Dariusx

In a current thread, one gentleman asks "can I buy ____ model for invoice?". For all the years I have been in this business, I am still amazed at car shoppers singular fixation with this magic number. It's funny that we don't ask for the invoice on a loaf of bread and offer say...13 cents over? How about grilling the plumber for his labor costs and allowing a 2.5% margin above that? Sounds ridiculous but isn't this similar reasoning for many car buyers?

Isn't it just a wee bit presumptuous (borderline insulting) to tell a retailer what kind of margin they should make?

The truth is that the dealers invoice (or any other merchants costs for that matter) is actually of little relevance. There are indeed only two factors that count and they are 1) Supply and 2) Demand. I know this may be news to many here but, yes, the market determines the price for any good or service.

For instance, what good would knowing the invoice on the new M5 do you? Sure, the dealer is making about 23,000...so what. If you want the car, you will pay it because someone else will, and gladly. Conversely, if you are looking for a carry over 2004 Mustang, you could pay hundreds or perhaps a couple thousand below invoice because it is an albatross and the dealers want them gone, doesn't matter what the cost is.

Please don't misunderstand, I have no problem with a consumer seeking the best possible value for their dollar. And sure, research on pricing and dealer costs could be useful in that endeavor. But I find that buyers are often so totally obsessed with invoice and how much profit the dealer is getting that they create needless frustration and anxiety for themselves:shopping for a car should be fun.

The first and most important goal is to just find a car that you really like/love and fills your needs and seeking a dealer that you like/trust. Then, after checking out the market for that car, get the most fair and reasonable deal you can.

Officer_down

Good post!

Officer_down

Btw, buying cars should be a fun experience, but I find it very dreadful. Of course, it has to do with all the stress of negotiations and crap. However, the fun begins the minute I drive the cars off the lots.

iatacs19

Well... invoice is a good starting point. Stealerships make enough money and rob those who are inexperienced in purchasing cars... sad and shameful, oh well.

useless post.

dcak

True, and I think people do get overly concerned with the invoice price, but here are a couple points to consider:

1) Everyday on the radio I hear commercials for cars being sold at X hundred over invoice. So dealers help to reinforce this concern with the invoice price. But like the chicken and egg, I don't know which came first- were consumers so concerned with invoice price that the dealers had to incorporate it into their ads, or did dealers help to perpetuate the belief that invoice price is so important..Probably the former.

2) Many people looking for a car just want a fair price. I don't expect to buy a car with the dealer making zero profit, nor do I want to line his pockets with 10 grand in profit. So knowing what they pay for it can help someone feel as though they're getting a "fair price". And I realize fair price is also determine by supply and demand, but John Q consumer does want to feel like they just doubled a sales person's monthly commission. Most cars are not like a new M5 or a new Mustang, etc. Those "rare" (at the moment) cars will always demand more, and the dealers will always make more on these types of in demand cars. Minivans and Honda Accords are not like these cars, so knowing invoice price can help someone determine a target price they should think about paying.

s2kpdx01

Well, the fact I can walk in to a car dealership and they are just fine with me haggling for a lower price means this mindset will prevail. I don't walk into wal-mart and haggle over the price of dish soap, but at a car dealer this is considered normal, acceptable behavior. Because of this people are not interested in paying MSRP or even the dealer price if it is lower. It is understood that by haggling you can get a lower price. Dealers sell cars at a loss, for small profits, and large profits all the time. People shopping for cars understand this happens and want to be the guy who gets the loss leader. We aren

rai

It'd be fine if a dealer said "this is the fair price take it or leave it" But they want to rob anyone who is unwise. They don't start at a fair price, they start at the highest possible price and work down. You think a dealer will give a niave person a good deal that is fair to both sides? No way, if the buyer has so much money the dealer want's all that and more.

I like new cars, but I've been tending to hold on to my current cars as long as I can to keep dealer profits to a minimum.

LiQUiD iCE

Yeah you've got to remember that the attitude of dealers is also different than your standard Walmart.

Walmart sets its prices at what it thinks is the lowest it can sell it while still making a profit and maintaining their supply/demand and staying competitive with other retail stores.

Car dealers don't set a price. They have an MSRP and expect you to come in to haggle on the price.

If more dealerships were like CarMax, where they simply sell it for as low as they possibly could, prices would be more competitive and you would find that the dealerships could probably set their own prices based on their competition and supply/demand instead of having to have the consumers haggle the prices.

Interesting note also is that the dealer invoice usually still has some profit dollars for the dealer. Dealer "cost" is what the dealer actually pays after you subtract holdback and factory to dealer incentives. So if you pay invoice, or even under invoice the dealer is still making money off of you. Sure they aren't making boatloads of cash like they would if you bought at MSRP, but they aren't losing money like some people think.

honda606

It would let me know how bad the typical no ethics having dealer is trying to rip me off. Quite simply it's being informed.

I will not pay anywhere above $500 over invoice for ANY car now and in the future. It's too easy to negotiate to that level if you have timing on your side and only a fool would pay MSRP or near it. Fools would also perfectly describe, IMO, the ridiculous people that love to be first adopters gladly paying this extra $23k you're talking about.

Unfortunately this world is full of morons that have more money than common sense.

MyHieu

boohoo