Invoice, how much less?

[bannonm]

Originally Posted by Miraclewhip

Close Miracle, but not quite.

So while MOST dealers adhere to their local ad groups, some dealers choose not to be part of their ad groups. They do not pay into the advertising, and incentives of the group and so their invoice is lower.

I recently was invited to a White Sox skybox with a general manager friend of mine. The box was owned by the Chicago Sun Times, which is where he advertises to the tune of $40K a month. Needless to say he was treated like a king by the Sun Times guy.

[Miraclewhip]

Originally Posted by bannonm

I recently was invited to a White Sox skybox with a general manager friend of mine. The box was owned by the Chicago Sun Times, which is where he advertises to the tune of $40K a month. Needless to say he was treated like a king by the Sun Times guy.

I would assume that like MOST dealers this is above and beyond what the ad group does for them. Thats 40K a month of additional cost, and he better not just be advertising in the papers..or the internet is gonna leave him behind. so he better be paying google / yahoo / cars.com / vehix. com / carfax / craigslist / ebay and a dozen other places especially considering the newspaper is a half dead medium, and the box...is because hes still throwing money at said half dead medium. Youre friends dealership sells...250 cars a month+ I hope?

[Solocus]

Originally Posted by Miraclewhip

Close Miracle, but not quite.

- MSRP is what a dealer asks (except for some who still think it is an acceptable practice to mark up prices above that price. This is done with an addendum sticker which is near, but not legally touching the msrp sticker)

- Invoice is what a dealers open flooring account is charged for a car. This number WILL vary depending on whether or not a dealer is part of his or her local advertising group. For example when you hear a radio ad that states "go see your southern california chevy dealer" those advertisements are paid for by the "so cal dealer group" that group addends an invoice on the car between 1.5 and 3%. That group is NOT all bad, as it will pay for special incentives for your area as well. If the group agrees to take X amount of malibus from the manufacturer, GM will agree to run a "so cal special lease" with 0 drive off, and pay each clients drive off ( this is better for the customer, as that customer is saving more than his invoice is raised as not all customers will lease etc etc.)

So while MOST dealers adhere to their local ad groups, some dealers choose not to be part of their ad groups. They do not pay into the advertising, and incentives of the group and so their invoice is lower.

That dealer loses other benefits as well (more GM accomodations type things, hey our customers car blew up at 36,500 miles can we fix it anyways, accomodations like that are relative to a dealers standing with its manufacturer. think, your survey, their profitability, the ad group standing, overall sales, and past history with the dealer) but ultimately his base invoice cost for the car is lower.

- Holdback, credits refunded to the dealer upon his monthly statement of his open flooring account. This amount is the total of all holdbacks the dealer sold cars to earn. This amount is also a % of invoice, and IS the same at every dealer.

A few years ago this was considered sacred money, YES this money is profit, but were ANY of you aware that a dealerships flooring account is charged RENT PER CAR. So while you may get....700 to 1200 bucks back on a flooring account, you may pay a couple hundered dollars a month per unit on your lot. So while Tahoes, Suburbans, Avalanches, Trucks, Colorado's, 3 dozen wierd used cars and an assortment of whatever else you have on your lot are sitting for 6 months or a year...you have basically paid all of the holdback on them back to flooring company already, and if you think about what product is cold right now...it is A LOT, and if you choose simply not to order the product, you lose not only accomodations form the factory for not taking the 4 purple avalanches they want you to take....but you lose customers...because you have an empty lot and when a guy wants to see a 4 door stick shift crew cab colorado....you better have one or you are gonna be "PLAYIN GAMES LIKE EVERY OTHER DEALER!!!11" and thats going to cost you sales.

So your holdback is to pay flooring rent. the closer a guy gets to invoice its to pay his salespersons commission, the million bucks a year a dealer pays to keep his employees with benefits, his million bucks a year he pays into the pension plan for his shop employees, and to ensure the dealer can keep the lights on, his facility painted, his car insurance (which at a dealership is insane dollars as well) The closer you pay to invoice it is also to pay to keep cars clean, pay the frontloaded nearly 180,000 dollars it took to certify his dealership to be able to even carry the chevy volt so you can stay competitive, oh and now its to completely remodel your facility as required by GM if you want to still be getting cars in 3 years.


- Conclusion, 2 years ago 500 over invoice was what you did for new clients, 250 over was repeat, 100 was for your family, and now id say that dipping into the holdback a hundered or two is for the family, friends, internet shoppers who are going to give you a bad survey and cost your dealership more than your making anyways......and somewhere between 400 over and 100 under is MORE than fair.

Thanks, one of the best explanations I have yet to read.

[2010victoryredss_ron]

wish we could see Canadian list cost like this....

[67 Convertible]

Not to jack the thread, but I'm curious as to what it actually costs GM to produce the car. Not that it matters, just curious.
From the example above: 2SS=msrp $35,450 Dealer Invoice= $34,032 Dealer Price= $32,968.

