Tips on Buying Cars: Dealer Invoice price, dealer invoice price, invoice price for cars

Question
Hi,

I purchased an online service (CarCost.com) that supposedly gives the wholesale or dealer invoice price for cars to help one negotiate a price. In my case this cost was about $3000 less than the MSRP (a 2008 Malibu). Are these really the dealer invoice price? I am a bit suspicious as this service also links you to a particular salesperson at a dealership who will prepare a good quote. In my case it came back $900 over the supposed dealer invoice price. What do you make of this situation? I would have thought the spread between the dealer invoice price and the MSRP would have been more than $3000.


Thanks

Answer
Hi Paul, Lots of great questions that I would love to shine some light on. First of all, I am not a big fan of these on line buyer's services. Most don't have all of the current information needed to effectively price every vehicle out there. Manufacturers change their pricing allowances and other programs to their dealers, it seems, at least on a weekly basis, and they just can't keep up. I even had a customer bring in an Invoice for a pick up truck, that an on-line service had put together for him, that the factory couldn't even build! This will "tick off" most of the on-line guys, but it is what it is!. Your observation is correct. The mark up between dealer invoice and MSRP, or "sticker price", isn't usually very large. That number will vary from vehicle to vehicle, but a 3000.00 spread is about common. When you are at the dealership, ask to see a copy of the invoice. I am never afraid to show one to a customer. To answer your question, the invoice price is genuine, with the exception of what is known as "dealer hold back" and "advertising allowance". This is additional monies that the factory will allow on the vehicle of of his price to cover his expenses to advertise, prep,and sell the vehicles. This number isn't very large either. Keep in mind that if a Dealer sold every vehicle for invoice, and that was what he actually paid for the car, how would he stay in business? As far as the Buying service and dealership discrepancy in the invoice pricing, this goes back to what I addressed earlier. It MAY be that there is an allowance that one thinks can be made, when in actuality the factory, won't allow it. That is why it is always best to ask the salesman to go over the invoice with you and explain what can be allowed or not. I hope I was of some help to you, let me know if I can do anything further for you. A funny related story: When Pontiac first introduced the new Solstice model, it was the most difficult vehicle to find. Demand was well over the supply, and you just could not find them anywhere! Dealers would not sell them for any less than sticker price, and some were even marking UP the sticker price by 1 or 2 thousand dollars. The first Solstice we got in had a mark up from invoice to sticker of only 900.00! So you see, on some models more than others, there isn't a ton of difference. Thanks for your inquiry and I hope I helped.---Jim.