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Dealer Holdback questions

shc1shc1 Posts: 10
I recently had a Toyota sales rep from a
dealership in OK respond to my mention of the 2%
dealer holdback that Toyota didn't do that "...or
we'd all be rich." (His words!) Is what he told me
a flat out lie, or is this a possibility? (He
also said I must have been looking at on of those
"things"on the internet, and "they" don't know what
they're talking about.)
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Comments

  • It's a flat out lie...find another dealer!!
  • doc7doc7 Posts: 6
    I ordered a Consumer Reports price service report for the 1999 Toyota Sienna XLE. It indicated that there is a dealer's holdback. I don't have the report with me, but it seems like the holdback was $480 or thereabouts.
  • The invoice I was shown by Rivergate Toyota said no holdback on my sienna. So the invoice I was shown was probably a fake one???
  • Probably. The invoice for all the ones I've seen (and I've looked at several) had a holdback of 2% of base invoice (which is actually lower than the price quoted on all the internet sites, since the internet prices include holdback, and the invoice lists it separately).
  • johnajohna Posts: 2
    I am planning on purchasing a green or blue manual
    99.5 VW Cabrio GLS within the next few weeks. I
    would buy sooner, but the various dealers in my
    area (PDX) don't have this vehicle in stock.

    All of the dealerships have told me that I can't
    have the car ordered from the factory; rather, the
    factory sends the dealership a number of vehicles
    periodically, so it becomes a craps shoot as to
    whether the specific car I desire will arrive in a
    reasonable amount of time (say, within a month or
    so). Am I being fed a line from them, or is this
    standard procedure from VW?

    Anyway, under this scenario it would appear that
    I'm entitled to take advantage of the Dealer
    Holdback. Using Edmund's advice, I have talked
    with the Fleet Managers over the phone and have
    been quoted a price of around $22,500, which seems
    reasonable to me. The Holdback for the Cabrio is
    2% of the MSRP ($23,300 + $525 destination), or
    $476.50.

    How do I take advantage of the Holdback? Should I
    be able to subtract the entire amount from the
    quote given to me, or is the dealership entitled to
    any of it (keeping in mind that I'll be taking the
    car off their hands as soon as it arrives)?
  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Johna, dealerships always receive the entire holdback amount on every vehicle that they sell. Of course, the longer a vehicle stays on a dealership's lot the larger the inventory expense is that is associated with it. My point is that reguardless of what you may have heard, the dealership that you purchase from always gets the entire holdback amount. Having said that, it still doesn't mean that you are entitled to dip into a dealer's holdback on your purchase. We make holdback information available to the public here at Edmund's so that consumers can calculate an approximate dealer cost for the vehicle that they are interested in. Dealerships hate to talk about their holdback and will rarely dip into it to make a deal. In fact, mentioning it often only serves to break down negotiations. I suggest that you calculate an approximate dealer cost for the vehicle the exact Cabrio model that you want using the information that is available here at Edmund's. Then take this number and add a fair profit to it. Once you've done that you will have an estimate of how much you want to pay for this car. Now visit several dealerships in your area and see what the best prices you can get out of them are.

    Your Host
  • johnajohna Posts: 2
    Forgive my naivete, but are you then suggesting that you need to take the invoice (including options), and subtract the Holdback from that figure to obtain the true dealer cost?
  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Yes subtracting the holdback from the dealer invoice will give you an approximate dealer cost for the VW Cabrio. Remember that anything above this figure is not pure profit. The dealership has a lot of expenses that they have to pay.

    Your Host
  • I recently went to a Ford dealer to buy a new
    Ranger pickup. The dealer did not have the one I
    wanted on his lot, however he is trying to find my
    choice at another dealer. During our preliminary
    price negotiation, he said that since he will be
    getting the car from another dealership, his
    company will see none of the 3% on MSRP dealer
    holdback. Is this true or was he simply trying to
    jack up his profit at my expense?
  • megamasmegamas Posts: 1
    in the other topics dealing with this, my guess (and I want to stress that word) is that you'd need to know if he was swapping one vehicle for another. The threads say that the dealerships keep the holdbacks on the cars they originally got from the factory, not the ones they swap. The factory knows nothing about dealers' affairs regarding this, and pay them the holdbacks assigned when the cars are sold. I would have thought there was a pretty standard procedure for one dealer obtaining a car from another dealer without swapping, but maybe not.

    I guess the other point is, if he's not swapping the car, and is getting it in some other way, he'd have to pay the other dealer at least the factory invoice, and THAT dealer would still get the factory holdback, not your dealer. Your dealer would get whatever you wanted to give him over invoice (or what he paid), but he shouldn't expect to recover the holdback since he didn't need it for anything regarding loan fees or maintenance on the vehicle you purchased!!! If he wants reimbursement for operating costs, that's to come out of the profit you gave him on the deal.

    My two cents, and thanks for listening.
  • audia8qaudia8q Posts: 3,138
    It is true that when a Ford dealer does a dealer swap with another dealer, the holdback goes to the original dealer. The other dealer will make the holdback profit not the dealer selling you the car....Thus changing the profit structure for your dealer. The best way to get the lowest price is a factory order, the second best is an "in stock" vehicle...the worst chance for a great deal is a dealer swap...

    good luck
    Rich
  • On another note, I thought I read somewhere that if a dealer has to factory order a vehicle that he doesn't get the holdback. It only applies to vehicles ordered for stock. Any truth to this?
  • In Edmunds Anatomy of the car buying process, it
    makes mention that Mitsubishi charges the holdback
    amount directly to the customer and that it will appear on the invoice. I do not understand what this means. They don't get a holdback from the manufacturer? I need to understand this so that I
    can figure a target price on a 2000 Mitsubishi Eclipse GT.
  • Daplatt2, I answered this question in the other topic that you created. Please check there for my response.

