Skip to comments.Vanity - How do new Car Buyers find Invoice Prices?
Posted on 02/23/2013 11:04:33 AM PST by urtax$@work
A daughter is new car shopping for a Hyundai(they are supposed to be much better made now)and she used Consumer Reports to find the Invoice Price. She is nowhere near a seaport but the difference in Invoice & Sticker is only $200....
It has been a long time since i bought new and i though my Chevy Invoice was much lower than the sticker. I understood that knowing the invoice was a good baseline to bargain with the dealership.
Do any FReepers know if her Invoice from Consumer Reports is bogus or is there a better place to find invoice prices ?? Thanks.
No idea. But I can only hope “car+invoice+price” on Google would help.
is my favorite site for car prices/values
About fifteen years ago in a business class the professor said that no matter what the window sicker price is, and what the add on’s are, the dealer pays 10-15% less than the base price listed, depending on their inventory turnover.
Assuming he was correct, I do not know if that still holds.
I have purchased two new cars in my life and both times I offered 5%less than the base price, and received it. Also I went on the last day of the month, and one month before the new cars hit the lot.
Last new car I bought was ten years ago, so who knows now.
Hyundai’s have really stepped up in the last 5 years or so - and I’m sure you can find a lot of info, some of it maybe even accurate, pertaining to your search.
But my question is this: is it your “right” to know the mark up on purchases you make? Why is it necessary you know the supposed profit, as opposed to simply knowing the best price you can get? I am all for being a wise shopper, but I am not thinking “profit” made by a private business is really any of our business.
Invoice price to a dealer may not necessarily be an indicator of the bottom price for a sale. Things like dealer volume of sales, advertizing allowances, special financing, monthly sales targets, etc may also factor into getting the lowest price. Good luck with her hunt.
Next thing you know he’ll want to see the dealer’s tax returns and income statments too........sheesh.....where does it stop?
- Factory Invoice. What the Dealer pays the Factory for the vehicle, minus any "hold-back" that the Dealer gets from the factory for taking delivery of the car.
-Dealer Invoice. What the Dealer has paid for the vehicle plus any "upgrades" or "add-on's" to the car that were performed at the factory, or after the dealer received the car and had third-party add-on's put on the vehicle, typically from a local shop/provider.
- Customer Invoice. That'll be the deal your daughter actually signs to buy the vehicle. Customer Invoice is the document she signs agreeing to the price, which is then used to generate the Sales Contract.
99 times out of 100, you will never see the Factory Invoice. You'll see the Dealer Invoice, which has already included their built-in profit from the factory.
If you want the best deal on a car, here's what you do:
- Ask which vehicles of the type your daughter is looking for have come in during the last week.
- Look at those cars, choose one.
Any car that's arrived in the dealer in the last week has likely not yet been financed by the dealer's bank. That means they haven't had to include it in their "floor plan." The "floor plan" simply stated are all the cars on the dealer's lot that are financed by the dealer's bank, and includes any insurance required to protect the vehicle in case of loss (theft) or damage (hail storm, vandalism, etc..) as well as any "prep" and advertising charges. Prep is simply removing the plastic bumper covers, putting in floormats, checking fluids, etc.. The dealer also has to pay to advertise the car for sale, insure it while on the lot, etc..
By finding a car on the lot a week old or less, the Dealer hasn't incurred floor-plan finance charges with their bank yet, and you don't want to pay for those charges.
You also don't want to pay any of the dealer incurred cost of insuring, advertising, maintaining the vehicle since it's been on their lot since they haven't incurred those charges on a week old car.
In fact, what you can do is negotiate those charges OUT of the sales price AND negotiate part of the hold-back away from the dealer, and into your pocket. (There are websites you can find that information.)
On an average car, the Dealer's "hold-back" from the factory is anywhere from $250 - $1500 or higher, depending on the car. On lower model cars, hold-back is pretty low. On more expensive models, the hold-back can be $1500 or higher.
By finding a vehicle that suits your needs that's been on the dealer's lot a week or less, and armed with the cost of options, dealer hold-back amounts and the fees the dealer pays for keeping a car on the lot you can negotiate yourself a very good deal, typically within the hold-back the Dealer gets from the factory.
I'll also tell you that a new car is the WORST thing you can buy, financially speaking. The second you drive it off the lot it loses 1/3 of it's value to you. Your absolute best deals in buying cars is to find a 2-3 year old model with low to medium mileage on it as someone else has already taken that 1/3 depreciation hit. Used cars typically are not as risky to buy as they were in the 80's, 90's or early 2000's. The quality on cars is up dramatically, and its easy to tell a well maintained vehicle from a poorly maintained one if you know what to look for.
For myself, I always buy something 3 years old since I drive 8 miles/day. If it breaks down, the wife can come and get me. She gets the new vehicle since she's the one carting the kids around all the time. That's just personal preference.
