Dealer Holdback questions

cgould119 · March 2000

I am currently in negotiations for a Jetta GLX and have also heard from one dealer that "Volkswagen no longer has a holdback." I then asked since when, and was told it was effective September, 1999. Funny, the other dealer didn't seem to flinch or balk when I mentioned the holdback. Somethings fishy here! Anyone hear otherwise?

isellhondas · March 2000

And of course, the customere NEVER lie either...!

taek · May 2000

I'm helping a friend negotiate for a VW Golf, all information we've gotten indicates no holdback for the dealership.

footprints · May 2000

Have gone to a few dealerships and on one internet service to purchase a 2000 Passat GLS, manual 1.8T, luxury(maybe leather)package and it would help negotiations at the dealership if I state exactly were it is indicated that VW has a holdback(equivalent to 2% off invoice?). Car_man if you do not recall were it is indicated could you give some advise as to how to get that amount reduced off the invoice price of the Passat?

CarMan@Edmunds · May 2000

Footprints, don't worry about the exact holdback percentage that Volkswagen has. Mentioning that you know about the dealer holdback definitely will not help you in your negotiations. In fact, it often serves to break them down. Reguardless of whether there is a 2% or a 20% holdback on the Passat that you are interested in it will sell for whatever the market will bear in your part of the country. I suggest that you pay visits to three or so different VW dealerships and see what sort of deal you are able to negotiate on the car that you're interested in. I would say that a 2000 VW Passat GLS 1.8T with the luxury pkg. and a manual transmission would probably for around $21,800 or so with a little work. Good Luck.

Car_Man
Smart Shoppers / FWI Co-Host

KCRam · May 2000

Hi Town Hallers!

This topic has been frozen due to extended inactivity, and will be archived or deleted in the next few weeks. Please use our Search feature in the left margin to locate other topics in Town Hall that may be of interest to you by entering keywords that address your needs. Also, remember to check the "Archived Topics" in this conference, accessible from the main topic list page. If you discover that no other topics exist that satisfactorily answer your questions, please feel free to start a new one so that they can be addressed,

kcram
Co-Host - Smart Shopper & FWI Conferences
edmunds.com Town Hall

KCRam · May 2000

Hi Town Hallers!

This topic has been frozen due to extended inactivity, and will be archived or deleted in the next few weeks. Please use our Search feature in the left margin to locate other topics in Town Hall that may be of interest to you by entering keywords that address your needs. Also, remember to check the "Archived Topics" in this conference, accessible from the main topic list page. If you discover that no other topics exist that satisfactorily answer your questions, please feel free to start a new one so that they can be addressed,

kcram
Co-Host - Smart Shopper & FWI Conferences
edmunds.com Town Hall

peatnick · June 2000

is the best deal i can get on a passat glx 4motion, silver or blue anthracite with black interior. i talked with a dozen dealers in five states so i know this is the market condition.

Question - if i wait for 2001 model year what are the chances vw lowers the msrp? DM is down 40% vs. USD ytd, vw's costs should be relatively consistent. this amounts to a 40% increase in the margin, less whatever they've hedged for currency fluctuation. i realize the only benefit to vw of lowering the msrp is to sell more passats, and vw seems to have no trouble selling everything they can build. do you know of any new capacity coming on lne this year at wolfsburg?

CarMan@Edmunds · June 2000

Peatnick, personally I really doubt that Volkswagen will lower the price of the Passat for the 2001 model year reguardless of what their home currency does. All of their redesigned products have been selling very well in the U.S. and have absolutely no cash incentives on them. Either some consumer or dealer cash on certain models would probably precede a price reduction and I don't see any indications that would lead me to believe that VW will introduce any new cash on its products in the near future.

Car_Man
Smart Shoppers / FWI Co-Host

kaschr · June 2000

I'm in the process of purchasing a 2000 Passat. MSRP is 22,800---they will "give" it to me for 21,900. Does that sound right to you? Is there a certain formula I should be using to decide on my final price? Thanks!

