $3100! Also, factories sometimes give incentive money for dealers if they order a certain number of poor selling models, or if the dealer's CSI is high. There's more. This applies to American cars. Note that I have not worked in a dealership since 1995, so somethings may have changed, but I don't think that to be the case. At the end of a model year the dealer gets more money called "carryover allowance" on each old car in stock. Thus reducing the cost more. Again using the example above, let's say this car is an old model, still new but old, the carry over might be another $300. Dealer profit $3400. Cost can go the other way too. Sometimes a dealer will have to contribute to a factory rebate. The factory may advertise a rebate of $1000. The dealer may have to kick in as much as half. This causes the car's cost to rise. I could go on and on. What have we learned? Is the invoice what the dealer really paid for the car? Yes/No. If you are shown an invoice, you are looking at something that could be a lot more that what the car really cost the dealer. But at least you have a guide. If you guys have any more questions, about dealerships and how they run, I would be happy to answer any questions.

[stockae92]

thanks for the info

[onefiend]

Also companies like Enterprise who purchases vehicles in huge fleet sizes, gets their cars for way below dealer invoice. I just recently found out that Enterprise buys Nissan Maxima's new for $21,000. And after two years Enterprise sells the car for below KBB value and still makes a decent profit from the resale.

[MCOjerry]

I guess you could say this is from "the horse's mouth". I worked in dealerships as a Comptroller (head of the accounting department, so I saw and paid every invoice), including Toyota, for almost 25 years. Here's the story. To a point the invoice is indeed what the dealer pays for the car. But. You knew there had to be a but! All American car companies and some non-USA give the dealer back money that is known as "holdback" that amounts to about 3% of the invoice cost. The money is paid back to the dealer in most cases every three months, however the dealer can delay the payments longer if they wish. A mention was made of floorplanning. When a car is sold, the dealer must pay off the factory invoice to the flooring source. The dealer pays the invoice cost. But when you factor in the "holdback" the dealer gets some of his money back. In other words a car that costs the dealer $30000, and he sells it for $32000, the dealer has to pay off $30000 to the floor source. At first blush it appears that the dealer made $2000 profit. Nada. When you plug in the "holdback" which on a car in that price range is about $800, then the dealer made $2800! There's more! Car companies sometimes give dealer incentives on cars that are not moving. The is not a rebate. The customer will never know if a car has an incentive on it. The dealer uses this incentive money to lower the cost of the car. Using the example above, lets say the factory gave the dealer $300. The profit is now $3100! Also, factories sometimes give incentive money for dealers if they order a certain number of poor selling models, or if the dealer's CSI is high. There's more. This applies to American cars. Note that I have not worked in a dealership since 1995, so somethings may have changed, but I don't think that to be the case. At the end of a model year the dealer gets more money called "carryover allowance" on each old car in stock. Thus reducing the cost more. Again using the example above, let's say this car is an old model, still new but old, the carry over might be another $300. Dealer profit $3400. Cost can go the other way too. Sometimes a dealer will have to contribute to a factory rebate. The factory may advertise a rebate of $1000. The dealer may have to kick in as much as half. This causes the car's cost to rise. I could go on and on. What have we learned? Is the invoice what the dealer really paid for the car? Yes/No. If you are shown an invoice, you are looking at something that could be a lot more that what the car really cost the dealer. But at least you have a guide. If you guys have any more questions, about dealerships and how they run, I would be happy to answer any questions.

The only thing I'd like to know is why the dealerships cant be honest with people. Has anyone ever encountered a dealership that was honest, and didn't try to screw them?

I want to know how they live with themselves...oh, that's right, they have ALL of our money!

[linmk2]

I can only say that a business must make a profit. All businesses have to make money to survive. Anything you buy, be it a quart of milk or a diamond ring, the retailer must make money. Frankly, the mark up on diamonds are close to 300% at the "finer" stores. As I said, I worked in dealerships for about 25 years and during that time I've seen real scum! Not only the salesman, but management people too. What's sad the best salesman, as far as those making money for the company and for themselves, tend to be the worst that humanity has too offer. Some of the stories I could tell. It is not uncommon for these sleezeballs to make more than $100,000 a year. I know, I did the payroll. What's even worse, the dealers (owners) protect them!! At one time I worked for an Acura dealer. A saleman who sold a great many cars each month stole a new Legend off our lot late one Friday night. He got drunk and ran the car in a ditch. The insurance company "totaled" the car. When I went to the dealer to inform him I was deducting the $3000 insurance deductable from this thief's paycheck, I was the scolded!!!! I was told not to do that, Willie would leave. If I stole the same car from the dealership, I would have been sent to jail. Yes there does seem to be a lot of dishonesty in the car business. I don't really know why that is. Like I said, every business has to make money, but I don't know why salesmen have to lie to make it. It's just the nature of the car business.

