Dealer Holdback questions

greanpea68 · April 2007

Beuatifully put Joel.... I wish every deal could be that easy.

dk76 · May 2007

Making a counter offer is fine, but what do you expect if say I come to your store and ask to buy something less than what you bought it for. Do you recall your sales person's reaction. Duh, he felt insulted and if he worked his butt off for you and spent his/her time test driving you on five cars, he should have the right to wack you with a shovel, literally.

Most people either get paid hourly or salary. How would you feel if your boss made you work all day and he threw you a dollar?

I've had all sorts of jobs and I personally would pay sticker for a high quality product than to get a huge discount for a crappy product. My point is that paying MSRP for a Toyota/Honda for example is not a crime, but paying full sticker for a KIA, yeah you should be killed in action buddy.

Most of you guys haven't worked at a dealership so you wouldn't have a clue who gets paid for that one car you bought, I know you rather give your money to Sally S. to feed kids you never met or live in this country. Big chunk goes to the dealer principle, management, sales people, admins, wash bay, and the people who park the cars you all leave wherever you please. Now a $20k Toyota, holdback around $400, split that up from top down. No wonder why there is a high turnover at dealerships. But honestly, the house the win, if not from you then from employees pockets and/or both.

Here's is the truth about the lies that dealerships tell you about, it's same as your parents telling you about Santa Claus and the Tooth Fairy. You've seen those lose weight, make money quick commercials, they're advertisements. Use your common sense, if something sounds too good to be true then yeah there is a catch.

I'll give you an example of a holdback. First of all, salespeople don't get a dime of that, they get commission above invoice. Invoice minus the holdback is the actual wholesale price (you deserve that if the car has been sitting there so long the tires are dry-rotting or you get your own dealer license and buy few hundreds from the factory), it's called wholesale. Second, for Toyota, the Dealer Daily is the actual Toyota's Inventory database that breakdown the entire specs and figures, all the way down to how price of gas they put in the car before it was shipped. If I showed you all those breakdown, most customers will say "why should I pay for that" lol. Hey retard it's a dealer invoice, the dealer had to pay it, what, you buy/sell more than the dealer for the manufacter to deserve the holdback? Holdback is like, customer cash rebate, how about if I say you can take my $400 holdback and i'll take your $750 customer cash rebate for your Camry.

I used to have problems with Edmunds, not because they show invoice or TMV, it's because when they configure the car with options they leave out some here some there or they want to pay the base invoice of the car and keep the options that must come out of my butt. You know i'll be happy to sell everyone at TMV price any day, but when I show them what the TMV is of course they want cheaper than the TMV.

I know i'm ranting and lost a lot of you, but one last thing I heard from a customer recently, he said "hey I taught the dealerships stop selling cars MSRP and now all selling at invoice or less".

People will believe whatever they want to believe, ignorance is so bliss ain't it.

I do have respectable customers few times a month. Last one let me do my job by presenting the Sienna XLE LTD AWD with no talk about price and of course he was also looking at the Honda Odessey as well. But I didn't go bashing Honda, I showed all the feature, their functions, and his benefit for having it. And when it was done he was ready to go home and "think about it" (which means he hasn't done his homework), I said not a problem, but of course when I turned it over to my manager he gave him figures then said how I can earn his business today (that is desperate approach I think). Anyways, next day he shows up with a brief case (he brought his homework) and me keeping every integrity at this point to sell a Sienna at MSRP because yes I deserve it and yes it's worth every penny. He breaks out a consumer report and edmunds. He never talk about a holdback because he was smart enough not to insult me with stupidity that everyone at the dealership works for free and of course he's not a wholesaler.

FYI dealer exchange/inventory managers talk about holdbacks because dealership sell each other at wholesale which means there is no profit. And, yeah the dealer giving out the car keep the holdback, but not every dealer may want an equal trade. Which means if I want a Camry and they want my Yaris, the holdback they keep from the Camry is higher of course.

