How to Read a General Motors Invoice (2012 Camaro)
 

Where there are cars, there is a lot of money being spent and being made. I want to help even the playing field a little bit. I have obtained the invoice to a 2012 Chevrolet Camaro SS, and I will use this invoice to demonstrate why cars cost so much, how much money can be made off of this car, and where that money goes in the sales process. I have concealed a lot of information about this particular car to protect the parties involved. As far as Camaro5 will know, this is just another black Camaro 2SS. We have a lot of those around here. :D

MODEL IDENTIFICATION
Let's start from the top. At the top, make sure you have the right model year. The very first thing in the top-left corner is the model year of the car. Here, it reads "2012 CAMARO 2SS COUPE." If you have asked your dealer for a 2012 and your dealer has shown you a 2011 model, you may be entitled to discounts.

In order to make sure you are negotiating the car you were promised, the invoice can help you keep the dealer accountable. It includes a lot of information about the car:

• Line 1: model year, model, trim, type
• Line 2: exterior color
• Line 3: interior color
• Line 4: order number and stock number (unique to your dealer's inventory)
• Line 5: vehicle identification number (VIN) and vehicle invoice number
• Lines 7-10: various dates regarding production and transit (right side)
• Line 15: dealer number
• Bottom-Left Corner: dealer currently in possession of vehicle
• Bottom-Right Corner: dealer number

I have blocked out this information in an effort to keep all parties confidential. I then bought a new computer and called an air strike on the computer with the original invoice so that no one will ever know wherefrom it originated.

OPTIONS
Following the left side of the paper, there are various 3-digit alphanumeric codes. These are called RPO codes. GM and other manufacturers use codes like these to build cars. On this one, we can see that GBA means that the exterior of the car is black and that AFM means that the interior is black. Additional RPO codes are on the left below the line of asterisks.

PRICING
Further down below the asterisks, there are more RPO codes, what they mean, and how much they cost. These are the options on this particular car. Each option has two prices. The first is the retail value of that option. The second is the invoice value of that option. This list starts with the price of the car. In this case, the difference between the retail and invoice prices at the top of the list is $1,418. As you add options, the difference between MSRP and invoice grows. If you follow these columns past the gap in the middle of the page, there is a section that breaks down the total prices for the car with options. The difference now is $1,625.60. With those options, the dealer has the opportunity to make another $200 in gross profit in the sale if you calculate gross profit based on invoice pricing. At a 25% commission, those options give the salesperson another $50 before taxes.

Let's talk about the various prices on the page. On the right side of line 19 is the line labeled "PREFER." This is the GM Preferred Pricing. You may also know this as supplier pricing. Certain companies and individuals are entitled to this price. If this price is higher than invoice, then you should ignore this price and talk to your dealer about invoice pricing instead. MSRP and invoice prices for a car of this quality with no options is listed at line 5. Follow those columns to the bottom of the gap in the middle of the page. 3 lines above the asterisks is the total price of the car. The one on the left is MSRP plus destination. All you have to add is the stuff you want to add in accessories plus taxes, title, and license (TTL). The one on the right is invoice. Once again, all you have to add is accessories and TTL. If you get an invoice deal, this is usually a fair deal.

I want to point out the lines between "TOTAL MODEL & OPTIONS" and "TOTAL." In the invoice column, there are a couple of lines. These are regional contributions the dealer is required to make. For example, all Chevrolet dealers in Chicago contribute to any Chicago media campaigns for the entire community. These costs increase the price of invoice. You cannot negotiate these away because your dealer has to pay them. If you live in an area with these charges, be aware that there is no profit in them.

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. :)

VALUE AT PURCHASE
People are under the impression that cars lose value when you drive off the lot. This is only the case when you get a bad deal. Buying a vehicle at invoice is buying a vehicle at the value that the car is insured by the finance company or manufacturer. Take a look at the bottom-right corner of this document. If this vehicle is destroyed, this is the value of the car. Notice that the invoice price is what is written there. When your car is signed in your name, your new car becomes a used car, and its value is only what you can insure. Invoice is your magic number when you drive the car home. After that, the value of your car depends on how hot they sell, how many miles you put on it, what condition you keep it, and wholesale guides that dealers uses, like NADA and Black Book.

APPLICATION
Invoice pricing applies in the US and Canada. Costs that change include TTL, advertising fees (the lines above the invoice total), and destination.

NEGOTIATION EXAMPLE
Before I begin this section, I want to point out Camaro5 dealers tend to be pretty good people. People that are allowed to sell cars on Camaro5 do a lot of business here, and they have reputations to uphold. Those that don't sell cars here don't have reputations to protect and future business to earn. When you choose to do business with a dealer or any company, try to consider whether the person earning your commission is a good person who deserves your hard-earned money.

