Is this really the price that dealers pay for vehicles?

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The “dealer’s invoice” is what the dealer paid for the vehicles in the field from the manufacturer. But sometimes the dealer price is very different. There are certain things like factory incentives that the buyer doesn’t see. “Dealer Hold” is another hidden amount that is not reflected in the invoice price. Dealer credits are also not from the manufacturer. So really, the dealer bill can be more than what a dealer pays for a vehicle.

Is “dealer holdback” included in the dealer price?

A Nissan dealership during the global chip shortage | Justin Sullivan/Getty Images

Let’s dig a little deeper to see how the dealer invoice may not represent the dealer price. This “dealer hold” has always been a mystery, as has the “destination fee”. We already covered that one.

The holdback is something the manufacturer pays to the dealer after the sale. Dealers won’t always even admit its existence. It’s usually about three percent of the purchase price, more or less.

If a vehicle is hot, the price you will pay is the MSRP or sometimes more

Couple accepting a car key from a car salesman.  Obstacles to buying a car often start at the dealership

A couple receiving the key to their new car | Getty

In this seller’s market right now, don’t expect a dealer to show you the invoice price. Everyone pays the MSRP for just about every vehicle sold. But as a future reference, it’s worth learning more. After all, this crazy post-pandemic market won’t stay that way forever.

And don’t expect that once prices stabilize, you can see the dealer invoice for each vehicle. If a particular vehicle is selling well, there is no reason for the dealership to negotiate. Again you will be pay the MSRPwhere you walk.

Can you ever see what the dealer bill is?

A man buying used cars looking at several Kias

Someone is considering buying a used car from a dealership | Getty

Sometimes the dealer’s invoice is shown to the potential buyer, making it look like the dealership is making very little profit. So if the negotiated price is only a few hundred dollars above the dealer’s invoice, most buyers will think that’s fair. After all, dealerships are in business to make a profit.

But in some cases where it’s used in a negotiation, you can probably assume the dealer gets more money from the manufacturer, on top of your $300 more bill. So as you can see it doesn’t matter if you see the dealer invoice number. There may be a $1,000 incentive from the factory because they overproduced that particular model.

In fact, there may be incentives or discounts advertised as a way to bring buyers to dealerships. But if the buyer doesn’t know or mention it during negotiations, the dealer may not offer it. Then he will keep whatever discount or incentive.

So what might be a better plan is to do your homework first. Check consumer sites to see what the MSRP actually is, what trimmings add to the cost, and what discounts or incentives there are. Even in today’s market, there are discounts for certain cars and trucks.

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