Three things to remember, buy the car not the price, price does not have wheels. 1st pick the car you may want to own someday then negotiate a FAIR DEAL for both parties, oh yeah review your finance contract before signing, that's where they can really rob you blind.

dk76 · May 2007

The usual outcome of a $1,000 for example, under invoice is by using monthly cash rebate. So if there was a $1,500 rebate for the month then the true price was $500 over invoice.

Another scenario is holding back on your trade and giving allowance to your new car. So if your ACV was $3,000, but the dealer said they'll buy it from you for $2,000 and use the $1,000 to discount under the invoice price.

dk76 · May 2007

what kind of a tard are you? you guys talk about dealers as one entity, if so the salesperson should be getting paid like someone at Bestbuy. No dealership pays their salesperson a commission on a holdback or at a...did I say commission. lol

Example:
$20,000 MSRP
$18,000 INVOICE minus holdback for example 2% Toyota
$18,360 NET

So if a salesperson sold you at NET(wholesale), then it's $0 profit. Not really, it's a minus because the dealer pay the accounting/admin and washbay/lot attendants by the hour/salary. So how many dealerships can you find near your house who would sell you at wholesale plus some cash you robbed from hourly/salary people who wash the car, who title it with DMV, who answers your calls, who wash the windows of the showroom you like to be in when it rains or it's too hot outside?

oh btw. my Toyota dealership's employee price $100 above invoice, but no processing fee, guess how many of our own employees buy from their own company when we have customers paying less than that? oh yeah and this is a no haggle price, you don't think I need a car too?

dk76 · May 2007

cuz you can't handle the truth, seriously!!
Every manufacter has all those fees included, some show all the details some don't because you won't understand it and think it's a sham.

You know what Edmunds.com doesn't sell cars, but it's pretty close to the manufacter's specs/figures, doesn't have all the breakdown of cost because Edmunds doesn't make cars. Edmunds make money by selling ads space. And Edmunds is not free, there's no such things as free. I mean it's common sense, you see a Saturn ad here, who do you think pays for that indirectly? You of course, you know how much money car makers spend money on ads which includes buy ad space here so that Edmunds can give you the so called free service.

jeffyscott · May 2007

what kind of a tard are you? you guys talk about dealers as one entity, if so the salesperson should be getting paid like someone at Bestbuy.

I'm kind of thinking some should, but I won't name them

. It is not the customer's responsibility to to concern themselves with your compensation. If you don't want to sell a car for $X, just say "no, I am sorry but I can't sell it to you at that price" and move on.

The owners of car dealerships all seem to be quite wealthy, from what I can see. So they are making plenty of money, if the employees feel they are not getting their fair share of the wealth they ought to ask for better pay, instead of blaming the customers.

dino001 · May 2007

Unsuccessful pitches to people who will buy it from the next guy, never had intent of buying, or have no idea how much it will really cost them is part of your business model. I know it is disheartening, but don't take it so personally. If somebody thing this Sludgeon XLS AWD is worth 3 grand less than you paid for if, it means you either selling an overpriced POS that nobody wants, or that person is wrong. No sale either way, but again - part of the business.

Do you really think your business is so different than others? My bosses have to pitch engineering project presentations for free all the time and only get paid when win (read 0 if we don't we all go home).

As a customer I don't care what your business model is. Perhaps you're paid hourly, perhaps you are paid nothing until you have sold 20 cars that month. You may think your product is precious, superior and worth every penny - I may think just the opposite. If you want a sale, and I want a car - we have to meet somewhere. If it takes holdback sell it - good for me. If it takes ADM for me to get it - good for you.

If you accept that you can command MSRP+ for something and get away with that, you have to accept that other products that are not so hot will require your losing money just to clear your lot. For your sake it would be better if you were selling the former ones in greater numbers - but if not - well that's tough, but I don't honestly care. You obviously chose wrong product to sell or wrong profession to hold, but meanwhile I will take advantage of that. I know it's cruel, but if you feel no remorse of charging above sticker for model X, I feel no remorse in taking your holdback on model Y.

