Negotitating for a new car. How far below invoice is the price the dealer pays?

[KaCajun Boy]

I always go 20% off the sticker price. I bought a 2003 Ford 4x4 Lariat, had to wait 6 months but they called me back and I got the truck 20% off like I wanted. Reason I do this is because just say I buy this new truck and on my way home I get in an accident then the truck is no longer new it's then a used truck. Insurance will only offer me the KBB great conditon they will not give me the sticker price on the truck.

 

[Scott.Thornton]

Also getting preapproved at a bank or credit union is a must. Lets you make the deal like cash

Sent from my Galaxy Nexus using Tapatalk 2

 

[CEHollier]

I do my research on cars.com It had been very helpful to me.

 

[FishingFool]

http://www.carbuyingtips.com/car2.htm

 

[Btl_Rkt_Sci]

Yes. My new ride was a 2010 Toyota Tundra. Here's how to find the customer rebates.
- Go to Toyota.com
- Find the model your looking at. For example Tundra Double Cab.
- In the upper right hand corner is a tab "Tundra Shopping Tools". Mouseover that and enter your zip code. Click go.
- You have now left the national site and are at the local distributor site. In my case Gulf States Toyota. GST, remember that as the rebates use the abbreviation.
- At the top click "Offers". Then click your model again on the left.
- There is all the rebates and offers.

In some cases you can mix and match. I rolled Toyota Care along with the rebate. Didn't pay a cent for my first two service intervals at 10k and 20k miles. Since it's end of the model year the 2012s need to move. There's another $1000 rebate.

Easy enough to sign those rebates back to the dealer. Just knock the value of the rebates off invoice. If the dealer gets in a wad over that then say fine, have the rebates sent to my house. We'll now negotiate a much lower percentage over invoice. My dealer didn't do that but I was told to keep that card in my pocket. Just in case.

I may not have gotten the best deal on the planet but I certainly didn't get it stuck in and broken off.

So when you say to aim for 3-5% of invoice minus rebates, you mean pay 103-105% OF invoice minus rebates?

Did your brother-in-law have any advise for used cars?

 

[Ellis1958]

So when you say to aim for 3-5% of invoice minus rebates, you mean pay 103-105% OF invoice minus rebates?

Lets say that invoice is $25,000. From there two paths.

-$25,000 minus $3000 in rebates = $22000
-4% of $22000 = $880.
-Negotiated price is $22,880

or

-Invoice is $25,000 and rebates come to me.
-3.5% of $25,000 = $875
-Negotiated price is $25,875. Don't forget you're getting a $3000 check sent to you. Actually it will get sent to the lending institution but lets not muddy the water.

If I had to do that deal over again I would have done a one thing different. Forget doing the invoice minus rebate thing. Easy to get confused with all the numbers being slung around. Easier to negotiate the $25,875 example above then the first payment of $3000 in rebates goes to the dealer. Second payment is your $2000 down out of your pocket. Then get your lending institution to send the third payment of $20,875.

Bottom line is 3%, 4%, or 5% over invoice depending on how bad they want to sell the vehicle and how bad you want it. Big advice was to not discuss financing till the deal is done. None of their business where the money is coming from. I've always been pre-approved for a loan from my credit union prior to setting foot on a dealership. Then take a look at what the dealership has to offer in financing. How you pay for the vehicle in no way should affect your purchase price.

Did your brother-in-law have any advise for used cars?

The in-law did hook me up with a car for the wife. It was a lease return. Low mileage and well taken care of with all maintenance done at the dealership. When told the price it took all of 5 minutes to make that decision. If I decide to get a used car in the future that is the direction I'll be headed.

One option that will start a bar fight is rental car sales. My current work car is a former rental. Yeah we all know that rentals can be hammered but on the plus side they do maintain them. Because of how rentals are treated scares many away but how do you know how the car at Joe Schmucks Used Cars or even at your local dealership was treated? I've had zero issues with my former rental and it has 80,000 miles on it now.

The in-law is retiring in a couple years. I've suggested that he start a consulting service. For $250 he will do the negotiating and the grunt work. All you have to do is have pre-approved financing. Not a chance that will happen.

Edited to add: One other path I investigated was Sams Club vehicle program. Basically the local Sams Club works with one local dealership for cut rate pricing. Did a lot of digging on that one. Talked to a Sams Club manager in charge of the program. In a nutshell the price was 3% over invoice. Went to the dealership to discuss a vehicle but two things killed the deal. First when the dealership found out I was a Sams Club buyer they ignored me. Like I sat for 30 minutes without anybody asking if they could help or anything. Obviously no money to be made from this cheapskate. Second while wandering around I found a neatly disguised but visible "no-guns" sign that I missed when I walked in. I can put up with being rude to and can return the favor but I can't spend my money with an establishment that curtails my civil rights. Sams Club has since cut their ties with that dealership.

