[mrf0151]

Best way to purchase a new vehicle is to know what you are going to pay for a particular vehicle is to have your deal done before you ever walk into the dealership.
Over the years I have only dealt with the dealership's internet manager. You will have to do your homework before you call. Know what exact vehicle you want and know the dealerships price breakdown on that vehicle. Make your deal over the phone and with a set appointment. All you are doing when you walk into the dealership is signing and driving away.

[CosmicTrucker]

Originally Posted by Rainger99

This is an interesting video of a person negotiating for a new car! It came out 10 days ago and has over 1 million views.

https://youtu.be/BbAKMD8o3iA?si=BMk9ZOZLc8VCPhx_

This video popped up in my feed a few days ago. I wasn't impressed with his tactic and it was clear he really wasn't in a position to buy this car due to having to put a portion of the cost on a credit card.

[retiredguy123]

To price a new vehicle, start with the MSRP from the window sticker and subtract any recommended discounts from Edmunds.com and KBB.com and any current rebates. Then, add the sales tax, which is 6 percent plus a $50 county fee. Add the title and tag transfer fee, which is about $130 (more if you need a new tag). If you can get that price, you will have a good deal.

Dealer installed add-ons, doc fee, dealer fee, title and tag processing fees, and other fees are all bogus fees that the dealer will try to apply to increase their profit. It's really not that complicated.

[Wondering]

Originally Posted by Rainger99

This is an interesting video of a person negotiating for a new car! It came out 10 days ago and has over 1 million views.

https://youtu.be/BbAKMD8o3iA?si=BMk9ZOZLc8VCPhx_

Useless. First of all you don't pay an adjusted Market add-on or any other add-on that the dealer pushes. Secondly, you do some online research before you go to the dealer - Kelly Bluebook, Edmunds, etc. Then you go to the dealer willing to walk away ,if you don't get your price, or what is a reasonable price based on your research. If you are not willing to walk away - the dealer has you by the "you know what"!

[Rainger99]

If every car dealer sold cars at 5% below MSRP (out the door price - the 5% includes taxes, fees, and any additional costs), could the dealer stay in business?

A friend of mine (who worked as a car salesman) told me that the MSRP is worthless. He said that they could do that because they get the car for substantially below MSRP and that the car dealers get bonuses for meeting sales goals. So even if they sell for below MSRP, they would get additional money from the manufacturer on top of the sales price.

Are there any people on Talk of the Villages that worked in auto sales that can confirm whether this is true?

[retiredguy123]

Originally Posted by Rainger99

If every car dealer sold cars at 5% below MSRP (out the door price - the 5% includes taxes, fees, and any additional costs), could the dealer stay in business?

A friend of mine (who worked as a car salesman) told me that the MSRP is worthless. He said that they could do that because they get the car for substantially below MSRP and that the car dealers get bonuses for meeting sales goals. So even if they sell for below MSRP, they would get additional money from the manufacturer on top of the sales price.

Are there any people on Talk of the Villages that worked in auto sales that can confirm whether this is true?

The MSRP is worthless to whom? Federal law requires all car manufacturers to establish an MSRP for every vehicle, but the dealers are not required to sell at that price. I think it is a good law that at least provides a starting point for pricing, and allows customers to see and compare the relative value for all vehicles. When people look at new cars, they always focus on the window sticker.

[BrianL99]

Originally Posted by Rainger99

If every car dealer sold cars at 5% below MSRP (out the door price - the 5% includes taxes, fees, and any additional costs), could the dealer stay in business?

A friend of mine (who worked as a car salesman) told me that the MSRP is worthless. He said that they could do that because they get the car for substantially below MSRP and that the car dealers get bonuses for meeting sales goals. So even if they sell for below MSRP, they would get additional money from the manufacturer on top of the sales price.

Are there any people on Talk of the Villages that worked in auto sales that can confirm whether this is true?

I can confirm what you say is partially true.

Here's a brief primer:

There are 2 "sticker" prices (for lack of a better word).

First off, every new vehicle for sale in the USA, must have a Monroney Label (MSRP) affixed to the window. This is required by the Automobile Information Disclosure Act of 1958. (Named after Mike Monroney, who filed the legislation).

The profit margin from Dealer Invoice to MSRP will run about 4% - 13% profit margin. Some less, a few a bit more. There is no standard.

If you were to look at a Dealer Invoice, you would see "adjustments" to the Dealer Invoice Price. They would include things such as "advertising allowance", "floor plan assistance" and "hold back". These are monies which are rebated to the Dealers, under various scenarios and conditions. They could amount to as much as 3% - 4% of the Invoice price.

You might also see "Factory Incentives", which could be any amount of money, depending on the manufacturers need to sell certain vehicles, over a given period of time.

So the answer to your question is, "yes, under some circumstances, Dealers will still make a 'profit' if they sell a vehicle under Factory Invoice". That doesn't mean they make a "net profit", because there's overhead and commissions to consider.

Here's the biggie, the public doesn't understand and is usually not privy to ... but can make a huge difference in what you pay for a new car.

I'll try to explain it, in a (fairly) simple example.