kathyc1 · May 2007

I love reading these notes from salespeople themselves, and I know you're trying to help us, but to tell you the truth...they go completely over my head. I'm not a professional bargainer and it's hard for me to go into a dealership as this little old lady who is nervous to begin with. I look at what Edmunds says about MSRP and Invoice and I wonder what would be a fair price between the two. Years ago I heard a certain percentage was fair for both (4 or 5% over invoice?). That's the information I need. If a Honda EX is marked at $18,000 MSRP and $17,000 invoice, would something like $18,500 be fair for both? These are of course dreaming figures, not actual. Any ideas would be helpful. In 2002 I went in and got an extimate on a Civic. They didn't like my price and I didn't like theirs so I walked. They called me the next day and made me a counter offer which I accepted. I felt I got a good deal whether or not I did. I never worried about it because I loved the car.

jkinzel · May 2007

Kathy, I dont think any dealer would walk away from 1% over invoice, and if he does be grateful. 4% to 5% is too high.

dino001 · May 2007

It strongly depends on what they're selling.

thenebean · May 2007

i agree with dino - there is no one percentage over invoice that is the benchmark for all car deals everywhere. it depends on a lot of variables as to what a good price is for a specific car. if you do your research, you should be able to determine a fair price to offer/accept. if you have questions, come to a forum like edmunds where people can point you in the right direction.

to say that 4-5% over invoice is "too high" is just not right.

-thene

kathyc1 · May 2007

Thanks Thene, I really love the entire Edmunds site and have learned a lot. I've been lurking around the Civic area and they really are reporting prices that jump all over the price range so I'm not sure if any of those dealers would accept 1% or even 5%. It's a very popular car right now.

sidious6688 · May 2007

It depends on how afr you want to go. You could argue that if the dealer accepts your offer you should have offered less, and that until the dealer lets you walk out, you are not being unreasonable.

gooserider · May 2007

Hey guys...lots of info here but I won't pretend to understand it all hence I ask these questions:

On the lot the HHR I'm looking at has a red tag on it advertising it for 18296 after 1500 dollar rebate

MSRP on it is 21195

Before destination charge it is 20605 (3% is 618.15 remember this #)

I balked at some of the #'s that the dealer was throwing out there so he pulls the "invoice" for me and presented the following on how much the dealer is making on this sale.

20128.68 is what invoice shows for this HHR
618.15 is what is listed as holdback amount
19510.53 is # after HB is subtracted from "invoice"

Before we go any further, can someone tell me what this 19510.53 number is? Thanks

Ok continuing...

19510.53
1500.00 this is the current GM rebate for the HHR LT

18010.53 Net

18296 is selling price and according to him that means the dealer is only making 285.47 profit on this sale.

Do these numbers make sense? If true does this man the dealer is cutting into his holdback to make a sale?

It was mentioned to me on another forum that the first problem is that the dealer is using the 1500 dollar rebate as if it was his money discounting the price of the car....now no genius here but if I'm not mistaken, that 1500 dollar rebate is to ME, not the dealer so he should not using it in his breakdown on how much profit he is making on the car right?

As asked above, what is this 19510.53 number and how should I treat it?

I'll have some more followup questions but I didn't want to try to jam everything in at once.

Thanks so much!!

thenebean · May 2007

that 19510.53 number is dealer net. unless there are other incentives to the dealer on volume, etc, that is their bottom line. will they ever cross it? of course. but there are a lot of variables that come into play as to if and when they cross that line.

it looks like the deal they are giving you is definitely cutting into holdback. i don't know the going rate for HHR's - but it seems like an aggressive deal.

with regards to rebates, most dealers discount the car the amount of the rebate, and then the money is sent to them. i am sure you can not do it that way, and get it directly from the mfgr after the fact, but in the two years that i sold cars, no one ever did it that way. dealers just discount the car up front for you, and then they go through the process of getting the rebate money from the mfgr.

again - not knowing the market for the HHR - i can't make a definite yay or nay opinion on the deal...but overall, you're into holdback, which is aggressive.

good luck!