CarMan@Edmunds · June 2000

Kaschr, Edmunds.com just introduced a new feature to this site that I think will help you out tremendously in your shopping for this car. It's called the Edmunds.com True Market Value. Basically, this new feature is a statistical model that takes into account factors such as supply and demand, MSRP and invoice pricing, the model and style of the vehicle, the Edmunds Street-Price Survey, option availability, and color and produces an approximate price that you can expect to pay for the vehicle that you're interested in. You can find the TMV of the Volkswagen Passat by visiting its page in the New Vehicle Price Guide of this site. Click here to go there: Edmunds.com New Car Price Guide.

Another good place to find out approximately how much money this car is selling for on the street is to pay a visit to the Sedans Conference and to speak with other Passat owners and shoppers. Perhaps some community members there would be willing to share with you how much money they paid for their vehicles. Click here to go there: Town Hall Sedans Conference.

Car_Man
Smart Shoppers / FWI Co-Host

jherm · July 2000

Folks,

I bought a V6 GLS with luxury + leather for invoice + 3% (or ~ $750) from Carlsen in Palo Alto. Very cool people, gave me a quote over the phone, showed me the invoice (which checked out with Edmunds and elsewhere on the web). They were quick, pleasant, didn't insult my intelligence-a painless experience. Ron Price was higher by about $350. Boardwalk in Redwood City was unwilling to give me a phone quote and the person I spoke with gave me as much runaround as I was willing to deal with-which was about 30 seconds (click). Bottom line, in the Bay Area give Carlsen a shot at your business-they did right by me..

KCRam · October 2000

Hi Town Hallers!

This topic has been frozen due to extended inactivity, and will be archived or deleted in the next few weeks. Please use our Search feature in the left margin to locate other topics in Town Hall that may be of interest to you by entering keywords that address your needs. Also, remember to check the "Archived Topics" in this conference, accessible from the main topic list page. If you discover that no other topics exist that satisfactorily answer your questions, please feel free to start a new one so that they can be addressed.

kcram
Co-Host - Smart Shopper & FWI Conferences
edmunds.com Town Hall

guest · December 2000

sysop · December 2000

sysop · December 2000

sysop · December 2000

hyperpiper · May 2001

Quick question about dealer holdback. What happens with the holdback money when the dealer trades a car with another dealership? Does each dealer keep his own holdback "check" no matter how long the cars have been on each lot or do they compensate each other? I hope that makes sense. Thanks...

PAman · May 2001

I've had dealers I trust tell me that the 3% holdback does NOT move with the car. The only two ways this burns a dealer is if he buys a car from another dealer rather than trading one, or if he trades a fast-moving expensive model for a slow-moving cheap model. In that case, shame on the dealer for making a dumb mistake. Remember, they only get the holdback when the car sells.

Also keep in mind that the holdback is NOT the only incentives the dealer gets from the manufacturer. They often get a lump-sum payment in regular intervals based upon overall sales production, or to help pay their floorplan (their way of financing the cars they've bought from the manufacturer). There can also be SPIFs, Special Production Incentive Funds that the manufacturer will pay to move certain models at specific times. These amounts can be thousands of dollars per car, so they are not going broke, no matter what they tell you. And, lets not forget the rebates that go directly to the dealer and not to the seller that they hope you don't know about.

There can also be secret rebates for leased cars that are paid by the leasing company to the dealers, and for dealer-arranged financing through local banks and credit unions. NOW you know why they are so eager for you to arrange financing through them. Add to that the profit margins ranging up to 60-70% on extended warranties, rustproofing and paint and fabric treatment, and they can make $3000 profit on a car you bought at invoice minus a small rebate, but got loaded up with extras in their finance department.

Joe

hyperpiper · May 2001

Thank you PAman for your information. This really helped me out!

rroyce10 · May 2001

......All do respect here but, were do you get your information....?

This has been a topic that has been discussed since the second coming.....

Holdback..is - not - a incentive, bonus, spiff,rebate etc.......it's nothing more..or..less than monies accrued to offset the floor plan of incoming and standing inventories....which by the way, depending on the dealership runs approx 1/4 point over prime -----

So, you do the math..9 million either incoming ..or..standing ---- that's quite a little bit of change.........so, make up your mind ..do we get holdback to keep things just about boyant ( believe me, my friend ..it barely covers that )...do we get this as a "Bonus"--- or to cover a floor plan cost -- that I have already paid out..(remember..my money goes first before I see a dime )...well, so much on your theory there...