Follow this dialogue, and I guarantee that you'll get a better deal than many buyers. Remember to be as polite and respectful as possible. Your local dealer may not be used to this sort of request.

The salesperson comes to the desk with the pricing. With a pen, he points at a sheet divided into 4 corners (a 4-square). "This is the new car. This is your trade. This is your down payment. This is your monthly payment. Just sign here."

Politely, you ask, "Can you please show me an invoice with these prices?"

Confused, the salesperson responds, "We don't show internal invoices to our customers." After this, he says something about how the cost is irrelevant to the value and that you're buying a great value at this price.

You have to keep being polite here. "I know it isn't normal for you to share invoices, but I have been promised invoice pricing elsewhere and know that I can get it. I want to see the invoice on this car so that I can get the best deal. If I don't see an invoice, how will I know that I've gotten the best deal?"

Determined, the salesperson will try to deflect using the 4-square. A good salesperson will have asked you earlier what payment you are trying to reach. Now, the salesperson will talk to you about how close the payment is to your goals. He will ask you to sign again. "If I can get your payment to [insert number here], will you buy the car?" They write the number in the square with the monthly payment.

Ignore the distraction. You respond, "That depends on whether I see an invoice. If that is how the math works out for invoice, then we might have a deal."

The salesperson will leave, talk to a manager, and will either come back with an invoice or come back with a manager. Say the same things to the manager. Do not get angry and do not leave. Stay in your seat, relaxed, until you see an invoice. You've already spent a long time talking to the salesperson, driving the car, and asking questions that the salesperson probably couldn't answer. Make it all worthwhile. Wait for an invoice. A lot of people miss a good deal because they didn't negotiate like a professional. It doesn't matter how many cars you've bought in your lifetime. These salespeople sell more than you will ever buy. They are better at it than you, and you need to stay focused on the price of the car. Eventually, they will give you what you want so long as you are reasonable.

HOW THE SALESPERSON GETS PAID
The salesperson probably makes 25% above invoice or what is called a mini deal depending on how the math works out. On top of this, a salesperson can make bonuses, but those depend on total cars sold at the end of the month, high gross awards, manufacturer awards, and additional products and services the dealer sells you.

If you buy a car at invoice, your salesperson makes a mini deal. This varies from dealer to dealer. If someone sells a car, they will always make at least this amount. I know a salesperson who used to work somewhere that paid $50 mini deals and someone else who sold cars with $200 mini deals. A decent salesperson sells at least 10 cars per month. If your salesperson falls in this category, that $50 is 3 days of work. In other words, a $50 mini deal is like making $17 per day. New cars are not where the money is. Allow me to demonstrate.

Let's say your dealer guaranteed MSRP. On the invoice attached to this post, MSRP is $38,080 and invoice is $36,826. Subtract the invoice from the MSRP and divide by 4. That is your salesperson's commission, $313.45. The dealership, after paying the salesperson, made $940.35 in profit. Keep in mind that invoice has some built-in revenue to cover dealership advertising, non-commissioned payroll, bills, and other costs of running a business. There is some profit in there, too, but it isn't a whole lot. If you bought this Camaro from your dealer at full price, they still made less than $1,000 off of you, which goes to show the money really isn't in new cars. Even if your dealer sold 100 new cars in a month with that profit margin, there is less than $95,000 in gross profit for the whole month in the new car department. That's pretty low considering the value of the merchandise. The days of big markups are long gone—a big win for consumers. Lower markups mean better lease residuals, higher resale values, and better loan terms.

EXPLAINING STUPID CAR DEALS
In business, it is reckless to sell below cost without a reason. Dealers rarely explain why they may be compelled to offer below cost deals.

Keeping a car on the lot costs about 1% of MSRP. If there's a $40,000 car on the lot, it therefore costs $400 to keep it month after month. If this car has been on the lot for over 6 months, this car needs to go. The dealer, in hopes of saving another $400, will offer at a substantial discount. As a buyer, you should ask how long the car has been there. Be careful of any signs of lot rot. There are dates on the right side of the invoice that indicate the age of the car. These are in the black box on the right side under the asterisks. Use these to get some idea of how old your car is.

The next reason that a dealer might woo you into an exemplary deal is to truly earn your business. They will ask the following of you: that you give them a perfect survey and that you use them for service. This applies to first-time customers more than anyone else. Statistically, someone who bought a car somewhere is more likely to use them for service. That's important because the dealer can make up the bad sale in service costs.