-thene

groverc · June 2007

I want to buy a 2007 Mustang that the dealer has had on his lost since last August. The car has some very minor scratches on the rear bumper, and due to the fact it has been sitting for 10 months, I think it should sell for below invoice. Am I nuts? The dealer won't go below invoice. The invoice is $19,486. I want to buy it for $19,000. The dealer also wants a $125 doc. fee. Any thoughts?

joel0622 · June 2007

I don't know what your time frame is but spring time is a bad time to be trying to buy a Mustang back of cost. A cold, Snowy January evining is a good time to do that

british_rover · June 2007

There aren't any rebates on mustangs right now?

groverc · June 2007

Yes, there are rebates. The rebates would be deducted from the invoice price.

joel0622 · June 2007

If you let me know your zip code I will pull a program sheet for your area and let you know if anything special is going on

oldfarmer50 · June 2007

Edmunds lists $1000 rebate on Mustang V-6.

metro123 · June 2007

I once bought a car with a scratch on the door. I got a decent discount off the price because of the scratch, but otherwise it was a nice car. Several months later I had the door painted and the scratch was gone. It looked perfect. Cost me $500 out of pocket but I was happy. A year later my needs changed and I decided to trade the car in for a truck. Dealer's best offer was about $2000 off of wholesale. Why? The car had paintwork and that knocks about 15 to 20% off of the value of the car (according to the used car manager). So a good deal wasn't so good after all.

Unless you're getting a substantial discount off of the price, even for minor scratches, keep looking. Lot's of nice cars out there on the lot.

bobst · June 2007

How do you know they will not accept your offer? Have you made a specific OTD offer and told them you are willing to write a check and buy the car RIGHT NOW?

That is the only way to see if your offer will be accepted or declined.

groverc · June 2007

I have made them a firm offer. Even talked at length with the sales manager. I am in Indianapolis.

bobst · June 2007

You made a firm offer. Good for you.

Did you do it in person with your checkbook in your hand? They seem to take those kind of offers pretty seriously.

groverc · June 2007

I did it in person, but my checkbook was not visible. Should I try again? Or am i being unreleastic to expect to buy the car, which has been sitting on the lot for nearly a year, for less than invoice?

bobst · June 2007

Well, having your checkbook open and your pen in hand may help a little.

However, my guess is that you are being unrealistic.

By the way, did you make a specific out-the-door offer or was it one of those ambiguous offers like "$300 under invoice"?

groverc · June 2007

I gave them a flat offer of $19,000 plus tax and a $125 doc. fee. The invoice is $19,486. My reasoning for under invoice is because the car has been on the dealers lot since last August and has a scratch on the rear bumper.

bobst · June 2007

Well, it sounds like you did all you could except offer more money.

ryama · August 2007

I just got the invoice on a Lexus I want to purchase and it has:

TDA
Dealer Holdback
Whsl. Financial Reserve

TDA .........: $ 583.00 not negotiable
Dealer Holdback ......: $ 932.00 not negotiable
Whsl. Financial Reserve $ 466.00 not negotiable

Are these charges that are tacked on to my pricing? I thought dealer holdback was a kickback to the dealer and I have no idea what whsl. Financial Reserve is.

oldfarmer50 · August 2007

So an "invoice deal" gets the seller $1981 profit? That's pretty sweet.

gasman1 · August 2007

Are these charges that are tacked on to my pricing?

We've been seeing more of these types of charges/fees. Some say they're legit and others say they walk over them. Personally, I would pay the $583 advertising, but not the $932 holdback or $466 financial reserve. A few have said they tell the dealership, okay... I'll pay these, but you will add $1 to my trade-in for every fee $1 that I pay.

The way car sales are changing, I envision my next purchase more difficult than past purchases.

joel0622 · August 2007

WOW, you can negotiate a Lexus from invoice now days? I thought that was Toyota's luxury line and that you had to work hard to get a break off of MSRP on.

Several years ago a guy I know bought two of there SUV's one for him and one for his wife (I knew I should have went to medical school) and they told him the price was posted clearly on the window sticker, will he be paying cash or financing?

british_rover · August 2007

A couple of weeks ago one of our directors asked us to do an experiment. He wanted to see what quotes for RX350s were in our area.