Just about all "dealer incentives" ..and rebates, are blasted all over the radio,tv and the internet......So, unless you are a buddist monk........... or deaf and blind- how could a consumer miss it....? ' Secret rebates..on leased cars-- please tell me, I'm slow..and I don't get out much....and please let me know about the -triple super secret credit union monies-- I would love to know..and please, you gotta tell me more, about the 60/70 % profit margins on the extended warranties.....

I would like to hear your response.....and while I wait, I will just be sitting around and reading about the -- other shooter's.. on the Grassy Knoll in Dallas when JFK was really shot by aliens.........I have to admit, you do have an imagination.....l......o....l.....

ps....and yes, the hb follows the vehicle...

Terry.

isellhondas · May 2001

Isn't it amazing what some people think?

All of this "secret" money we make!

hyperpiper · May 2001

isellpotiac · May 2001

BY 6 POINTS. SO I CAN SEE WHY YOU WOULD NOT WANT A DEALER TO SECURE FINANCING FOR YOU. KEEP UP THE GOOD WORK PAman.

kfallsbuyer · June 2001

Hi Everyone,

I'm new to the board here! Looks fun.

I was wondering if a dealer can claim the dealer hold back if he is getting the car from another dealer?

For example: I'm getting ready to buy a new car and they don't have my car in stock, but they did find the car with a dealer several hundred miles away. Can the dealer get a dealer hold back on this car?

Also their is a manufacturer dealer rebate on this particular car, so I'm wondering exactly how to negotiate.

Any comments welcome. Thanks.

Ed

vwguild · June 2001

Holdback will most probably not enter into any negotiation that you have
with your Dealer...See Edmunds.com Tutorial on this subject.

However; that said, most dealers when doing a *trade* do so "Invoice for Invoice",
or a "Difference" check. Holdback on each of these cars stays with the Original
Dealer. The only exception to this Rule is an OutRight Purchase. If I buy a car
from another Dealer it is done for Invoice - Holdback=my check. The reason for
this is that the trade is preferrable, and if a dealer has too much inventory and
forces the sale that is the premium that they pay.

This is California business; I cannot speak to any other part of the country.

I urge you to check out what Edmund's has to say re Holdback...unless you are
looking for a car that no one on this earth wants, it will make your shopping
experience more efficient and enjoyable. For the most part uttering the word
"Holdback" in a dealership is akin to yelling *FIRE* in a theater...And you will be
treated accordingly.

frankrichards · June 2001

Mentioning holdback is like yelling fire in the theater?

I want to pay the dealer less, the dealer wants me to pay more. We reach a common ground and make the deal - win-win. I am going to throw out everything that I can AND the kitchen sink to try and get a better deal, and the dealer is going to do the very same thing. So what?

Ed wants to buy a car that nobody has, he is prepared to pay for it, perhaps pay more than if there were 10 on every lot.

Go to the dealer with your plumbing gear, the tools of the trade, the kitchen sink, bring your lunch and have fun - buy the car!

If I were you, I'd focus on saving a point or two on the financing than paying a $300.00 holdback.

rroyce10 · June 2001

......Let's not go there, but VW is right -- it's always difference to difference..or..check to check, and HB stay's with the original...

Terry.

rroyce10 · June 2001

......I got a funny feeling that your "tool's of the trade" didn't work with your Benz dealer l..o..l.

Terry.

tthrasher1 · June 2001

The vehicle that I am looking to buy has a dealer holdback of 2% of MSRP. From my review of this message board, I have gleaned that the dealers do not usually dip into the holdback to make deals. My question is this, when I make an offer, should I factor in the holdback? In otherwords, one website suggested that you try to make a deal at invoice - holdback + ($100-$300). This strikes me as too little for the dealer to make on the deal but $100 - $300 over invoice seems ok if the dealer will also get another $800 from the holdback. Do the dealers look at it that way?

