Dealer invoice vs msrp

[Rdfish1]

Normally I negotiate pricing up from invoice not down from Msrp but I did not even check to see what invoice was until after the deal was struck and my deposit placed. I was surprised at how little spread there is between the two on Toyota vs domestics. I was also surprised by how much below invoice I got my limited for, especially since it was not easy to find in 4wd and my color.

I thought I would share in case this helps anyone else. I have read other posts Harding pricing and it gets distorted so hopefully this will be a clear example.

Msrp was 44.1 and I negotiated a 4000$ discount so purchased price was 40.1. However, the dealer fee was 700 so I add this back

Net purchase price was effectively 40.8k bs invoice of 41.8. I bought it for exactly 1000$ below invoice, a larger discount than I realized. Of course tax tag and title must be paid but that doesn't factor into what the dealer sold the car for.

Have others seen this same knd of discounting?

 

[On Point]

Normally I negotiate pricing up from invoice not down from Msrp but I did not even check to see what invoice was until after the deal was struck and my deposit placed. I was surprised at how little spread there is between the two on Toyota vs domestics. I was also surprised by how much below invoice I got my limited for, especially since it was not easy to find in 4wd and my color.

I thought I would share in case this helps anyone else. I have read other posts Harding pricing and it gets distorted so hopefully this will be a clear example.

Msrp was 44.1 and I negotiated a 4000$ discount so purchased price was 40.1. However, the dealer fee was 700 so I add this back

Net purchase price was effectively 40.8k bs invoice of 41.8. I bought it for exactly 1000$ below invoice, a larger discount than I realized. Of course tax tag and title must be paid but that doesn't factor into what the dealer sold the car for.

Have others seen this same knd of discounting?

I've never sold cars so my assumption is merely that. I do not believe the "dealer invoice" is the true amount the dealer actually paid for the vehicle. I think it's just another "tool" they use. Who knows? I could be completely wrong.

 

[JayceeP]

Even if invoice is a real thing, don't forget to add in any manufacturer's rebates his reducing "invoice." I too think it's murky though. Why would you sell a vehicle at a loss with no guarantee you will service your vehicle there? It would only make sense if you/the customer financed, and purchased the add-ons like warranty, paint protection etc.

 

[1engineer]

OP about 10% off list is usually the best people do whey buying a Toyota. Many get worse deals a very few get better deals but a fair amount get about 10% off give or take.

 

[philsey]

@OP As to what you paid vs msrp, you done good. As to "invoice", that remains a figment of the public's imagination.

Sure, somewhere there exists a value representing what a vehicle truly costs a dealer, but you and I will never know. Business Practises 101.

http://www.toyota-4runner.org/5th-gen-t4rs/185331-what-invoice-you-speak.html

We've got a couple of recent posters who could address this, but just like every other business in the world I wouldn't expect anything.


EDIT: "However, the dealer fee was 700 so I add this back". Salesmanship 101.

 

[Granth77]

Having worked for a Toyota dealer for 7 years, invoice is a real thing. But, you're right, it's not what the dealer pays.

The dealer pays net / net, which is the invoice price, minus finance reserve, minus dealer holdback. These figures vary by car...and by sales region.

OP, I'd say you did pretty well. I paid invoice for my 14 TEP. It's ticketed for something like $39,095, and I paid $36,2??. The dealer I worked for never got into the holdback and reserve when dealing with a customer.

 

[1engineer]

Yep. I can give you a simplified version of how it works:
You have a MSRP that is given.
You have an Invoice price which is what a dealer really pays for the vehicle.
The Invoice is public domain though so what happens?
A separate deal is brokered between Toyota and their dealers that IS NOT in the public domain.
It very simply put says "You sell a car for any price (or a certain amount of cars) and we (Toyota or Toyota Regions) will give you $X dollars."

 

[Lester Lugnut]

I do not believe the "dealer invoice" is the true amount the dealer actually paid for the vehicle.

A dealer invoice is a piece of paper or a computer screen view that can be made to say anything one wishes.

