Originally Posted by GearheadSS
Freight and advertising are not something that is kept by the dealership. It's not profit.
It basically works like this.
There's a number that the dealer pays GM for the car, which is invoice and then there's MSRP. Now, when the dealer sells the car, they get the holdback from GM. So, if a dealer sells a car below invoice, they're eating into the holdback, which is the profit on the car. Therefore, depending on the vehicle, that would be a good deal.
A ZL1 will have roughly $1600-1800 in holdback. So, if you can buy one for less than invoice, say $200-300 less, then that's a fair deal for the dealer and the customer. It's also less than preferred price. So, that's a win for the customer.
Everyone thinks that a dealer making over $1000 on a car deal is too much. It's not. Imagine how much it costs to keep a dealership running.
That I understand. It's just that Invoice is actually confusing. Invoice is the goal, but there is Invoice that doesn't include freight and advertising and Invoice that does and the difference between those two numbers is significant. I am just trying to figure out the real invoice.
As for as not making a lot of money that is true of GM dealers. The difference between MSRP and Invoice is a very narrow margin. Ford allows its dealers to make more money.
It's kind of surprising how much more expensive a camaro is compared to a mustang considering the small margin the dealership gets.