[kingkakyle]

well south bay toyota was very no hassle (not with my car i didn't get from there)
my mom got a highlander and they just said this is the "invoice price" and we'l give it to u for a nickel over
yes i know they actually pay less than the "invoice" but it was a good deal for a semi-popular car and no hassle
i think if u go to the internet sales department, they are less likely to be a hassle and just give u a price take it or leave it

[JMSinMaryland]

I used to sell Toyota's myself. To be honest it wasn't the worst place to work, it's like every other business. I also used to be in the credit card business which WAS sleazy. You all complain about car dealerships while paying 12.99% (that's considered low) on your credit cards and maybe making 3% at the bank and you think you're getting a good deal. Be an informed consumer. If you try to negotiate dealer holdback you might as well just walk out the door. The best thing to do is to be an informed consumer. Go to edmunds.com (prices are spot on), kbb.com, carmax.com and consumerreports.com to see what invoice and MSRP prices truly are and what market demands says a fair deal is. Always talk price over payments, trade in , etc. Toyota dealers are a dime a dozen and Im sure most of us here aren't limited to 1. Within a half an hour I have maybe 10-12 Toyota dealers to go to. So nobody is putting a gun to my head. If I'm not comfortable I walk. There are plenty of sleazy customers out there who will waste hours of your time while you help them land on a car that fits there needs, then goes to another dealership to save $20. As a salesman the worst groups to deal with were the Indians and Chinese. They always came in as a family and tried to group harass you so you'd give them the lowest price just to finish up as quickly as possible. If someone came to your work and asked you to work for work for free would you? Buy a Saturn if you can't negotiate. Jon.

[silversurfer220]

Also companies like Enterprise who purchases vehicles in huge fleet sizes, gets their cars for way below dealer invoice. I just recently found out that Enterprise buys Nissan Maxima's new for $21,000. And after two years Enterprise sells the car for below KBB value and still makes a decent profit from the resale.

Take into consideration though that Enterprise buys BASE model cars (for the most part) that have no extra options. Sometimes the dealerships decide that they are going to buy them back from us after a predetermined period of time or miles. I guess that if I was an auto manufacturer, I'd give companies like Enterprise a discount if they ordered 10,000 of the same vehicles in 1 year. After we (I work for Enterprise) rent them out for awhile, we sell them- not always do we make a decent profit on them. Sometimes we barely break even on them. Not every penny of the rental rates go to the purchase price of the car- it goes to pay salaries, rent and mortgages on buildings, fuel, maintence, blah blah blah. Lots of times, cars that are sold because they are near major mileage marks lose money, but we get rid of them because we have new cars on their way to our offices. For whatever it is worth, the auto manufacturers are not going to be giving us such good deals on cars when we buy in huge quantity anymore- thats why vehicles do not hold their resale value- we get them cheap and sell them cheap. We've been told that from EVERY manufacturer. Some wont let us buy direct from the manufacturer- they have to come direct from the dealership at sticker price. Not quite as awesome of a deal as some might think...

[linmk2]

I bought my 06 from a salesman who I worked with "in the day". I told him what I wanted and what I could pay. I was dead on as far as the invoice was concerned. He showed me the invoice, which I know was a real one. There was no hassle I got the car I wanted at a note I could afford. I still know people I've worked with in the past, and the cars I've bought after I left the car business were purchased without any hassle. It's all in who you know.

[silversurfer220]

When I bought my 04 SLEV6, I was shown the invoice and sold the vehicle at that price, then I added other options to it, so it raised it up a little bit. When I bought my 03 Grand Am, my salesman told me how much the invoice was on it and sold it for about 800 less than that, so I think I did pretty well with that one too. I have though, bought quite a few vehicles from each of these dealerships, so they know if they treat me well, I'll continue to return to them.