Dealer Holdback questions

shc1 · August 1998

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.)

pvanmaan · August 1998

It's a flat out lie...find another dealer!!

doc7 · October 1998

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.

Imashmo2 · October 1998

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???

bjmeyer · November 1998

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).

johna · May 1999

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@Edmunds · May 1999

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

johna · May 1999

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@Edmunds · May 1999

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

bill_mccrory · July 1999

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?

megamas · July 1999

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.

audia8q · July 1999

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

GL1500 · September 1999

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?

daplatt2 · October 1999

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.

CarMan@Edmunds · October 1999

Daplatt2, I answered this question in the other topic that you created. Please check there for my response.

Car_man
Smart Shoppers / FWI Host

tiptop · October 1999

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!

tiptop · October 1999

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!

CarMan@Edmunds · October 1999

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

jmurman42 · October 1999

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

ronkabele · October 1999

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?

CarMan@Edmunds · October 1999

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

audia8q · November 1999

gee I can't imagine that something on the "internet" could be wrong...hahahaha

Rich

tirebiter · November 1999

Does anyone know the holdback percentage Subaru dealers receive here in the northeast???

CarMan@Edmunds · November 1999

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

stash4 · December 1999

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 ?

CarMan@Edmunds · December 1999

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

bambam2 · January 2000

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.

CarMan@Edmunds · January 2000

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

bluedevils · January 2000

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. Thats 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 wont 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 shouldnt be considered as part of the dealers 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.

bambam2 · January 2000

Thanks for the info!

CarMan@Edmunds · January 2000

Bambam2, I'm glad that I was able to help you out.

Car_Man
Smart Shoppers / FWI Host

miller40 · January 2000

Based in part on the strength of many positive comments on Edmunds forums pages, I am in the final negotiations for a Jetta GLS VR6.

Got a line that seems contrary to Car_Man's info above...my dealer said with finality that there is no longer a VW dealer holdback. Said there was in '99 and the company has changed its policy in '00 and held very firm. Anyone else had this experience/verification of this statement or am I getting hoodwinked?

(Final figure of 21545 for the Jetta GLS VR6 with leather, luxury package and in-dash CD -- good deal? plus some dang fees I couldn't get him to budge even slightly on...)

audisales · February 2000

I am a Volkswagon dealer and I can assure you that there is no longer ANY holdback on VW products.

Mitch

miller40 · February 2000

I appreciate the skinny. I used to live very near your dealership-thanks for helping out a (former)neighbor.

scott37 · February 2000

I was told by a volkswagen dealer that they do
get a holdback.

CarMan@Edmunds · February 2000

Hi Prateek. The Dealer Holdback on a vehicle is a certain percentage of its price that the dealership eventually gets back from the manufacturer to help pay its expenses. With Toyota, the dealer holdback is 2% of the vehicle's invoice price. This is not a fee that the consumer has to pay, but you should not expect to be able to dip into the dealer holdback on a vehicle when you make your purchase. In certain instances dealerships will cut into their holdback to make a deal on a vehicle that doesn't sell that well. However, I doubt that many Toyota dealerships would be willing to do so. Similarly, whether a consumer orders a vehicle or purchases one off of a dealership's lot seems to have little effect upon their ability to dip into the dealer holdback. In fact, it often seems as though a dealership would rather unload a vehicle that it has sitting on its lot than order one from the factory for a customer.

As you are probably aware, the Toyota Sienna is a pretty popular van right now. Thus is may be a little difficult to negotiate a whole lot on one. The exact price that you will be able to negotiate will somewhat depend upon the part of the country that you live. Still I would guess that you should be able to get a base 2000 Toyota Sienna LE for around $24,000 or so. It probably would be a good idea for you to check out the Edmunds.com Vans Conference. There you will be able to speak with other Sienna owners and shoppers and perhaps find out how much they paid for their vans. Click here to visit that area: Town Hall Vans Conference.

Car_Man
Smart Shoppers / FWI Co-Host

1500suburban · February 2000

I getting ready to order a new 2000 2WD1500 Suburban. All the dealers in the Atlanta area swear that they do not get a dealer holdback on this model. The Edmunds page on this vehicle clearly says that there is a 3% dealer holdback on the vehicle.

Somebody is either not telling the truth (dealers) or misinformed (Edmunds). Who is really correct? If the dealers are not telling the truth, what proof can I give to nail them.

