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In the automobile industry, retail dealers buy their vehicles directly from the manufacturer at the new car invoice price, then they resell them to the public at higher prices, which are usually around the sticker price. For this reason, car shoppers should know the new car invoice prices to help them negotiate better deals. Although it may seem like a mystical figure to most, it could be uncovered. When a client does some comparison shopping they will see that there is a often a big difference between dealerships’ asking and selling prices. Because this difference exists, one must search for the wholesale cost in order to save money. The wholesale cost the dealer pays to the manufacturer is the same across the board, meaning that Dealer A pays the same price as Dealer B for the same vehicle. However, there are further costs added to the new car invoice price that the dealer must pay, such as the transportation and delivery fee. However, this number is the same regardless of the location of the dealer. This figure is just tacked on to the individual cost of the vehicle that is passed on to the consumer. Where things change from one dealer to the next is the financing that dealers take out directly from the manufacturer to pay for their vehicle purchases. They must pay interest on this financing.
The longer a car remains on the lot, the more money that car will cost the dealer. These loans are known as floorplans in the business. In addition to floorplans there are other charges known as holdback. But holdback is not a real expense, since the dealer receives the holdback amount as a rebate from the manufacturer after the sale. Dealer advertising is another charge that is tacked onto the invoice, whether these are direct advertising campaigns from the dealer or from a regional organization of dealers. Now that all that is said and done, you have to figure out how to buy a new car below the invoice price. To be a smart consumer means to take advantage of situations that arise, such as slow car sales. Manufacturers do not appreciate a huge inventory sitting idle on a lot because it means a reduction of orders. Therefore, in order to be profitable and move their inventory along, the manufacturers provide incentives to both dealers and consumers. We have all heard of the various incentives they offer, like zero percent financing, low lease rates, rebates, etc. It is important to explain that consumers must be reasonable when expecting to purchase below the invoice price. If there is no help coming from the manufacturer, it just isn’t possible because this really is a combined effort. Consumers who miss out on a temporary incentive should know that these programs are often followed by new programs that might be even better.