    Car_man
    Smart Shoppers / FWI Host
  • tiptoptiptop Posts: 6
    I will be ordering, most likely, a Ford Windstar LX van. I understand that the dealer will receive the full holdback amount since he is ordering and selling at the same time. Can I negotiate this (I believe it is 3% for Ford)? If so, what is reasonable? Has anybody worked a 1.5% deal? Thanks!
  • tiptoptiptop Posts: 6
    I would like to have the dealer order the vehicle I am interested in if, for no other reason, to take advantage of possible holdback negotiation. If the dealer already has what I'm looking for in stock, will he resist the idea of ordering the same vehicle? How would I persuade him to order?
    Thanks!
  • Tiptop, dealerships almost always would rather
    sell you a vehicle that they have on their lot than order one for you. It is to their advantage from a financial standpoint to turn over their inventory as quickly as possible. Reguardless of how long it has been sitting on their lot, dealerships will receive the same amount of holdback money on a vehicle that they already have as they will on one that is ordered. I do not think that ordering a car or truck that a dealer already has on their lot will help you in any way in your negotiations.

    Car_man
    Smart Shoppers / FWI Host
  • jmurman42jmurman42 Posts: 675
    Car Man is right, the dealer will negotiate the holdback ONLY if its in his best interest to do so. In other words, is he making money somewhere else? There are only htree weays to make money in cars...on the front end...the back end...and trade. Take any of those away from the dealer and your negotiating power diminishes. Unless you are buying Chrysler, holdback should be minimal...Good Luck
  • I just received a printout from Consumer Reports and it stated that there was no dealer holdback for Prizms. I called Consumer Reports and they stated that their information came directly from Chevrolet.

    I also called a Chevrolet dealer and he said that all their cars had holdbacks (which matches the information on the Edmunds web site).

    Does anyone know who is right?
  • Ronkabele, I am under the impression that all General Motors vehicles have a dealer holdback that is 3% of the its MSRP. I have never heard that the Chevrolet Prizm is an exception to this rule. To be honest with you, I really don't see any reason why it would be.

    Car_man
    Smart Shoppers / FWI Host
  • audia8qaudia8q Posts: 3,138
    gee I can't imagine that something on the "internet" could be wrong...hahahaha


    Rich
  • Does anyone know the holdback percentage Subaru dealers receive here in the northeast???
  • Tirebiter:

    I have not heard if Subaru made any changes to their holdback policy for the 2000 model year. During the 1998 model year they had a holdback that was equivalent to 2% of the vehicle's MSRP. That percentage was increased to 3% for the 1999 model year. I suspect that it remains at that level, but don't know for certain.

    Car_man
    Smart Shoppers / FWI Host
  • From the Holdback data provided by Edmunds, it
    appears that Volkswagen/Audi no longer provide a
    dealer "holdback". What's the deal with this ? Is
    Volkswagen just hiding this information from the
    public or do they have a different arrangement than
    other auto manufacturers do with their dealers ?
  • Stash4, I just did a little research on this topic not that long ago. It is absolutely true that Audi does not technically have any dealer holdback. However, there are other ways for Audi dealerships to get money back from the manufacturer, such as customer service bonuses, that essentially serve the same purpose that a true dealer holdback would. Volkswagen on the other hand I believe still has an actual dealer holdback if I am not mistaken. I can't remember the exact percentage that it is off of the top of my head though. If you check back with me later in the week I will know for certain.

    Car_man
    Smart Shoppers / FWI Host
  • Hi Car_man,

    Can you share what you found out about VW holdbacks? I am shopping for a New Beetle and would find the info usefule. Thanks.
  • Bambam2, I wrote that information down somewhere around here, but I just can't seem to find it right now. I believe that Volkswagen's dealer holdback was around 2% of the vehicle's invoice price if I am not mistaken.

    Car_Man
    Smart Shoppers / FWI Host
  • bluedevilsbluedevils Posts: 2,554
    So if you buy a vehicle from a dealer that has to get the vehicle from a different dealer, the other dealer (not the one you bought from) gets the holdback amount. That’s easy enough to understand. But in many cases like this, the dealer acquiring the desired vehicle trades a different vehicle to the other dealer, right? So the dealer you bought from would be getting the holdback on this car that it just traded to the other dealer, making the holdback issue on these two vehicles somewhat of a wash (I know the amounts won’t necessarily be the same). Is there anything wrong with this logic?

    Also, the salespeople in these forums have scolded the customers repeatedly for even considering holdback as part of the transaction. Their stance is basically that holdback shouldn’t be considered as part of the dealer’s profit because the holdback is intended to be used to cover normal operating expenses. The sales folks tell customers to make an offer that they think is fair (e.g. $500 over invoice), without factoring holdback into the equation. But if the dealers are whining about not getting holdback on a vehicle that they had to acquire (buy? trade?) from another dealer, or even pointing this out to customers, that seems pretty contradictory and inconsistent. Do dealers routinely lose their holdback in swap situations, and, if so, do they use this as a bargaining point when determining the price of the vehicle?

    FYI, I am in no way supporting the notion that buyers are entitled to any of the holdback, or even that they should try to use this amount in their negotiations. Most people who are "negotiating the holdback" are probably looking to get a vehicle for some amount below invoice price, assuming that the dealer is still making a sufficient profit if the dealer still gets some of the holdback. Usually these people are being overly optimistic at best, and greedy grinders at worst.
  • Thanks for the info!
  • Bambam2, I'm glad that I was able to help you out.

    Car_Man
    Smart Shoppers / FWI Host
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