Is there a rule of thumb regarding the price I should try to get based upon the invoice or the holdback? The vehicle that I am looking at is moderate demand (not selling at MSRP or premium, no incentives and vehicles seem to be moving ok).

cgaydos · June 2001

Whether dealers will go below invoice depends entirely on market conditions. For many domestic models market conditions are such that manufacturers are offering lots of unpublished factor-to-dealer incentives in addition to published incentives and rebates. In those cases you can sometimes not only dig into holdback, but even go below theoretical dealer cost of the vehicle.

However, since your car has a 2% holdback it is probably a Japanese make, and in most cases you're unlikely to do better than straight invoice. What's the supply like? If the answer to some of the following questions is "yes" then you might be able to go below invoice: Does the dealer have a large amount of the model in stock? Does the stock seem to be mostly unchanged over a period of weeks? Is your particular trim line easy to get or can you basically choose the exact options and colors you want? Is there any particular option or color you want that is a soft seller?

tthrasher1 · June 2001

I am looking at a Toyota Sequoia. This model seems to be moving fairly well (otherwise my wife would not want it

. The trim that I want is fairly readily available. I did not really expect to get a price lower than invoice. I guess my question is: is it a strong position to go to the dealer and say "I will pay you $300 over your invoice. You will make approximately $800 on your hold back plus the $300 over invoice that I am paying. Your total gross profit will be $1,100 which is a reasonable amount for you to make on this car".

navy4 · June 2001

This is the first year for that particular SUV. The dealers may still be wanting to sell them a little, ok a lot, closer to MSRP. There are some Toyota salesman on here that may be able to help. Try the Sequoia topic under SUV. I know it's a great vehicle and as such the Toyota dealers will want to make some money.

raybear · June 2001

Dealers are moving on the price more and more, as supply catches up with demand. It depends on where you are looking, but I've seen $500 over invoice in some regions, elsewhere $2000 over is a deal.

tthrasher1 · June 2001

Its funny that you mention that the prices are beginning to move. I noticed that the Edmunds TMV price is very close to MSRP but the CarsDirect price is discounted and the initial offers that I have received from the dealer are also discounted (by about $2,000 off MSRP but not as much was I would like). When I saw that Edmund's TMV appeared to be too high, I had thought that maybe initial demand was very high but that supply had now increased (or demand decreased) lowering the market price but that Edmund's TMV model had not registered the market change yet.

isellhondas · June 2001

Sorry...I can't resist...please, bear with me.

No dealer likes to be told by a customer that he is being offered a "fair" profit, especially when you start talking about holdback.

So, be prepared for that.

For the umpteenth time...*sigh*...holdback is NOT bottom line profit!!! It *helps* pay for bank flooring and a bit of the overhead.

My advise, for what it's worth, would be to NOT mention holdback or "fair" profits, but to simply offer a price.

Because, you see, it's the MARKET that determines pricing and not what the dealer paid for the car.

I do think that a Sequoia is pretty hot stuff right now and are selling for MSRP or close to it.

If 2000.00 below MSRP on a hot selling car isn't attractive to you, I don't know what would be.

I wish you well..just don't get discouraged when your low offer isn't accepted.

tthrasher1 · June 2001

Thank you for your input. I am trying to use a methodology that I am comfortable with during negotiations. I understand that the market drives the prices of the vehicles, however, since I do not sell cars for a living, I have little to go on in using that as a basis for negotiations.

Regarding this particular vehicle, the CarsDirect price (with the options that I want) is $2,400 under MSRP and about $400 less than my dealer's initial offer. CarsDirect's price is still $1,800 over invoice. I feel that the dealer should come down more (at least match Carsdirect price). I am trying to (in my mind) get a target price that I am comfortable is also a fair price.

If I understand your response, you are saying that speaking in terms of a fair profit may not sit well with the dealer. What approach would you suggest? Let me also make clear that I have no problem with a dealer making a profit so I do not view a profit as a negative thing. I also understand that the dealer has substantial overhead to pay and that a lot of the gross "profit" from the sale of a car will not actually land in the dealer's pocket.

im_brentwood · June 2001

As far as Sequoias go.. Cheest deal I have yet seen on one in the Orlando market is roughly $1800 or so over actual invoice (I looked at some cross-sells).

