Originally Posted by SLSILBERT
When you are using the term "invoice pricing" are you referring to a price less than msrp as advertised on the various sites such as kelly's blue book, edmund's, or nada pricing for new cars
Sorry to contribute to the resurrection of a 9 month old thread but here goes.
Invoice is the price the dealer initially pays for the vehicle from the manufacturer. This used to be a "secret" number but over the last 15 or so years it's become widely published and sites like Edmunds, Cars.com, KBB and NADA show that price right next to the MSRP for the base vehicle and all the options.
There are 3 numbers when it comes to a new car:
MSRP = Manufacturers Suggested List Price
Invoice = The amount the dealer is charged when they take delivery from the manufacturer. This is usually financed through a "floor plan" with a certain number of "free" days before they start paying interest monthly on the "loan"
Actual Dealer Cost = This number varies on almost every car sold. Factors such as dealer holdback, advertising co-op, floor plan expense and factory to dealer incentives all factor in. This is a number that unless you are the GM or the dealer's controller you will never know. Even the salesmen rarely every know this true cost.
Holdback, as mentioned in a number of posts, is an amount, usually 2 or 3% that is "held back" by the manufacturer and paid to the dealership in a limp sum every quarter (or month) based on the cars the dealership has sold and delivered. It's a fixed amount per vehicle but the actual amount the dealership actually receives is based on a performance quota.
Sometimes dealerships are 1 or 2 cars away from qualifying to receive 100% of the holdback or there's some incentive money on top of the holdback they qualify for if they exceed quota. In these cases it's not unheard of for a dealership to sell off a couple vehicles below cost (well below) and lose some money on them to quality for tens of thousands of bonus or holdback dollars. That explains why sometimes you'll see or hear about people getting deals that no one can believe. If they aren't lying then they just got lucky enough to be in the right place at the right time.
I've known a few dealership owners over my lifetime, it's a business I'm not sure I have the nerve to be in. The risks they take to move iron amazes me. And having a customer base that feels entitled to purchase their product for at or below what it costs them to buy it makes it an even more thankless profession.