Do dealers get vehicles at the same price?

[WhyMe]

Been shopping for new vehicle for my son to go back to school with. did the rounds to the dealers carrying what i am looking for within 50 miles of me. Sat down and talked price price with a few of them . there seems to be one dealer that the price they gave me could not or would not be touched by any other dealers. Same vehicle use to compare. vehicle come pretty standard with no options that would vary more than $100

So do car dealers get the same price on vehicles? seems so strange that the other dealers would not come even close. i am speaking of over $1500 difference

 

[OVERKILL]

No, I believe volume plays a role in the wholesale cost the dealer pays. Higher volume dealers get better breaks. Of course they are all entitled to the same incentives, which are often what dictate the lowest price the consumer is able to get the unit at.

 

[henni]

https://www.autocheatsheet.com/new-car/dealer-holdback.html

 

[demarpaint]

The short answer is no, there is hold back, and incentives dealers get based on units moved. Having said that some dealers like to move a lot of cars and offer lower prices to accomplish that. More cars moved can also mean more allocation. I worked at the #1 Honda dealer in the US, they'd low ball Civics and Accords to get more Odyssey Mini Vans and Pilots [allocated] which were higher margin units. Especially when were were the only dealer around with an Odyssey in the color certain customers couldn't wait for. They also felt moving more cars meant more cars coming back for service, and warranty work. Warranty work doesn't pay much but if they won the customer over they'd be back after the warranty, hopefully. And it was a shot at an up-sell.

Others like to work a higher gross profit on deals and sell less cars at a higher profit/unit. Some low ball deals and have the finance manager make it up on the back of the deal. Bottom line do your homework, and make sure you're not getting screwed on the back end, with hidden fees, and a packed deal should you finance with the dealer.

 

[WhyMe]

ahh i see. i am not too concerned about being taken by the finance guy. they hate me as i buy nothing.

 

[Kestas]

There was a time where destination charges reflected the real cost of transporting a car from the factory. There were even people hired to drive a car from Michigan to Florida to save on destination charges. Or, some people planned a trip to near the factory to pick up a new car. Many dealers thought it was unfair, so some 30 or 40 years ago they made the same destination charge for everyone.

 

[Pelican]

All dealers pay the same price, but then there are volume discounts, sales incentives, hold-back etc all of these plus the cost of doing business (wages, Taxes, Insurance, Maintenance) have an effect on the net income and therefore on profit margin each dealer needs to stay in business. (This is very simplified version)

 

[ARCOgraphite]

Watch out for the 600-900 dollar additional over- charge fee not on the monroney.

They call it a doc fee

That's the big thing up here.

Year ago it might be 39 or 99 dollars.

Now its pushing a thousand!

And many times they wont show you that number until you are signing a deal.

Then there is the finance after sale situation that could lighten your wallet another 1-2 grand - if they are successful.

"Oh, we can just fold that right into the loan - - its will only be another ... tap, tap, tap click click ...17 dollars a month!"
Sound Good?
Ok then

Son, school, new car ? uhhh...... lets sit down a minute.

 

[Hall]

Originally Posted by Pelican
All dealers pay the same price, but then there are volume discounts, sales incentives, hold-back etc all of these plus the cost of doing business (wages, Taxes, Insurance, Maintenance) have an effect on the net income and therefore on profit margin each dealer needs to stay in business. (This is very simplified version)

That's what I was thinking too. The incentives they get "on the back end" or this "hold back" stuff is what they look at a lot on the new car sales side of the business. That's why dealers can sometimes claim to sell a car for a few hundred dollars "over invoice". Well, it might be true but the incentives they get later effectively reduce the invoice cost when it's all said and done.

 

[MNgopher]

I buy based on the out the door price and as a result, don't care what the doc fee is. The dealer can structure it however they want, no trade in, and look at the bottom line. (Though doc fees are capped in MN at $75). I walk on a dealer that wants to do it any other way...

Dealers all structure their sales differently - some based on volume, others based on getting higher prices when they sell, etc... My truck came from a volume dealer - they get their prices where they are by selling more - and getting rewarded by the manufacturer along the way.

 

[Pelican]

Originally Posted by hallstevenson
Originally Posted by Pelican
All dealers pay the same price, but then there are volume discounts, sales incentives, hold-back etc all of these plus the cost of doing business (wages, Taxes, Insurance, Maintenance) have an effect on the net income and therefore on profit margin each dealer needs to stay in business. (This is very simplified version)

That's what I was thinking too. The incentives they get "on the back end" or this "hold back" stuff is what they look at a lot on the new car sales side of the business. That's why dealers can sometimes claim to sell a car for a few hundred dollars "over invoice". Well, it might be true but the incentives they get later effectively reduce the invoice cost when it's all said and done.


That's why the best time to buy is end of December, they have end of month & end of year incentives. I always buy from Dec to Feb and always get great deals. If sales volume at the end of Dec is met there could be a roll back incentive for all the sales for that year, so even if they lose money on your particular vehicle they make it up on the whole year's volume.

 

[atikovi]

None of our business but why are you buying a NEW car for a young driver?

 

[Randy_R]

I once heard a salesman say "We lose money on every deal. We make up for it in volume." Really?

 

[Mad_Hatter]

Originally Posted by WhyMe
ahh i see. i am not too concerned about being taken by the finance guy. they hate me as i buy nothing.

Good manðŸ‘...he wasn't able to eat steak that night, at least not on your dime....‚..i walked out of a deal because of the finance guy once. The sales dude literally stopped me from getting into my car and driving off and begged me to come back in. I told him I would only if I didn't have to see that finance guy again (total sleaze ball) and the deal was closed on what we had already agreed on. I drove car off the lot about 2hrs later.. and the sales guy actually bought me a Subway sandwich and pop while we waited for the paperwork...‚ (it was the end of the quarter, so I'm certain he needed that sale more than I.. which if you can wait a couple of weeks, you might get some free oil changes/detailing or a Subway sandwich ...‚)

 

[CKN]

Originally Posted by Randy_R
I once heard a salesman say "We lose money on every deal. We make up for it in volume." Really?

They could lose money on each deal and make money on the back end. That would include "hold back" and other incentives. So yes-if that was what he was referring to.

Many times you can get a car at invoice or slightly under-it's really an exception that the dealer dips deep in to the "hold back"-but it happens. So-if the hold back to the dealer is $500.00-and you pay $100.00 under invoice-the dealer makes $400.00.

 

[JeffKeryk]

Dealers can make $$ on the sale, the loan, the trade in and the add-ons.
Plus, they have to move cars, as they may be on a revolving line of credit.

Then there is the hold backs and mfg. bonus on survey.

 

[JTK]

Originally Posted by Randy_R
I once heard a salesman say "We lose money on every deal. We make up for it in volume." Really?


I've heard the same thing from sales managers. There is no way they're selling at a loss. To me it means they broke even on the sale, but didn't make much profit.

 

[javacontour]

There may be spiffs for hitting certain sales targets or selling some hard to move models.

Since dealers are the real customers of car makers, I'm sure there is some wheeling and dealing and special treatment for dealers that move the most metal.

Special vehicles are allocated, so a high volume dealer may get more copies of something that will sell for MORE than sticker. That leads to an incentive to move other metal for less money.

I doubt many transactions at a new car dealer are money losing. There may be a few, such as getting a long in the tooth inventory item off the books as it's costing monthly interest payments to the dealer and there is no more floorplanning money for that unit. I.E. cut your losses. But that's rare.

There is generally profit somewhere in a deal for the dealership.