Jeep Garage  - Jeep Forum banner

What is the "real" dealer price?

6K views 18 replies 13 participants last post by  Pat@PalmenMotors 
#1 · (Edited)
OK, so we know about invoice price. But some dealers sell under invoice even when there is no incentives. I don't believe they are losing money on the deal. So real dealer price has to be under invoice.

Can anybody in-the-know share some insider knowledge on what is the actual dealer profit on a single new car sale (in %)? Let's speak about Jeep GC because things may be different for other brands/price ranges.
 
#2 ·
Re: What is the "real" dealer price is?

Joe,

Here's what I got from Consumer Reports. "Invoice + destination charge" is what the dealer gets billed, but when they pay that invoice, they are allowed a "hold-back". For each of the models, here is the invoice + destination charge (and holdback):

Laredo 4wd $31,381 ($966) = Total $30,415
Limited 4wd $37,751 ($1,176) = Total $36,575
Overland 4wd $40,203 ($1,275) = Total $38,946
 
#3 · (Edited)
Re: What is the "real" dealer price is?

Yeah, I knew about holdback but forgot to mention it. It is 3% for Jeep. So it's about $1,000 on $30,000 car. And when they sell under invoice they lose some of it. So let's say there is $500 left. I just can't believe dealership can survive on this.

My only explanation (and this is well-known I guess) that dealers really make money not on new car sales but on used car sales, service and financing.
 
#8 ·
Re: What is the "real" dealer price is?

And when they sell under invoice they lose some of it. So let's say there is $500 left. I just can't believe dealership can survive on this.

My only explanation (and this is well-known I guess) that dealers really make money not on new car sales but on used car sales, service and financing.
Correct. Dealers make most of their profit from the service department for maintenance and repairs, including warranty work that is paid by the manufacturer. Some dealers use a volume sales business model to make up for the "invoice" or "below invoice" price that yields the subsequent small margin. This benefits the dealers who can handle the volume and obviously the consumer as well as the manufacturer; the manufacturer likes it because they require a volume-critical sales channel to make running their plants cost-effective. If it didn't work, we'd be paying $60,000 for a JGC rather than $40,000.

Don't believe dealers if they cry poor. There are other non-publicized incentives for dealers doled out by the manufacturer or their financing partner. No dealer is actually losing money on a new-vehicle sale. The manufacturers budget for the extra public&private dealer incentives for dealers so they move the metal.
 
#6 ·
Re: What is the "real" dealer price is?

Not everybody gets a fantastic deal on a new car, but you are correct- dealerships don't make their money on new car sales. They make their money on used cars (trade ins, others bought at auction), service, and parts.

There's occasionally other incentives given only to dealers and hidden from the general public, but those aren't on everything. Generally, I consider the dealer needs to make something on the deal, but I'm not interested in getting screwed. If they try to make too much off me up front, they lose the ability to make more off me in the long run, since not only will they not sell me any other vehicles, but they won't see my vehicle for service.
 
#14 ·
Re: What is the "real" dealer price is?

plus some dealer charge for "documentation", another $500. and they make money on the "Paint Protection" package as well as "Service Contracts".
If you really pay for any of these rediculous add ons you are a straight up sucker. I have gotten contracts with this stuff listed on it and simply just crossed it out with a pen and then signed it.
 
#15 ·
Re: What is the "real" dealer price is?

$500 Doc. Fee?

Highest Doc. Fee I've ever seen was $75. Which I am OK with.
 
#17 ·
Re: What is the "real" dealer price is?

guys the best way to negotiate price is to create an auction.

i do all of my negotiating through the internet and only talk on the phone when a deal is about emminent

i find all dealers within a 100 mile or so radius and identify their inventories online.

then i email their internet sales teams and start with a low ball offer and proceed to play them off of each other.

i don't always get the price i want but i know i got the lowest price.

i ended up buying my 2009 cts-v for $12000 off sticker last year and i did it all online.
 
#18 ·
Re: What is the "real" dealer price is?

Dealers make money on financing. Dealers get a percentage of the interest on new loans they get for banks.
 
#19 ·
Re: What is the "real" dealer price is?

Don't forget the so called "stair step programs". As already stated above built into invoice is a 3% holdback. On top of that there are volume programs that go to the dealer if they hit their "objective" or quota. The amount of money differs month to month as well as which cars get money back. Last month 2011 GCs payed extra if the dealer hit their objective. This month it counts toward the overall objective but does not have any money back from the manufacturer. There are different amounts back from the manufacturer based on the percentage of the objective hit(50% 85% 100%) Depending on the month and the vehicles that qualify the money back is anywhere from $300 and up.

Also, the GC doesn't have this, but each vehicle can have even more based on how many they sell. For example the if the manufacturer tells the dealership they need to sell 3 Rams this month and the dealer does then they get $1500 back per Ram retro to unit 1.

Best thing to do is find a volume dealer who goes after that objective every month and has a great service department.
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top