Another good reason to give you a deal that costs them money is that they'll earn another sale. That doesn't make sense until you consider GM's internal bonus structure. Basically, dealers can get big chunks of change from GM when they hit certain milestones, and that money can be collected quarterly depending on how the dealer is signed up for these rewards. If a dealer is the number one dealer in sales, GM rewards them. If they exceed GM's sales goals for that dealership, GM rewards them. I'm sure you can see how it is lucrative to sell you a car for way under cost in order to earn huge gobs of green from the manufacturer.

Finally, the last reason to give someone a ridiculous deal is because someone messed up. If someone prints you a buyer's order with a really low price on it, it's probably a mistake. If they promised you invoice, and you find yourself $1,000 under invoice, it's up to you what you want to do. It's like finding $1,000 on the side of the road. Are you going to turn it in or make it rain at the nearest bar?

It is also worthwhile to consider that relative to holdback the dealer receives money monthly or quarterly depending on how the dealer is signed up. If you get a crazy deal, your dealer may be waiting a while to get its money back.

USE IT WISELY
In conclusion, the invoice I have posted is meant to be a tool to keep all the players in the car game honest. The reason you want one of these in front of you is that it makes sure the dealer is using GM's invoice price in the deal. After this, all you need to do is take off any qualifying incentives. Your dealer gets reimbursed for those incentives.

This invoice is also a reminder that your dealer is not making a killing on Camaros. While Camaros are profitable for GM, they are not the reason your dealer is in business. I hope you found my invoice guide both educational and useful in your search for a great deal on your new Camaro.

Does invoice price include destination and advertising fees?

:D this is a phenomenal post btw. thanks for this!

Great information...thanks for this post!

Thanks for your time on this. Great read.

I have bought approximately 30 new gm vehicles and have seen several invoices and I have never understood the bottom. The 2 colums at the bottom right have different figures. Is the holdback $900 or $1115? Thanks

I got a copy of my invoice from my sales rep but it's missing the bottom section starting with "This motor vehicle..." and down. I went in there saying I wanted to pay invoice for the car, and we agreed to do invoice + $100. He gave me the invoice and he said I'm paying the price listed next to "Prefer" which is $28,809. The invoice price appears to be $28,908. However, with your example above, the preferred pricing is significantly higher than the invoice price. Did I get this car for what the dealer promised me?

No, those prices are separate from the actual invoice price. You can find the vehicle invoice price as the left column besides the words "TOTAL MODEL & OPTIONS." The comprehensive invoice, including destination, is the left item beside the word "TOTAL."

I'm glad that this was helpful. I should point out that this post is not designed to make dealers the bad guys. While I'm not a fan of old-school car sales strategy, I am a fan of quality customer service. Camaro5's dealers remain on this site because our members have a good relationship with them, and they continue to participate in this community in a positive way by both following site rules and helping Camaro5 members when they can.

You'd have to see the invoice sheet to be sure. Usually, GM Preferred Pricing is very close to invoice, but it really depends on the equipment on the vehicle. Just because you didn't see this sheet does not mean that you got a bad deal. GM Preferred Pricing is a great deal, and you can see that there isn't a huge amount of room for dealers to make money off of you as long as you beat invoice. I would just make sure that you see an invoice next time to be more confident that you got the deal promised.

Also, you might not have seen the bottom part of the invoice because the dealer located the vehicle elsewhere. Locates are a common practice when the exact vehicle you want is not available, which is almost every time the vehicle is not ordered. It saves time, and it gets lot inventory into the hands of buyers. Locates are more expensive and time-consuming for dealers than selling off the lot or ordering, but it allows your salesperson to get the sale out of the way now. A salesperson would rather sell the car now than wait for something to possibly go wrong with the deal later. Even if you do end up buying the car on paper, there is room for problems with the financing or other issues, so salespeople are much more inclined to try this method than waiting for you to buy later. It also eliminates the risk that you will buy elsewhere.

The bottom of every invoice indicates the dealer holding the car. If the vehicle belongs to another dealer, do you think a dealer is going to tell you who has it? You might just make a trip over there and buy a car. They want you to stay put so that they get the sale on the books.

hi i read this thread and .... well i have a relative that is a car salesman
primarily for (deleated) but his dealer ship had a chevy branch in tampa also

from what he saids they are out to make as much as they can
they take classes on how to hide markup and profit
they are nice people but to keep their jobs they have to "milk" you
and some have gotten to were they joke about how much they got some one for
this is because they mostly do have feelings but have to make a liveing some how
that extra 1tho is house payment for them
they dont like thoes that are internet savy as they dont make much off them
but an internet savy person is more likely to buy a car
they can sell you a car at "" below dealer cost" and still make money
they make money on getting you fianceing
getting you to trade a car
getting you to buy a warrenty
and the give aways are not that much
oil changes at half .. discount on recomanded service
the dealer ship is a means to front the sirvice dept
which is were they make MORE money from GM on the warrety work!!!
unless that dealer is your relative ...you dont know..

