Quote:
Originally Posted by Egon
I didn’t go into great detail on that as you can see the post was already rather long as it was. (this one might be longer sorry) :( Here is how I see it, the invoice is the actual cost of the vehicle that I would be attempting to purchase with no additional charges or fees. In other words, the base cost of the vehicle plus any options I selected. For instance using 2013 model data lets calculate the cost of a 2SS, RS, with Navigation, and Dual Mode Exhaust using invoice prices for all options. (pricing info taken from www.kbb.com, www.truecar.com, etc.)
2SS base vehicle: $34,690
RS Appearance package: 1,188
Mylink with Nav: 699
Dual Mode Exhaust: 788
Total invoice cost with options: $34,690 + 1,188 + 699 + 788 = $37,365
The holdback for Chevrolet cars is 3% or $37,365 x 0.03 = $1,202
This means the actual cost of the vehicle to the dealer is $36,162.
That is without taking into account any factory to dealer incentives or bonuses for hitting specific sales targets which can drastically decrease the actual cost of the vehicle to the dealer.
A fair profit is then added to the actual dealer cost, usually calculated to be between 3-5%. Let’s use 4% for the example.
$36,162 x 1.04= $37,608
That is the price you are going to shoot for in negotiating with the dealer. It’s just $300 over invoice price and $1,567 off of the MSRP. (MSRP doesn’t include the destination charge in my example for reasons I am about to explain) The dealer will still be making $1,446 off of this sale and that doesn’t include the before mentioned incentives or bonuses they can earn. Remember the dealer will be making money off of nearly every part of the transaction as I described in my previous post, so the profit from the sale of the new vehicle is just a part of that.
Other fees like the Destination charge which is something charged by Chevrolet, not the dealer is a legitimate charge but is added after. It’s not part of the car, but it is part of the Out The Door cost. (at least the way I see it) Advertising fees would also be added after the fact, same with dealer prep charges or anything else they add that is not directly a cost of the vehicle itself. (rust proofing, vin etching, extended warranty, etc.) Dealer installed options such as stripe packages or different wheels would be considered as part of the Invoice and would be added to the cost just like factory options for example the RS appearance package.
After the price of the vehicle is negotiated then if you agree to any of the additional fees you can add them on. I have made clear my view on the advertising fees, but others will disagree and that’s fine. Lastly you would then subtract any rebates or discounts that you qualify for and subtract the value of your trade in if you have one. Sometimes dealers will try to trick you by including incentives in the price when negotiating down from MSRP, and you think you got $2000 off of the sticker price when in reality it was only $500 because of the $1,500 worth of rebates they already factored in. This is why you always start at or just under the invoice price and work up if necessary and keep everything separate so that you are dealing apples to apples.
Dealers and salespeople have sold dozens if not hundreds of cars and are experts at it. Buyers usually only purchase 1 car every couple of years and are at a disadvantage especially if they don’t do their homework ahead of time. Some people don’t want to go through all of this hassle though and I understand that. Sometimes it’s just easier to use the Costco buying program or whatever the equivalent is that you have access to. But even with that they can still try to tack on those extra fees and expensive extras if you’re not careful.
And on that note I am going to go have some BBQ Happy 4th everyone! |
Thanks for the detailed explanation Egon (I'll take your long post and raise you mine)!
Unfortunately, I'm still confused on whether the Destination charges and Advertising charges are negotiable or not. Some have said they are and some have said they aren't.
For my example, the following are the numbers I was given when I ordered a 2013 2SS/RS 1LE in May (it's supposed to get here today, so I haven't seen the actual invoice yet):
Invoice (base price + total options) = 41,373.21
Advert/Adjustments = 874.60
Destination charge = 900.00
Grand Total = 43,147.81
Option 1)
The following is what I was hoping I could negotiate the price at before I read your previous reply:
43,147.81 (Grand Total from above)
- 874.60 (Minus Advert/Adjustments; is this negotiable or not?)
- 900.00 (Minus Destination charge; is this refunded to dealer?)
----------
41,373.21 (Negotiating Price1)
Option 2)
The following is the price to shoot for in negotiating using your example:
41,373.21 (Invoice; including total options)
-1,241.20 (Minus Holdback; 3% of Invoice)
----------
40,132.01 (Dealer cost?)
+1,605.28 (Plus fair profit; 4% of Dealer cost)
----------
41,737.29 (Negotiating Price2)
As you can see, the Negotiating Price in both options is pretty close to each other (a difference of 364.08), but neither includes the Destination Charge and Advert/Adjustments; so are either a good negotiating price? If so, I'd obviously prefer the lower one but I'm not sure what the best approach to negotiate that price is. My dealer is claiming that "their invoice is their invoice; it's from GM so it doesn't change" and that neither the Destination Charge or the Advert/Adjustments are negotiable, which means they don't want to budge from the original Grand Total of 43,147.81.
Additionally, when I placed my order back in May, a $1000 Rebate was the current offer. However, now there is a $1500 Cash Allowance as the current offer (I haven't read the details on it). Therefore, I don't know which one can/should apply to my order?
The good thing is that I didn't leave any sort of deposit when I placed the order. The bad thing is that I have a short temper and will find it hard to not get mad and get up and leave (and lose this deal) once I feel they are trying to screw me over and don't want to negotiate on the price. I just want to arm myself with the right tools/knowledge to be able to strike a good deal on this car, but I don't know how to reply to their claim that neither the Destination charge or Advert/Adjustments are negotiable.
And on that note, I hope you had a great 4th of July!