 

[Btl_Rkt_Sci]

Lets say that invoice is $25,000. From there two paths.

-$25,000 minus $3000 in rebates = $22000
-4% of $22000 = $880.
-Negotiated price is $22,880

or

-Invoice is $25,000 and rebates come to me.
-3.5% of $25,000 = $875
-Negotiated price is $25,875. Don't forget you're getting a $3000 check sent to you. Actually it will get sent to the lending institution but lets not muddy the water

Thanks for the detailed response. That's what I thought you meant.

 

[Praesul Presul]

My experience has been slightly different. The last car I bought before my current one, I got quotes from every dealership who had one. I then pitted them against each other until I got a MSRP 19,500 to about 12,500. Once I got the right dealer, she quoted me 12,000 (on the phone). I then talked to her supervisor, and I lied and said the deal was 11,000, which she balked at, and we finally settled on 11,400. I wrote them a check, picked up my new truck, and drove off.

This except I went to every car dealer for that model as I was ordering. I got a good deal last time from buying one in the back where the trucks unload still in the plastic. They love to sell a car right off the bat. My experience has also been the larger the dealer(s) the more they can negotiate. I would avoid Robinson Brothers based on my experiences if its a Ford your interested in - they appear to be needing your money to pay for all their construction.

 

[Btl_Rkt_Sci]

Sorry to dig up this old thread, but I had a thought. I'm shopping around for a 2013 model truck still on the new lots right now. If I were to take the "3-5% over invoice minus rebates" approach, would the invoice they show me be the original invoice from 2012? How would I account for the car being an older model? Is that usually in the form of another deduction/rebate?

 

[SVTFreak]

Don't expect 3-5% below invoice. Depends on the model but usually theor cost (on big 3) is only a couple to 800 is less than Nada shown invoice cost. On ford's, that is also the x plan price.

 

[franch1se82]

dealerships get penalized for the amount of "older" models they have on the lot.. or so i've been told… for me, i've always been a hard ass when it comes to dealing for at car dealerships. find a suitable price on kbb.com, nada.com and edmunds.com .. print it, bring it with you, get approved for a loan at your own bank, and goto the dealership with a reasonable lowball price, show them the documents to prove your reasoning, and make it clear that you will move on to the next dealership if you don't get the price you want.

it's worked for me in the past, i was able to get my 2014 Jeep Wrangler for a hair below invoice + delivery in November 2013.

 

[JWG223]

I always go 20% off the sticker price. I bought a 2003 Ford 4x4 Lariat, had to wait 6 months but they called me back and I got the truck 20% off like I wanted. Reason I do this is because just say I buy this new truck and on my way home I get in an accident then the truck is no longer new it's then a used truck. Insurance will only offer me the KBB great conditon they will not give me the sticker price on the truck.

I always buy gap. My credit union charges just a few hundred for it and it covers retail value x 125%. Because what happens if you buy something like the Ford Explorer 6mo prior to the rollover issues when they became damn near worthless? Dealership gap covers 100% of what you owe typically and is awesome for that reason. It's just a few bucks a month literally.

As to invoice and all that it depends on the vehicle. Some have more fat in the MSRP than others. Some sell regardless, like Subaru brz when it first came out, or like the camaro 5th gen.

on a new car what I do is search the US. I typically price huge dealers in Cali. Then I take their price to my dealer and will budge by the amount of a 1 way plane ticket + gas back and tell them I'd love to keep it local but also enjoy roadtrips. I bought my 2011 z06 like this for about $10k below sticker...and it was built to order and I watched them assemble it. It takes all the debate out. Fine...I'll fly...or not.

Used? Edmunds tmv is pretty on the money.

 

[JWG223]

Don't expect 3-5% below invoice. Depends on the model but usually theor cost (on big 3) is only a couple to 800 is less than Nada shown invoice cost. On ford's, that is also the x plan price.

I used to work for Ford dealer. Correct. People think dealers pay under invoice. No. Invoice is invoice lol. Dealers pay taxes on vehicles on the lot. They make money from finance interest. Promotionals. Holdback. Etc. That is how they sell below invoice and turn profit. Not because the vehicle cost less.

 

[SVTFreak]

I used to work for Ford dealer. Correct. People think dealers pay under invoice. No. Invoice is invoice lol. Dealers pay taxes on vehicles on the lot. They make money from finance interest. Promotionals. Holdback. Etc. That is how they sell below invoice and turn profit. Not because the vehicle cost less.