There is a big difference between making a living to feed your family, and
making a living based off of greed to feed your family... by taking more than
what is considered an "acceptable" practice or trying to get "rich" off of one vehicle sale. As in my case they kept a $500 dollar deposit for me ordering a ZL1 then canceling my order because they wanted 5k over MSRP.
In my case they should not be in business to sell cars if theyre only intent is to bend people over. Besides, a business cannot stay in business of just keeping deposits....they have to be able to sell cars...
And while I am still feel i am entitled to talk smack about my dealership
as they have no justification for keeping my deposit....
I signed nothing...and got nothing in return for my $500 deposit..
They did not even offer me a reciept or even the courtesy of letting me have $500 worth of accessories from the store. Will I ever get my deposit back?
Ask them Jupiter Chevrolet Garland Texas...
972.271.9900 Ask for Daniel Flat director of finance.
For the person that is active in getting me a refund to my credit card
I will personally paypal anyone $25 to your paypal account.
What happens if I never get the deposit back? No biggie as there are dealerships in this world that actually care that they do not bend one over backwards such as Chevyland In Shreveport La. Kudos to Blake Powell, internet and inventory manager!

Yes, there are some good quality dealerships out there that actually have a conscience when they go home. Dealerships that rape you over the coals and then still want more like Jupiter Chevy of Garland Texas? http://www.jupiterchev.com/
They deserve bad business and to have they're licensed pulled in MHO.
There is NO reason to keep a deposit if a person never signs a single piece of paper, or backs out for any reason at ANY time.
:chevy:
btw.. Thanks for the post!

Really great thread!

Now you've got me concerned. My dealer promised me a certain price, and took a $1,000 deposit, which they cashed already. The car is on the way (I have the order number plus my dealer has sent me screens of the order status), but I'm concerned they're going to flip flop the price when it gets there. And though they said they would give me my money back if I didn't like the price, then what recourse do I have to recover the money ???? I never signed anything....

Excellent information. I am currently trying to negotiate the best price I can for a 2012 2SS with some options. I have been shown what the MSRP on a new a camaro that I was trying to order. I was told that I might be able to get a better price by ordering the vehicle as opposed to trying to find one on a lot. My question is the destination charge that is $900.00 and the Dealer IMR contribution charge and the LMA contribution charges. Are these good areas to either have these charges removed or negotiated down. What is my best route and what can I expect related to what charges I might see after we come a price related to the factory invoice pricing on the car and the options??? I appreciate any expertise that can be provided. I am right at that final negotiating stage.

This is an awesome post. Glad to see that people like you are willing to go above and beyond to help everyone including new buyers like me. Thank you!

So , a good deal is $36800 on this particular vehicle ????....:)

Great Info, THANKS!!!!!!!!! I will def be using this info on my 2013 ZL1....

From looking at the information provided, a good deal would be more like $35,926.2 You should never pay for shipping charges as dealers get reimbursed for it from the manufacturer.

Interesting JacekPSUr1. I have always been told the destination charge was non-negotiable, even when I was eligible for GMS pricing, because the dealer had to pay that amount. Everything else was negotiable, but not the destination charged. To think all these years the fact that the dealer gets reimbursed for it from Chevrolet has been kept from me.

Laborsmith

Great post "the_blur"

I would just like to add a few things. I have not purchased a car at MSRP for over twenty years. The info about the holdback not many people know about. I think it is about 3% of the invoice price. I will tell you there are certain times of the year that are the best times to buy a car. End of the year is best. My most recent purchase was a SUV. The MSRP was about 40,000 dollars. The dealers invoice price was about 32,000. I only paid 27$ over the dealers invoice price. SUV's were and may still be one of the most profitable to auto manufactures. I believe a suburban had the potential of 12k profit.
Now with that being said I have an order for a ZL1 vert. It is a very limited production vehicle and as some of you know some dealers are marking up the MSRP 5-10K. Well I'm happy that I'm not going to pay these inflated prices but also will not be able to get the car at dealer invoice. In this case a happy medium will be exceptible. When Im ready to buy a new SUV I will be able to make up the difference.

Oh yeah the destination charge is not negotiable. neither are taxes or tags.

Just purchased 2013 ZL1 for MSRP minus $1000 rebate plus $150 paper work fee. They are just not going to move much on these, as a very great number of dealersips will never see one. And I do beleive they sell some of these for the $5,000 to $15,000 over MSRP.

