Buying a new car

On Wed, 16 Mar 2005 06:31:13 GMT, "Skip Elliott Bowman"
> wrote:

>He explains that you
>> can sell a vehicle for thousands under invoice and still make a
>> profit.
>
>I'd like to know how he does that. Thousands, you say? Maybe he meant
>MSRP?

It happens.
Take a Lincoln Blackwood, for example. The dealer may end up paying
over $5000 less than the invoice that's connected with the vehicle's
delivery to the dealer.
That leaves "thousands" under 'invoice' that the dealer can sell the
vehicle for.

--
Bill Funk
Change "g" to "a"

"Big Bill" > wrote in message
...
> On Wed, 16 Mar 2005 06:31:13 GMT, "Skip Elliott Bowman"
> > wrote:
>
>>He explains that you
>>> can sell a vehicle for thousands under invoice and still make a
>>> profit.
>>
>>I'd like to know how he does that. Thousands, you say? Maybe he meant
>>MSRP?
>
> It happens.
> Take a Lincoln Blackwood, for example. The dealer may end up paying
> over $5000 less than the invoice that's connected with the vehicle's
> delivery to the dealer.
> That leaves "thousands" under 'invoice' that the dealer can sell the
> vehicle for.

I getcha. It's probably last year's model and they want it off the lot to
make room for new models. This is especially true if one of the newer
models is a hot seller and the dealer moves a lot of units. Great deals can
be had that way, if one knows where and when to look.

"Skip Elliott Bowman" > wrote in message
link.net...

> That depends on what invoice is. There's actual invoice (what the
dealer
> pays for the vehicle) and then there's whatever the salesman says.

The "actual invoice" is NOT what the dealer pays for the vehicle,
that's the whole point.

There can be literally thousands of dollars between dealer cost and
invoice (actually there are cases where it's over $10,000. It's all a
game to make people think that when they are able to purchase "at
invoice" (ar a couple of hundred over or under invoice) that they've
gotten some sort of a terrific deal that they can brag to their friends
about.

For example, let's look at the last Camry I purchased.

MSRP: $20728
Factory Invoice: $18531
We Paid: $16988

And this was not a price that was haggled down to, it was "all in stock
at this price," and there were a LOT in stock (more than twenty). This
was not the end of the model year, and this was not on a model that was
not selling well.

$18,531 was NOT the dealer's cost. The dealer was getting a $1000
factory to dealer incentive, plus there was the holdback, the TDA
(money paid to the dealers by Toyota to pay for advertising), and WFR
(money paid to the dealer by Toyota to cover the financing of the
inventory). The net dealer cost appeared to be around $16,600. So for
$388 between dealer cost and the sales price, the dealer wasn't
covering his overhead, but he counted on selling financing, warranties,
and dealer installed options, where the big money is. This is why they
tried to renege on the deal, after the contract was signed, when we
didn't go for any of that stuff.

Don't think that the factory to dealer incentives are only for the
slowest selling models that nobody wants, or only happen at the end of
the model year. Companies like Toyota and Honda believe in keeping
their factories going at full capacity, and adjusting prices to
stimulate the demand necessary to not end up with unsold inventory.

In California anyway, the invoice price has become the de-facto price
to start negotiating down from, for all but the least knowledgable
buyers, unless the vehicle is one of the very, very few models that are
actually in short supply.

Steven, you are absolutely right. I knew all of this when it was fresh in
my mind, but had forgotten almost all of it. Thanks for posting your
example--this is excellent info to have.

> wrote in message
ups.com...
> "Skip Elliott Bowman" > wrote in message
> link.net...
>
>> That depends on what invoice is. There's actual invoice (what the
> dealer
>> pays for the vehicle) and then there's whatever the salesman says.
>
> The "actual invoice" is NOT what the dealer pays for the vehicle,
> that's the whole point.
>
> There can be literally thousands of dollars between dealer cost and
> invoice (actually there are cases where it's over $10,000. It's all a
> game to make people think that when they are able to purchase "at
> invoice" (ar a couple of hundred over or under invoice) that they've
> gotten some sort of a terrific deal that they can brag to their friends
> about.
>
> For example, let's look at the last Camry I purchased.
>
> MSRP: $20728
> Factory Invoice: $18531
> We Paid: $16988
>
> And this was not a price that was haggled down to, it was "all in stock
> at this price," and there were a LOT in stock (more than twenty). This
> was not the end of the model year, and this was not on a model that was
> not selling well.
>
> $18,531 was NOT the dealer's cost. The dealer was getting a $1000
> factory to dealer incentive, plus there was the holdback, the TDA
> (money paid to the dealers by Toyota to pay for advertising), and WFR
> (money paid to the dealer by Toyota to cover the financing of the
> inventory). The net dealer cost appeared to be around $16,600. So for
> $388 between dealer cost and the sales price, the dealer wasn't
> covering his overhead, but he counted on selling financing, warranties,
> and dealer installed options, where the big money is. This is why they
> tried to renege on the deal, after the contract was signed, when we
> didn't go for any of that stuff.
>
> Don't think that the factory to dealer incentives are only for the
> slowest selling models that nobody wants, or only happen at the end of
> the model year. Companies like Toyota and Honda believe in keeping
> their factories going at full capacity, and adjusting prices to
> stimulate the demand necessary to not end up with unsold inventory.
>
> In California anyway, the invoice price has become the de-facto price
> to start negotiating down from, for all but the least knowledgable
> buyers, unless the vehicle is one of the very, very few models that are
> actually in short supply.
>

On Wed, 16 Mar 2005 04:11:21 GMT, Bob Ward >
wrote:

>Reread for comprehension. Get out your thesaurus and look up the
>concept "pricing higher than the market will support." If the market
>won't support their pricing, they will soon find themselves
>unemployed.

