Quote:
HOLDBACK
While you are welcome to discuss holdback, I will not be doing so. I believe businesses do not have to share their costs with their consumers. We don't ask Taco Bell to sell us their tacos at cost, and we don't ask contractors to work for free, so I don't know why so many people expect car dealers to sell vehicles at a loss. If a dealer promises you a deal below invoice, you have gotten a great deal at the dealer's expense. If you get a deal below holdback, with all likelihood either something is wrong with the car or something is wrong with the dealer. Asking for holdback is not a good way to be taken seriously when negotiating for a deal, and it certainly won't be shown to you during the sales process. In my opinion, invoice is a fair deal. Holdback is robbing the car lot. MSRP is robbing the customer. I'd rather not see anyone on Camaro5 get robbed.
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Great post. Some further details on Holdback ...
The holdback is necessary to calculate the actual cost and should be the starting place to calculate the profit you want to give; just don't discuss it aloud as you've said.
Many manufacturers (not all) offer dealers a percentage of (not off) MSRP in the form of what's called a Holdback used to cover the financing of the vehicles. Dealers must pay for the vehicles in advance with loans from the manufacturer or a bank. Chevy offers a holdback; last I checked it's 3% of MSRP. If the car's just arrived, the dealer gets to keep all of the holdback as instant profit. At 45 days he gets to keep 50% of it. Since most dealers rotate their inventory in less than 90 days, they usually get to keep some of the holdback payment.
So, if you're special ordering a Camaro, you and the dealer can strike a win:win negotiation by offering a fair and reasonable profit above the real cost ... Invoice (minus) holdback where holdback is calculated at 3% of the total MSRP of all the options you've ordered. The key here is to make an offer that provides the dealer with a fair and reasonable profit.
You'll see many people on this forum say they got $1,000 off Invoice. Is that "good"? Calculate the total invoice less the $1,000 discount then add back the holdback and decide for yourself. It depends.
NOTE: there are factors other than Holdbacks and Invoice that matter too like local market data (how popular a certain car is or isn't), how long cars are sitting on the lot (look at the sticker on the drivers door, take today's date minus the mfg date on the stick plus on month and that's how long it's been sitting there), cash incentives, rebates that affect the total price of what you should pay for a car.