Nissan is having trouble selling their "Leaf" model, so they set up an incentive program for the Dealers and it goes like this:

We (Nissan) will rebate you (the Dealer) $1000 for every Leaf you sell, between May 1 and June 30, provided you sell a minimum of 100 of them.

One June 28th, the Dealership has sold 91 Leafs. Now what? If they don't sell 9 more, than stand to lose the $91,000 they (thought) they'd already earned.

Here's what they do (in simplified terms).

Every salesman gets on the phone and calls every Leaf customer they've had for the last 90 days and offers them the "deal of a lifetime". They offer Leafs at $3000 UNDER Invoice price. (Remember, they have to get to 100 or they lose $91,000.)

They sell the (9) Leafs they need to sell, but "lose" $3000 each.

The math works like this:

(9) vehicles sold for $3000 under cost = $27,000 "loss".

(100) vehicles sold, with a $1000 "incentive" to the dealer = +$100,000.

Net in Dealer Incentives = + $73,000.

This is an over-simplification of the process, but other than a few details, that's the basic premise of how it works.

I also haven't mentioned the "Inventory Allocation System", which is also a critical component, related to how much you have to pay for a specific vehicle.

All the above is why I laugh every time this "how to negotiate for a new car" thread shows up. As ShippingUpToBoston aptly said, the customers are playing checkers and the dealers are playing chess. The average customer has no clue how it all works. Some of us in the business, have trouble figuring all the angles. [Yes, I'm a consultant to a very successful Automotive Group. I mostly do the real estate, but used to be on the other side of curtain.)

Just an added note, to give some perspective on the industry. The EOY profit is likely to be 2% - 3% of total sales volume.

[retiredguy123]

Originally Posted by BrianL99

I can confirm what you say is partially true.

Here's a brief primer:

There are 2 "sticker" prices (for lack of a better word).

First off, every new vehicle for sale in the USA, must have a Monroney Label (MSRP) affixed to the window. This is required by the Automobile Information Disclosure Act of 1958. (Named after Mike Monroney, who filed the legislation).

The profit margin from Dealer Invoice to MSRP will run about 4% - 13% profit margin. Some less, a few a bit more. There is no standard.

If you were to look at a Dealer Invoice, you would see "adjustments" to the Dealer Invoice Price. They would include things such as "advertising allowance", "floor plan assistance" and "hold back". These are monies which are rebated to the Dealers, under various scenarios and conditions. They could amount to as much as 3% - 4% of the Invoice price.

You might also see "Factory Incentives", which could be any amount of money, depending on the manufacturers need to sell certain vehicles, over a given period of time.

So the answer to your question is, "yes, under some circumstances, Dealers will still make a 'profit' if they sell a vehicle under Factory Invoice". That doesn't mean they make a "net profit", because there's overhead and commissions to consider.

Here's the biggie, the public doesn't understand and is usually not privy to ... but can make a huge difference in what you pay for a new car.

I'll try to explain it, in a (fairly) simple example.

Nissan is having trouble selling their "Leaf" model, so they set up an incentive program for the Dealers and it goes like this:

We (Nissan) will rebate you (the Dealer) $1000 for every Leaf you sell, between May 1 and June 30, provided you sell a minimum of 100 of them.

One June 28th, the Dealership has sold 91 Leafs. Now what? If they don't sell 9 more, than stand to lose the $91,000 they (thought) they'd already earned.

Here's what they do (in simplified terms).

Every salesman gets on the phone and calls every Leaf customer they've had for the last 90 days and offers them the "deal of a lifetime". They offer Leafs at $3000 UNDER Invoice price. (Remember, they have to get to 100 or they lose $91,000.)

They sell the (9) Leafs they need to sell, but "lose" $3000 each.

The math works like this:

(9) vehicles sold for $3000 under cost = $27,000 "loss".

(100) vehicles sold, with a $1000 "incentive" to the dealer = +$100,000.

Net in Dealer Incentives = + $73,000.

This is an over-simplification of the process, but other than a few details, that's the basic premise of how it works.

I also haven't mentioned the "Inventory Allocation System", which is also a critical component, related to how much you have to pay for a specific vehicle.

All the above is why I laugh every time this "how to negotiate for a new car" thread shows up. As ShippingUpToBoston aptly said, the customers are playing checkers and the dealers are playing chess. The average customer has no clue how it all works. Some of us in the business, have trouble figuring all the angles. [Yes, I'm a consultant to a very successful Automotive Group. I mostly do the real estate, but used to be on the other side of curtain.)

To me, when buying a vehicle, the invoice is a totally worthless document. If a saleperson hands me the invoice, I just hand it right back because I don't trust any information on it.

[Michael G.]

Originally Posted by BrianL99

I can confirm what you say is partially true.

Here's a brief primer:

There are 2 "sticker" prices (for lack of a better word).

First off, every new vehicle for sale in the USA, must have a Monroney Label (MSRP) affixed to the window. This is required by the Automobile Information Disclosure Act of 1958. (Named after Mike Monroney, who filed the legislation).

The profit margin from Dealer Invoice to MSRP will run about 4% - 13% profit margin. Some less, a few a bit more. There is no standard.