I bow to both your superior verbiage and ignorance.

On Wed, 16 Mar 2005 06:31:13 GMT, "Skip Elliott Bowman"
> wrote:

>He explains that you
>> can sell a vehicle for thousands under invoice and still make a
>> profit.
>
>I'd like to know how he does that. Thousands, you say? Maybe he meant
>MSRP?

Nope. His favorite story is when he was just a salesman, He sold 2
Chevy (I forget the name, kind of like a small VW Rabbit, got 40 MPG
with gas) diesels. Yes, diesels. He sold them for $500 under
invoice, and after all incentives he netted $3000 for each one in his
pocket. The dealer was so happy with him he gave him a raise - to 50%
of net profit from 40%. The dealer still swore he made money by
selling the car under invoice and paying $3000 to the salesman.

Now he runs a group of dealerships in Indiana. It depends on the car,
but when he sells one at invoice, which is of course rare, he states
the dealer still makes from about $800 to a couple thousand on every
normal vehicle. Examples like above where the dealer gets additional
incentives from the manufacturer mean even more profit.

"DTJ" > wrote in message
news
> On Wed, 16 Mar 2005 06:31:13 GMT, "Skip Elliott Bowman"
> > wrote:
>
>>He explains that you
>>> can sell a vehicle for thousands under invoice and still make a
>>> profit.
>>
>>I'd like to know how he does that. Thousands, you say? Maybe he meant
>>MSRP?
>
> Nope. His favorite story is when he was just a salesman, He sold 2
> Chevy (I forget the name, kind of like a small VW Rabbit, got 40 MPG
> with gas) diesels. Yes, diesels. He sold them for $500 under
> invoice, and after all incentives he netted $3000 for each one in his
> pocket. The dealer was so happy with him he gave him a raise - to 50%
> of net profit from 40%. The dealer still swore he made money by
> selling the car under invoice and paying $3000 to the salesman.
>
> Now he runs a group of dealerships in Indiana. It depends on the car,
> but when he sells one at invoice, which is of course rare, he states
> the dealer still makes from about $800 to a couple thousand on every
> normal vehicle. Examples like above where the dealer gets additional
> incentives from the manufacturer mean even more profit.

This makes perfect sense, and the math fits. I learned something new today.

On Wed, 16 Mar 2005 18:03:10 -0600, DTJ > wrote:

>On Wed, 16 Mar 2005 04:11:21 GMT, Bob Ward >
>wrote:
>
>>Reread for comprehension. Get out your thesaurus and look up the
>>concept "pricing higher than the market will support." If the market
>>won't support their pricing, they will soon find themselves
>>unemployed.
>
>I bow to both your superior verbiage and ignorance.


Would you care to explain how someone attempting to sell a product at
a price that is higher than the market will bear can succeed?

I didn't think so.

On Wed, 16 Mar 2005 18:10:19 -0600, DTJ > wrote:

>On Wed, 16 Mar 2005 06:31:13 GMT, "Skip Elliott Bowman"
> wrote:
>
>>He explains that you
>>> can sell a vehicle for thousands under invoice and still make a
>>> profit.
>>
>>I'd like to know how he does that. Thousands, you say? Maybe he meant
>>MSRP?
>
>Nope. His favorite story is when he was just a salesman, He sold 2
>Chevy (I forget the name, kind of like a small VW Rabbit, got 40 MPG
>with gas) diesels. Yes, diesels. He sold them for $500 under
>invoice, and after all incentives he netted $3000 for each one in his
>pocket. The dealer was so happy with him he gave him a raise - to 50%
>of net profit from 40%. The dealer still swore he made money by
>selling the car under invoice and paying $3000 to the salesman.
>
>Now he runs a group of dealerships in Indiana. It depends on the car,
>but when he sells one at invoice, which is of course rare, he states
>the dealer still makes from about $800 to a couple thousand on every
>normal vehicle. Examples like above where the dealer gets additional
>incentives from the manufacturer mean even more profit.


I think you are referring to the Chevette - and $3,000 probably
represents about 75% of the original MSRP, so I'm inclined to believe
that your car salesman friend was pulling your leg.

Bob Ward wrote:
> It's sort of self-modulating - the salesmen who consistently price
> their wares higher than the market will support will soon find
> themselves in some other line of business.

The market in cars is close enough to a monopoly (and they're a
necessity for enough people) that the dealers can do what they want.

Until the industry is deregulated, the market can't do its job.