Keep heading toward the door until they stop chasing you.
Then you know it is time to turn around.
My last new car was a 2002 Jeep Grand Cherokee Laredo for $29k, with all kinds of end-of-year, US Military discounts (my Parents are Vets), ‘94 V8 Grand Cherokee LTD trade-in and paid cash. Net cost was $23k, off the lot. I’m afraid to even go looking now, as the new ones I’ve “culled the small herd” down to are in the $55-80k range, now. Yikes; they’re way, way beyond my pay grade. It’s cheaper to repair the ‘02, since it’s in such pristine condition, with only 165,205 mile on it.
Helpful tips here: http://www.investopedia.com/articles/pf/09/best-price-on-a-new-car.asp#axzz2LkfKxLcv Good luck to you!
Typically that's not true. Cheaper model cars have very thin margins and Dealers have to sell alot of them to make any money. Using the poster's example, if his daughter is looking at a Hyundai Elantra the "hold-back" or built in profit the Dealer gets from the factory is going to be smaller than say for a fully loaded Hyunday Genesis which has a higher hold-back and a higher profit margin.
That means the dealer would negotiate harder for a higher price on the Elantra than they would for the Genesis, absent supply and demand issues.
There are a number of services that will provide you with all this information. I have used some of the following:
One approach you can use is to email the Internet sales at nearby dealers (as many as you can), asking for a quote on a specific model of car with specific option packages. Wait until you are ready to buy, and let them know that you will be buying from the dealer with the most competitive quote within the week. I recommend that you first walk around some of their lots to see what option packages the dealers are ordering. Otherwise you risk asking for a quote on something they don't have in stock, and that will add confusion to the process.
Once you get the quotes back, compare it with information you got from the sites that I mentioned above. In my case, every time I have done this I got very good pricing. You can also go into the dealer and negotiate directly. There are many dealers out there now that don't mess around and have more honest, direct pricing. However, I still like to use my email technique to get a range of quotes. In fact, I purchased my Ford F-150 using this approach about 6 months ago - worked great.
Just choose the model and any options, select a few colors that she would like and start shopping, use an online site like AutoTrader set for a 200 mile radius, they have new cars from dealers too. Get written offers. Play one dealer against another and then buy the lowest one with which you’re comfortable. Leave trade, down payment and financing out of it during price negotiations. As far as they know, you’re walking in with a certified check from your bank. Cut off as many avenues for game-playing as possible, because they will play them. Watch the contract, they’ll try to recoup some money there. Be willing to get up and walk out. They’ll try to wear you down by keeping you there for hours.
I bought 1 ‘brand new’ car with something like 18 miles on the odometer. Most of the others I have bought have been ‘program’ cars. They are typically same year or last year, low mileage (under 20k).
The last one I bought was a 2007 Jeep. It still has a ‘resale’ value more than what I paid for it, because used car prices have actually risen (remember Obama’s Cash-for-Clunkers? Most of those trade-ins were supposedly scrapped).
Even with 1-2 year old used cars, check the CarFax. I saw one vehicle locally a few years ago. I noticed it kept showing up on a local sales lot. I checked the CarFax and it was showed it had had 6 owners. I assumed the vehicle had problems and kept being traded in on other vehicles.
I have been told by car sellers you round-robin several local car dealers to get THEM to lower the prices by matching or beating the others - on the same vehicle specs or as close as you can get as they may not have identical inventory.
Makes sense to me. The car salesman who told me that thought so.
Looked and drove pristine. Had the 4.0L High Output inline 6 cylinder. Sold it in 2007 for $5,500. Figured that wasn't bad depreciation, about $1k/year over 10 years I drove it. Only maintenance I ever did on it were brakes, tires, 1 tune-up and oil changes at every 3,000 miles. What a great vehicle, sorry I ever parted with it. The 2003 GMC Envoy Denali that replaced it is the biggest piece of crap I've ever owned. Never buy another GMC ever again.
It has 72,000 miles on it and has been through three front suspensions, it's second cooling system, 3 sets of brakes, 3 batteries, 2 alternators and miscellaneous other stuff. I'm far from hard on my vehicles, I drive 8 miles a day.
Look for the "Union Label" indeed.......
For when your salesman tells you he is going to go "see his manager" to get you a better price, what is really going on is that he is simply stalling for time because they know the longer they keep you in that showroom, the more likely you will eventually come to terms. The sales reps and the managers are in cahoots and the object is to keep as much "margin" in the deal for themselves as possible.
Here are some tips for buying a new car.
Since dealers inventories seldom match car for car, your best bet is going with make, model and color only. Ultimately one dealer will have the lowest price on a base model, while another dealer will have the best price on the same vehicle with the best equipment package.
Guess which one you want to buy?