If you were to look at a Dealer Invoice, you would see "adjustments" to the Dealer Invoice Price. They would include things such as "advertising allowance", "floor plan assistance" and "hold back". These are monies which are rebated to the Dealers, under various scenarios and conditions. They could amount to as much as 3% - 4% of the Invoice price.

You might also see "Factory Incentives", which could be any amount of money, depending on the manufacturers need to sell certain vehicles, over a given period of time.

So the answer to your question is, "yes, under some circumstances, Dealers will still make a 'profit' if they sell a vehicle under Factory Invoice". That doesn't mean they make a "net profit", because there's overhead and commissions to consider.

Here's the biggie, the public doesn't understand and is usually not privy to ... but can make a huge difference in what you pay for a new car.

I'll try to explain it, in a (fairly) simple example.

Nissan is having trouble selling their "Leaf" model, so they set up an incentive program for the Dealers and it goes like this:

We (Nissan) will rebate you (the Dealer) $1000 for every Leaf you sell, between May 1 and June 30, provided you sell a minimum of 100 of them.

One June 28th, the Dealership has sold 91 Leafs. Now what? If they don't sell 9 more, than stand to lose the $91,000 they (thought) they'd already earned.

Here's what they do (in simplified terms).

Every salesman gets on the phone and calls every Leaf customer they've had for the last 90 days and offers them the "deal of a lifetime". They offer Leafs at $3000 UNDER Invoice price. (Remember, they have to get to 100 or they lose $91,000.)

They sell the (9) Leafs they need to sell, but "lose" $3000 each.

The math works like this:

(9) vehicles sold for $3000 under cost = $27,000 "loss".

(100) vehicles sold, with a $1000 "incentive" to the dealer = +$100,000.

Net in Dealer Incentives = + $73,000.

This is an over-simplification of the process, but other than a few details, that's the basic premise of how it works.

I also haven't mentioned the "Inventory Allocation System", which is also a critical component, related to how much you have to pay for a specific vehicle.

All the above is why I laugh every time this "how to negotiate for a new car" thread shows up. As ShippingUpToBoston aptly said, the customers are playing checkers and the dealers are playing chess. The average customer has no clue how it all works. Some of us in the business, have trouble figuring all the angles. [Yes, I'm a consultant to a very successful Automotive Group. I mostly do the real estate, but used to be on the other side of curtain.)

This makes sense and sounds like "the timing" element here is important and what
are the chances?
The last day of the month or last month of the year sounds good time.

Also, isn't there a website posted somewhere that listed the price under MSRP paid by dealerships for each new model car/truck?

[retiredguy123]

Originally Posted by Michael G.

This makes sense and sounds like "the timing" element here is important and what
are the chances?
The last day of the month or last month of the year sounds good time.

Also, isn't there a website posted somewhere that listed the price under MSRP paid by dealerships for each new model car/truck?

If dealers are paid a bonus based on how many vehicles they sell, how can an invoice for an individual vehicle possibly be accurate?

[Tyson]

Cant see the video. What happened?

[retiredguy123]

Why would car sellers use the last day of the calendar month to give the best deals, when they can define the selling month to end on any day of the month they choose? To me, this sounds like another sales gimmick.

[Shipping up to Boston]

Originally Posted by retiredguy123

Why would car sellers use the last day of the calendar month to give the best deals, when they can define the selling month to end on any day of the month they choose? To me, this sounds like another sales gimmick.

They do..
Just like they release new models around September for the following calendar years vehicles. It’s fluid. Just like municipalities fiscal year ends on June 30....private businesses, some end on April 30 and some run a calendar year.

[Rainger99]

Originally Posted by Tyson

Cant see the video. What happened?

I have no idea what happened to the video. It has been taken down but there is no explanation. I assume that the auto dealer may have complained about it.

I think it had well over a million views when I posted it.

[BrianL99]

Originally Posted by Shipping up to Boston

They do..
Just like they release new models around September for the following calendar years vehicles. It’s fluid. Just like municipalities fiscal year ends on June 30....private businesses, some end on April 30 and some run a calendar year.

The post you quoted is 100% wrong. It is not fluid, in any way, shape or form.

The "month" for auto dealers ends on the "Last Reporting Day" of the month, per the manufacturers calendar. For internal accounting purposes, a dealer can do whatever he wants, but new car sales have always run on a monthly reporting cycle and are required to be reported that way.

All manufacturers in the US, require "monthly reporting" and they see monthly statements.

For internal purposes, *could* a dealer change his "accounting month"? Sort of, but it wouldn't really change the manufacturers' requirements regarding monthly reporting days (which is usually the first week day, after the end of the month).

Manufacturers will sometimes play with their "reporting month", internally.

Let's say the predicted #'s show that Honda is going to outsell Toyota for the month of October (because Toyota had a vehicle shortage). Toyota might finagle their October #'s because they already know they'll be #2 and move those sales into November, to show a huge "win".

None of that affects the dealer, because they are required to report all sales at the end of a calendar month (there are some nuances that have to do with the reporting [RDR cards]), but it's too esoteric for this discussion and not relevant.