Please help me. Thanks

CarMan@Edmunds · February 2000

1500suburban, for years General Motors has had a dealer holdback of 3% of a vehicle's MSRP on all of its cars and trucks. I don't see any reason why this would have changed with the new redesigned 2000 Suburban. Most dealerships will not dip into their holdback to make a deal. In fact, even just mentioning holdback often serves to annoy them and break down negotiations. Knowing about dealer holdback is important so that you understand that the dealership is making more money on your purchase than they often are admitting to. Still, ultimately the market will determine how much money you pay for a particular vehicle. From what I understand, the new Suburban has been selling very well since its introduction several months ago. I doubt that Chevrolet dealerships are going to cheap sell one of the few hot products that they have right now. I suggest that you shop around at a few Chevy stores in your area to see which one is wiling to offer you the best deal.

Car_Man
Smart Shoppers / FWI Co-Host

jherm · February 2000

Look Mitch, dealers always have, always will try to maximize their profit, and claiming that no holdback exists COULD be yet another example. I have no way of assessing your integrity. Thanks, but I think an independent source (if there truly is one) would give us more confidence.

CarMan@Edmunds · February 2000

Despite the fact that Audi doesn't technically have a dealer holdback (dealers get money back in other ways), I am almost positive that Volkswagen does have a holdback that is equivalent to 2% of a vehicle's invoice.

Car_Man
Smart Shoppers / FWI Co-Host

joy17 · March 2000

We are in the midst of a deal with a Toyota Dealership. He has given us the invoice price that includes a line item of holdback. How do we determine if the manufacturers base price already has the holdback included or if we are paying the holdback twice by it being listed as a line item?

CarMan@Edmunds · March 2000

Joy17, I suggest that you compare the invoice information that the dealership gave you with the dealer invoice information that's available right here at Edmunds.com. Our dealer invoice prices all include the holdback and this is not usually an item that is broken out separately. If the invoice that they gave you is the same as the one provided here and they are adding the holdback to it, you are essentially paying for it twice.

Car_Man
Smart Shoppers / FWI Co-Host

joy17 · March 2000

Car_Man,
The invoice the dealership gave us starts with MFG Base Price. It then list Factory Options, Port Options, Transportation, T.D.A., M.A.F., Base Vehicle Holdback, PIO Holdback, Whsl. Financial Res. We have tried to compare this invoice with what is offered on Edmunds and we cannot, because of the different lines and options. We do not know if the Holdback was previously buried in the MFG Base Price at the top of the invoice or if it being listed as a line item means it was not included in the MFG Base Price but is included in the Gross Invoice. Again we are concerned if we are paying this Holdback twice or if our concerns are unwarranted. Please tell us how to correctly compare the Edmunds invoice to the one the dealers? It seems to us that we are comparing apples and oranges.

CarMan@Edmunds · March 2000

Joy17, every vehicle has a base invoice price for it before any options are added. This should be listed on the invoice that the dealership showed you. Compare that specific price with the base dealer invoice price that is listed here at Edmunds.com. If they match up and the dealer holdback is added in again later then you are paying it twice. If the invoice price that is listed on the sheet that the dealership showed you is lower and the holdback is added in later then you are not paying it twice.

Car_Man
Smart Shoppers / FWI Co-Host

joy17 · March 2000

Car_Man
Thanks for your help. We took the base price of the auto from the invoice the dealership gave to us. We added the Holdback cost that was listed below (without adding any of the other options). Our figures showed that Edmunds invoice price was $571 more than the invoice the dealership gave to us. It sounds like we have a good deal.

chillief · March 2000

Acura dealer is denying existence of a holdback on
a 2000 3.2TL, which Edmunds clearly says exists.
How can I determine who's right. I wonder if
there's any other money on this car that they're
being disingenuous about.

Thanx to you for your help!

ChilliEF@cs.com

audia8q · March 2000

what difference does it make if the car has holdback or not?

just wondering

rich

cfg1 · March 2000

I would say it makes a difference if the dealer is lying or not.

fronobulax · March 2000

cfg1,
Don't most salesmen tell fibs to make a sale?
:^)

isellhondas · March 2000

I guess I'm wondering what difference it makes too...Do you think that is "your" money?

I agree that a dealer should tell the truth, though.

If a customer wants the holdback, then they shouldn't mind paying part of the overhead, flooring, advertising also, I guess...

floridian · March 2000

chillief: surely you jest. You mean to tell us you suspect a dealer would flat out lie ? Naw, it couldn't be, or could it? Never heard of such a thing. Oh, excuse me the Publisher's Clearing House prize van just came up the driveway. Gotta go!

Floridian

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