Don't forget used car (that's why all the old guys work there, more money) and service bay. New cars don't make a dealership money.

 

[tim9lives]

I used to work for Ford dealer. Correct. People think dealers pay under invoice. No. Invoice is invoice lol. Dealers pay taxes on vehicles on the lot. They make money from finance interest. Promotionals. Holdback. Etc. That is how they sell below invoice and turn profit. Not because the vehicle cost less.

Exactly. And they do make good money on trade in and the used car lot.

That said...Dealerships have massive overhead. It's a highly profitable business when the economy is great....And its a killer when times are bad...Because that overhead stays the same. They try to get the back part of the dealership...Parts/Service departments to cover as much overhead as possible.
They have huge insurance costs. Tons of theft. Its a very tough business. So...Yes, they do have to make a profit. They can't stay in business if they sell everything below costs.

FWIW...I would never buy new. Certified Used with a warranty makes a lot of sense IMO.

 

[JWG223]

Exactly. And they do make good money on trade in and the used car lot.

That said...Dealerships have massive overhead. It's a highly profitable business when the economy is great....And its a killer when times are bad...Because that overhead stays the same. They try to get the back part of the dealership...Parts/Service departments to cover as much overhead as possible.
They have huge insurance costs. Tons of theft. Its a very tough business. So...Yes, they do have to make a profit. They can't stay in business if they sell everything below costs.

FWIW...I would never buy new. Certified Used with a warranty makes a lot of sense IMO.

Yep, my dealership went half a decade or so in the red.
yes, most new cars made peanuts. Used could rake you in a fair chunk. Most I made selling a new car with trade in involved was about $450. On used, about $1k. Typical new was $140. Used, $350. Keep in mind we got 25% commission on the front end, plus incentives on various vehicles. ...those godawful t birds were carrying a $1K bonus just for moving one. No matter the sale price.

 

[madwabbit]

My brother-in-law is a sales manager at a upper end dealership. His advice to me was easy.

- Ask to see the dealer invoice. That piece of paper showing what the dealership paid for the vehicle. If they won't show it or give you some numbers scribbled on a piece of paper, walk.

- Deduct from that value any rebates from the manufacturer to the dealer.

- From there negotiate a percentage of invoice minus rebates. 3% is a darn good deal. 4% is fair for both sides. 5% if you absolutely have to have THAT vehicle. Never go more than 5%.

- Don't discuss financing till the price negotiating is done.

Did exactly that with my last vehicle. No I didn't buy from my brother-in-law. Ended up with 4% over invoice nimus rebates which the in-law said is pretty much as low as he will go and still make a profit. Bar napkin figuring shows the dealership made $1000. I'm good with that.

I read through this circus train and stopped at this post, now i'm done. follow this and youll never get totally screwed.

If they pull any of that crap where "we dont show invoices" or "everyone pays vehicle transfer fees" just walk. theres thousands of other vehicles absolutely identical to the one you saw that day- the only difference is the price and the name of the guy that shakes your hand.


edit: afterthought- don't hesitate to use technology to your advantage. When purchasing my wifes suv last year I emailed -every- dealership in a 100 mile area or so and CC'd them so they'd all see who it went to. My body was a brief summary of my 700+ fico score and that I have a strong interest to purchase this make/model. The best offer I receive this week will get my business thursday afternoon. I've driven the vehicle and I'm familiar with it, so I won't need any emails suggesting me to come in to discuss it. I'd like to make my purchase this week if possible.

they -scrambled-. I probably had 40 emails by the end of the day- and the prices thrown at me varied by over 8500.00.

 

[Btl_Rkt_Sci]

Don't expect 3-5% below invoice. Depends on the model but usually theor cost (on big 3) is only a couple to 800 is less than Nada shown invoice cost. On ford's, that is also the x plan price.

You misread....3-5% over invoice. I recently found out Ford offers X-plan pricing for my company, which less than 1% over invoice (I saw it) and I can get the rebates on top of that. Ends up knocking about $8.5k off MSRP.

 

[JadeRaven]

Paying over invoice doesn't make sense.... even without rebates, holdback is pure profit for the dealer.

 

[madwabbit]

Paying over invoice doesn't make sense.... even without rebates, holdback is pure profit for the dealer.

dealerships aren't non-profit organizations. you can negotiate the price of something in any store in town, but if they continuously sold at a loss they wouldn't still be there employing people.

I don't mind them making a few bucks on me. I mind them making a few thousand bucks on me.