Originally Posted by toehead93
I have an offer for a 2014 2SS 1LE for Invoice minus holdback plus a $699 dealer fee which sounds good but they consider Invoice to include the destination charge ($900), Dealer IMR and LMA Group Contributions ($219+$439). In comparison to what I asked for; $1,000 under Invoice minus the contributions and only adding the destination change the cost difference I estimate to be about $300-$340 based on 2013 pricing. After the dealer fee is added in I'm back at Invoice again.
The IMR and LMA group contributions are fees the dealer pays into to a regional advertising pool from the MFG. It is a legitimate cost of their doing business. However by joining that pool the dealer is getting back far more than they are spending on advertising otherwise they wouldn’t do it. It is completely voluntary by the dealer, Chevrolet or GM does not force anyone to take part in this. (as opposed to the $900 destination charge which is not voluntary and is part of the price of your vehicle)
Besides by paying these advertising fees and joining the pool the dealer is allowed to take part in Manufacturer incentives and bonuses back to the dealer. For instance there may be special advertising for a 4th of July sale where Chevrolet may enable special pricing or incentives to consumers and a nice hefty bonus to the dealer if they sell enough cars during that time window, and it is only available to dealers that join this advertising pool. This is the reason why sometimes a dealer will sell a car below cost and still make money off the sale. The car they sell you could qualify them for a $25,000 quarterly bonus because it was the 20th Camaro they sold that month.
The fact is that since the invoice price has become so easily obtained with the explosion of the internet dealers and manufactures have year after year been hiding more and more of their profits off of the invoice into other incentive plans and kickbacks from the manufacturer. The only person at the dealership that really knows how much a car costs is probably the sales manager. Dealerships also have so many different ways of making money that new car sales are only a small part of it. They make money off of your trade in, they sell you expensive extras like under-coatings, glass etching, scotch-guard and extended warranties. They make money in the finance department, and they also make money from warranty work on your car over the next several years. All of that adds up to thousands of dollars in profits.
I don’t feel the least bit guilty on getting every dime I possibly can on a deal and neither should you. In your case it sounds like the dealer is trying to confuse or muddy the waters with these extra fees by including them in the invoice price. The $699 sounds like it is supposed to be dealer profit on the sale, since negotiation should start from: Invoice – Holdback + Fair Dealer Profit = your negotiated price target. If you would like I would be happy to do some maths to see if we can figure out what they are doing but this response is already too long as it is. Let me know and I would be happy to bust out the calculator for you so we can determine what kind of deal this is.