Tweakophyte

Hi-

I am getting closer to pulling the trigger. :-)

Can someone share how a dealer makes money selling at invoice? I am wondering if I take delivery on Dec 31 if I have any leverage. I have a specific config in mind, but will take a "more expensive" car if the dealer can make it fit. I'd like to understand how much room I might have to finesse this.

For example, if the price of my current config is $500 above invoice, but he has a similar car in stock that has Carbon Atlas inlays ($467 invoice price), I might tell him I can take that one as the same price as my current config. This would effectively get him down to invoice.

They are there to make money, so why would they sell a car at invoice? What about going below invoice? What are the hold-backs we don't see on the invoice?

Thoughts?

Thanks,

jran76

Most cars on a dealer lot will have some type of manufacturer hold-back/kick-back or incentive. It can vary from a few $100 to a few $1000 depending on the car, model, and manufacturer. Also, the GM% on service and other dealer services is much higher than a new car, so they are hoping to make some $$ back on other things they offer (everything from warranties to actual service work).

With that said, just remember one thing.... You may need something from a dealer later on. If you are looking to fleece a dealer and never go back, that may not be the best thing for the long-term relationship with a dealer. My advice is always to take the best deal from the dealer that provides the best long-term service if possible. Saving $500 now is not worth the aggravation of dealing with a crappy dealership down the road if you really need help with something related to the car. I am sure this is not unheard of advice, but I am always surprised at how many people will take a "good" deal on a car only to have to deal with "bad" service later on all in the name of the best possible deal.

isles1

Dealers also make money by adding fees to the deal, like Dealer Prep, Title and Documents fees. Fees like those can turn your $500 over invoice deal into $1,500 over invoice.

snagitseven

Audi does not have "holdbacks" per car as such as is common with other brands. However, dealers are compensated with additional Audi incentives, i.e. quota performance, positive customer reports, sales volume rebates, taking certain models at certain times of the year, closeout funds at year end, etc. Lots of variables that probably only the dealer GM and CFO can determine by individual car.

How much a dealer will discount depends on many factors. Some are model availability and allocations, local competition, meeting period end quotas, internal expense ratios, inventory vs customer order, etc. Sometimes it just comes down to timing and customer and/or sales manager demeanor and relationship. Being a good, previous customer can also make a difference.

And let's not forget about timing. The best deal I ever made buying a new car with a trade was just before the dealer closed on a New Year's Eve during a snowstorm. They just wanted to do the deal, add to their quota and get out of there.

DrGP

Knowing the right people and being at the right place at the right time cannot be overrated

snagitseven

Most assuredly a fortuitous confluence of factors often leading to a positive outcome.

stactum

It really all depends. You may go there with your straight shot on Dec 31 and close it on your terms, however have a plan B just in case.

There are loads of variables from deal to deal, so no deal are made the same rule applies. One of the tricks I used to keep me happy and dealer happy was to use my Audi Supplier Discount and invoice difference with AoA rebate that dealer gets back.

I simply first found a dealer who wanted to do $500 in profit (he was stating at $500 over invoice, I was stating it as "you will make profit of $500")

Then the formula was simple:
MSRP - Supplier Discount (6%) - Difference-to-invoice - AoA Dealer Rebate (2% for supplier discount) + Doc Fee, Ad Fee

I ended up below invoice even with everything included: Dealer was happy, I was happy. At the end of the day what matters that everyone is happy. Also 13' S4 isn't the model they are willing to discount. Out of 13 dealers I started negotiation with, only 2 would even consider talking at discounting Supplier Discount even further. Many mentioned "in our area we're selling them close to MSRP so not even interested talking about Supplier Discount".

407guy

We were told the same thing about our 2013 S4. We live in the Orlando area.

CharlieG

This is simple really ... in general actual dealer cost < invoice. The "invoice" number is really just some reference point (much like the MSRP) and I doubt any dealer pays that amount for a car just as most buyers don't pay MSRP. Dealer cost is based on lots of things, not the least of which is the volume of cars that particular dealer sells. There are some sites (not sure if it was zag or truecar or somewhere else) that also displayed a dealer cost value in addition to the factory invoice price. I remember something like another $500 difference in that number.

isles1

The way it was explained to me by the dealer was "true dealer cost" is invoice plus $195 for prep charges to the dealer and a 1/2% charge for advertising costs. Dealer used a sales price of 1% over "true dealer cost".

I still use "invoice" (found on Edmunds.com) as my personal reference point. In the end, my sales price is about $850 over "invoice" and $500 over "true dealer cost".