So we emailed a couple of local Lexus dealers and told them what we were looking for. We got between 4,500 and 5,500 dollars off MSRP with just a single email. It was a fully OTD price quote too.

oldfarmer50 · August 2007

"...We got between 4,500 and 5,500 dollars off MSRP with just a single email..."

And you guys say internet shopping doesn't work :P

epiney · August 2007

A couple of weeks ago one of our directors asked us to do an experiment. He wanted to see what quotes for RX350s were in our area.

So we emailed a couple of local Lexus dealers and told them what we were looking for. We got between 4,500 and 5,500 dollars off MSRP with just a single email. It was a fully OTD price quote too.

Does this make you a stroke? :P

epiney · August 2007

WOW, you can negotiate a Lexus from invoice now days? I thought that was Toyota's luxury line and that you had to work hard to get a break off of MSRP on.

Yes you can. They still work the new LS from MSRP, but the ES and RX from invoice is very common.

british_rover · August 2007

I sure felt like it but when the big bosses say jump you say, "How high, where would you like me to land and can I get you anything while I am up there?"

jennheather · November 2007

Is there an internet site that lists the present Factory to Dealer Car Rebates? Thanks, Tim

joel0622 · November 2007

link title

cars800 · November 2007

My Texas car dealer charges me "inventory tax" on the car I want to purchase. He says in Texas, all buyers have to pay ""inventory tax. I would like to know if this a correct statement, or is "inventory tax" an expense that should be paid by the car dealer instead. I always thought that the buyer only has to pay sales tax. Thank you for your help.

badgerpaul · November 2007

I live in Texas and every new car I've bought since living here has had that charge and I've bought from many different places.

cars800 · November 2007

Thank you Badgerpaul for your input. I guess it's normal business practice in Texas for buyers to pay inventory tax, and this is not a negotiable point.

badgerpaul · November 2007

A little known secret is that the customer always pays for everything whether it's broken out on the sales sheet or just a part of the price.

kyfdx · November 2007

The tax is technically a tax on the dealer... But, as noted, every dealer in Texas passes it along to the consumer, as a line item charge.

So, the statement by the dealer is wrong, but immaterial..

Fortunately, it is a small charge, relative to the purchase price.

regards,
kyfdx
visiting host

oldfarmer50 · November 2007

"...Fortunately, it is a small charge..."

What next, a toilet paper tax for the customer rest room? Every time I read about these kind of deals I become more devoted to the "Bobst" method. :mad:

dash5 · November 2007

Will specific dealer holdback information be on the vehicle invoice? Sorry if that's obvious.

Also, as I understand it I should be able to request to see the invoice on any vehicle i'm purchasing and the salesperson should show it to me, or I should find another salesperson. Sounds right?

oldfarmer50 · November 2007

"...Will specific dealer holdback information be on the vehicle invoice?..."

Edmunds has that info online. I don't know if it is on the invoice of most cars.

I would think the salesman is under no obligation to show you the invoice unless he/she is basing your price on it (such as: Invoice plus $100). Invoice info is also available online.

I once saw a car where the dealer had listed the holdback as a charge to the customer thus trying to collect it twice.

dash5 · November 2007

Ah I see, it's a static value:

http://www.edmunds.com/advice/incentives/holdback/index.html

Honda 3% of the Base MSRP

I thought it varied from dealer to dealer or changed over time. Thanks

I know invoice is online but they seem to vary a bit depending on which site you use, not to mention I cant find the exact codes the dealer gives me sometimes. For instance a Rav4 was quoted to us with 5 or 6 option codes, I found 4 easily but not the others. I suppose bottom line is it would be easier to just see the invoice

Well what I'll do is run up an invoice online and just tell them "this is what I'm coming up with and that's what I'm going by unless I see otherwise from you"

wlbrown9 · November 2007

"...Fortunately, it is a small charge..."

"What next, a toilet paper tax for the customer rest room?"

I thought that was covered under the 'shop supplies' charge. Well, on second thought that should be included in the DOC fee for the sales side, shop supplies would cover it for the repair shop side.

Dealer Holdback questions

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