Taking into consideration parts, labor, R&D, overhead, etc. What did it actually cost GM to produce the car?

[Archontruth]

Originally Posted by MiracleAces

Far too much misinformation on this subject. Everyone thinks they know what dealers pay and how they get paid. I have no problems with someone knowing the invoice, but there is so much misinformation it actually hurts the customer. I have seen customers walk away from amazing deals because they dont understand how the invoice is structured. Then they are too proud or embarrassed to come back and we actually see them pay more down the street (yes, dealerships get to see what other dealerships sold and for how much). I will do my best to explain how the invoice works.

The invoice IS what we pay for the car. However, an invoice wont be the same amount for each dealer even for the exact same car. The bigger dealerships do pay for an advertising fee which on a Camaro can be as high as $700. There are other fees, but those are generally the same for each dealership. Edmunds.com does not know these fees. Now, as I said we do pay invoice plus the fees for these cars. The profit is already pretty small before any discounts. So GM (same with Ford and ChryslerDodge Jeep) pays the dealership 3% (holdback) of the invoice no matter what the car is sold for. Also, there are quarterly goals a dealership can reach that pays them a bonus from GM.

Ah, a fellow Northern Virginian! Which dealership do you work at?

You're right, it is far too hard to get a clear idea of what's a "fair price". Opinions are a dime a dozen, but hard numbers are harder. Edmunds had a price that was much higher than what I ended up paying. When you see one person complaining about how far over invoice the dealer wanted them to go, and another crowing about how far below invoice they got, it's impossible to know, and some people latch onto that low number without realizing that there may have been some special circumstance there. Another part of the problem is that, fairly or unfairly, people don't think they can trust a dealer they don't know personally, so they don't believe the explanation.

[sonictonic]

So... much... information...

[devilover]

Team - great discussion...one correction: Holdback is based on MSRP, not Invoice. For Chevy, holdback is 3%. So you would take 3% of MSRP, subtract it from Dealer Invoice, and then you would arrive at Dealer Price. Using the price list above for an example, we take the MSRP for a 2SS Coupe ($35,450) and multiply by 3% holdback to get a holdback amount of $1,063.50. We then subtract that amount from the Dealer Invoice ($34,032) to get the Dealer Price of $32,968.50. Try it for one of the other models listed and you'll see how it works in practice.

If you don't believe my lie is true, ask the blind man, he saw it too: http://www.edmunds.com/car-buying/dealer-holdback/

Bottom Line: The dealership gets paid 3% of the MSRP (including 3% for options). Your goal should be to get as close to Invoice as possible, or even under. This is considered fair to both the dealer and the consumer. Remember that the salesman and dealer both must also make a profit, and they do have overhead, so don't be too aggressive; just figure out what you can and will pay, then stand strong…but be nice. Try to make it a win/win. If you can't, move on to the next dealer, and do some pre-vetting. Send a bcc email to every dealer within X miles, and tell them what you want, and what you'll pay (give it to them line by line). Based on the "Dealers under MSRP" thread, they are out there. If they know you are well informed, they’ll cut to the chase, which is a benefit to both of you.

If you can't get a good deal from a local dealer, work with Becky @ Rodgers Chevrolet. She is a major contributor on the C5 forums, and wants your business. The drop ship charge is $150-$300 on average, so you can actually get your ride for less than from the guy down the street. Either she’ll beat them, or she won’t, but she will not try to screw you.

These forums are PACKED with all the info. and contacts you need to make an informed decision, and none of you need get raked over the coals. Use your emotions to build your dream ride, then use your brain to get her for Invoice, or close to it.

Happy Hunting!


DL.

[izone]

How does one qualify for GM preferred pricing? Are there any discounts for current GM owners (loyalty discount?) if you want to buy a new one?

[Jaggimann]

Originally Posted by dutchnrican

invoice is NOT what the dealer pays for the car. take a look:

Do you have the link where u got those from? Like I Really Wanna C The Other 3 Pages

Thanks in Advance

[swagled]

Bumping this thread since it has some good information on how cars are obtained by the dealers.

One thing I still don't grasp, even after reading the various threads about allocation. Why is a customer order so much different? The dealer is ordering and buying all the rest of the inventory anyway, right? Or does the factory produce it's own pipeline mix based on GM's marketing voodoo ... and the dealers normally buy out of that?

[PatsRS]

I think its because when a car is ordered it is delivered immediately and it doesn't absorb the cost of sitting on the showroom floor. I don't know if anyone will unlock the secret of "dealer cost". Does it really matter? Do you ask the butcher how much he paid for the side of beef your steak came from? Get the best deal you are comfortable with and drive your car and be happy.

[BBD]

I guess I missed the part or maybe they didnt say. How does one get the gm pricing.

[MY2012RS]

Great info here guys!!! Thanks..This is going to help me alot when I go to get my car