CarsDirect is offering a very good price.

Wanna know a trick? Just print it out, walk in and say "Match it and I buy now" if its' anumber you're happy with.

Bill

tthrasher1 · June 2001

What is a cross-sell? Also what is a Cheest deal.

im_brentwood · June 2001

Cheapest I meant!

A cross-sell is a report showing who sold what, when, where and for how much. Tied into tax records. They're sold to dealers and are kinda expensive...

I.E. I can see what a dealer sold cars for, to who and when and who they financed them through.

Generally not public info though.

Bill

raybear · June 2001

Since you're factoring in holdback be fair, and factor in advertising. The Toyota line averages about 1.2% charged to the dealer. Southern California has a $300 cap, in the rest of the country there's no limit.

Bill has a good point in that you should just challenge your local dealer to the internet price. He's the guy you'll need to service it with in the event something goes awry. You can always continue to shop if you want to.

I'm working on a Sequoia for someone today and the best I've seen is $1200 over invoice, in Southern California, where the dealers are very aggressive. Remember that includes advertising of $300 on the vehicle. Your local dealer may not be so bad in his offer so give him a chance.

isellhondas · June 2001

Is a MISERABLE marketplace! raybear, I feel for you. Lived there the better part of my life.

Carsdirect is only a middleman. They have to send you to a dealer willing to sell for that price. Since they are selling everyone they get their hands on there is little reason to "cheap sell" one.

the car is either a VALUE to you or it's not.

raybear · June 2001

I work on the Pacific Coast, from SoCal to Washington. I live in Connecticut. The marketplace is great for a guy like me, since I'm a deal facilitator I have more dealers and therefore more inventory to work with. And as a cybercommuter I get to show up for work at noon, thus missing all that lovely traffic!

You're right on with the line that the car's either a value or it's not. We all see folks looking to "steal" a car only to have the vehicle sold before they can decide on it or after the market winds change.

afk_x · June 2001

Try out Priceline.

I don't think you are going to get to the price YOU want to pay allowing the dealer to make a FAIR profit.

Still when I am in the market for a car I will probably try Priceline. Why not? You never know which dealer out there is going to be desperate for a deal.

raybear · June 2001

There's desperate, and there's DESPERATE!! Not too many DESPERATE!! Sequoia sellers out there now, but there may be a few deals that are fair to both parties.

jmurman42 · June 2001

If you are in awe over their price....then just buy it through them...

audia8q · June 2001

I agree with jmurman42....As a dealer, I would pass on the deal. If strong shoppers are getting $1500-1800 deals then I know its only a few minutes before somebody comes in and pays at or near MSRP...but it can't hurt to try, you local dealer might be goofy and discount the vehicle to your price...you will never know until you ask....but when you ask, make sure you start with "I will buy NOW... " four magical words that will always get you dealers attention.

Rich

edfinkle · June 2001

I'm talking to a local Nissan dealer and find it baffling that they're willing sell a brand new Maxima at invoice. They showed me the invoice and indicated, in so many words, that the Holdback was enough of a profit.

I also had the same experience at a Dodge dealer when we purchased our Grand Caravan. They sold it to me at dealer invoice, not MSRP.

Is this a good deal or something I should be skeptical about?

Ed

im_brentwood · June 2001

Depends on the car. Pretty much pure supply and demand.

Market conditions vary from carline to carline wildly.

Bill

frankrichards · June 2001

the general rule of thumb is you try to pay as little for the vehicle as you can and the dealer tries to sell the vehicle for as much as they can.

the second rule of thumb is concentrate on getting the best financing you can. again, the dealer wants you to pay a higher interest rate while you want to pay the lowest interest rate. focusing on a 2% holdback while forgetting about 1/2 - 3/4 of an interest rate over 4-5 years is short sighted.

the rule is you must focus on both and don't be in a hurry.

Dealer Holdback questions

Comments

Helpful Tools

Most popular vehicles