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.

Interesting point, I have never paid destination charges. I always asked to have that price removed. When I purchased my 2011 Camaro I think destination was like 900.00. They removed it and I brought the car home. Now I will be ordering a 1LE in March, I am wondering since I will be ordering the car should I feel responsible to pay the destination charge.

One word answer. Yes. :headbang:

I too thought destination charges were non-negotiable. Now that doesn't seem to be the case. Is it for all cars on the lot and also ordered?

Thank you for posting this article. In my case, I am told that the Invoice does not exist because I am special ordering my Camaro. I am told that since the car does not exist, there is no VIN number. And because there is no VIN number, there is no Invoice. It makes sense, but is it true?

Can you receive chevy cash back or usaa discount with invoice pricing?

My dealer allowed this when I took delivery just this Tuesday (12/11/12).

I received invoice price minus $750 USAA private offer and minus Chevrolet's $500 cash back for a total rebate of $1250.

I don't think they are suppose to give you invoice pricing with the USAA private offer, but my dealer did. I guess it is up to the dealer. Doesn't hurt to try.

Thanks for reply.

Sorry to bump an old thread as my first post, but I am eligible for a program where I can purchase a GM vehicle for 2% over "dealer cost".

I am trying to determine before I go in, if the term "dealer cost" may have too much wiggle room in it based on the "plus options and marketing charges" part in the above statement. Is "plus options" at the MSRP of those options or at the dealer cost?

In a perfect world, I would assume this to be true cost - basically what the dealer actually pays GM before icnentives.

I know its never safe to assume anything, but using the example invoice in this thread, would I expect this to be:
a) the amount listed in the MEMO line that states the total less holdback and finance credit ($35179.05)
b) the amount listed as Total ($36826.20)
c) the Total minus holdback ($35710.80)
d) something entirely different?

Thanks for any insight!

nice piece very informative but do any of you think that they only make a few hundred off of a $40,000 car? if they did none of them would be in business do you know how much it takes to employ all those people run all the phones keep up some of the elaborate buildings? I worked for a new car dealership and I know there are 3 invoices to each car this is the one that they will show you but it is not the actual cost of the car. you or no one at the dealership will ever see the true one except the person who pays the bills there. I know that the new car dept in every store is number one priority that tells me that that is where the most profit is made not service not used cars not parts. I know someone will disagree with me that is fine but think about it if they only made that much off or you it wouldn't be worth it to them and do any of you know any new car dealers personally? they are usually some of the wealthiest people in town.

This is exactly what I was looking for !!
Big thank you !

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.

ok what is the 699 dealer fee i am not fimiliar with that and i am puzzled on how they are negot anything with out pricing... sounds like an asumtion on there part but i like how you nailed the invoice pricing right off the bat... could that 699 dealer fee be a ordering fee???

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.

Egon, great information above. Thank you for clarifying the Contribution fees so well. I have run some numbers based on 2013 pricing and the contribution fees and dealer fees add up to about $1, 100 so compared to about $1, 300 black I will be paying about $200 under invoice. I tried s some local dealerships and this is the best offer so far, waiting to hear from one more.

So the destination fee and advertising fees are not included in the dealer invoice?

So is invoice on that $35,554.40 or is it $36,826.20?

The thing is, what SHOULD "Invoice" in the following equation be?

Invoice – Holdback + Fair Dealer Profit = your negotiated price target.

Should it be:

1) Invoice + Advert. Fees + Destination charges?
2) Invoice + Advert. Fees?
3) Invoice + Destination charges?
4) Invoice?

:pop2:

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)! :bellyroll: 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. :iono: 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. :help:

And on that note, I hope you had a great 4th of July!

I did have a great 4th of July, thank you hope you did as well!

In order to get a better idea of what they are doing lets go ahead and build your car and add up all of the totals and see what we get. What options did you get aside from the 2SS/RS and 1LE package? (also if it was one of the premium colors as well) We can then add up all of the invoice prices and get a total and then see where you stand.

As far as the destination charge goes that’s GM billing the dealer for the delivery of the vehicle. It is considered non negotiable and I wouldn’t bother arguing with them over that. The Advertising fees however I have a problem with. As I have explained in a previous post on this tread, the dealer gets back far more from that advertising fee or else they would opt out of it. They are allowed special promotions and all kinds of other great benefits as a result of participating.

It’s also good that you were able to get them to order it without a deposit since that is going to strengthen your negotiating position.

The current rebates should be available to you unless you negotiated in writing that you would except only the rebates that were available when you initially ordered it.