Unless you've made a living selling a particular make & model or car, then you will never be 100% sure of how good a deal you got.

 

[Lester Lugnut]

A separate deal is brokered between Toyota and their dealers that IS NOT in the public domain.
It very simply put says "You sell a car for any price (or a certain amount of cars) and we (Toyota or Toyota Regions) will give you $X dollars."

Is that what is known as "hold back" ?

 

[1engineer]

Is that what is known as "hold back" ?

It's called different names but yeah, that's the gist of it. Also it is a different deal depending on the regions. On top of that there are incentives offered to the dealer based on different targets, such as number of Tundras sold, etc.

 

[444]

In addition to all that was previously mentioned.....


Dealerships can "buy in" at the beginning of the year for their quotas.

For example, they pay Toyota so much in the beginning of the year and state that if we sell "X" number of vehicles every month we get a huge bonus. That's why it's often times a great idea to shop mid-week/end of the month where the last day of the month is not on a busy car shopping day.

The dealership knows how many cars they may be away from a bonus so if you are the sale that will put them closer to or over the top they are more than happy to take a hit on your sale to earn a ton from their bonus.

That's how I bought my last two vehicles for WAAAAYYYYYYYY below what I find out what invoice was plus I had them throw in some extras. It's kinda fun having multiple dealerships haggling down to earn my business instead of me sitting in a dealership playing their game.

 

[itsdchz]

Either way, OP did exceptionally well on their pricing!

 

[Rdfish1]

I talked to 4 select dealers via email and asked for Internet pricing and two showed a willingness to be aggressive with one at 3500 and the other at 4000 in discounts. The one at 3500 had a lesser optioned vehicle which was important to me. No 3rd row, no carpeted mats or toto guard, no running boards or anything else besides the cargo slider which I couldn't avoid.

I asked the 3500 dollar dealer to match the 4k discount, which j had in writing but did not provide and they did.

The other two dealers discounted appx 1600 and they weren't budging. I don't really blame them. Toyota does a better job than domestics in terms of managing inventory. None of the dealers seem to have a glut of units so it isn't necessary for them to discount too heavily. At one point I identified 4 units fitting my profile and another 4 scheduled for delivery to the dealership that week, all 4we blizzard pearl limited. This was a high volume dealer in Miami. I called the next day, a Monday and all four on the lot were sold so I asked about the in transit units and they said they were all pre sold but might be able to get me one by the end of the month.

 

[8086bruce]

The dealer I bought mine from is also a freind and when he ordered it for me he gave me a coly of the invoice. It had $2,984.00 in mark up from invoice and just shy of 2% in hold back.

 

[NJTrail]

MSPR is meaningless. Invoice may be totally opaque, but definitely in the right direction towards what you are likely to pay. The reality is, around here, if you walk into 10 dealerships and offer 500 over invoice on a current model year 4runner I'd bet you are ultimately walking out with keys to 8-9 vehicles (should be ALL but some dealers make no sense and try to play the "its a high-demand vehicle" card). Offer invoice and maybe only 4-5 will bite. Offer 500 or more below invoice, and you will walk out of most of the dealerships on most days with nothing, unless you hit them on the right day and they are just below an invisible quota, in which case lucky you! Although you NEVER know how much money they "make" on you, if dealers truly are willing to let you walk once you have made a legitimate offer, I do think you can safely assume it's not much. And I don't think there are multiple $thousands of spread available to dealers on the 4runner, unlike other brands/models. So buying a 4runner is really actually much easier than say, a crazily-optioned F-150 or something. And OP probably did fine and better than average from what I saw around here.

 

[Granth77]

Any respectable dealer will show the invoice. We had no problem at all showing people what we were making. Toyota actually does issue invoices to dealers. These detail the finance reserve and holdback for the particular vehicle. It will also show both MSRP and invoice price of each option.

Just ask the dealer to show it to you. If they won't, simply ask them "why?" I'd love to hear their answer.

 

[bandaman]

I'm currently negotiating on a TEP and the best I can do is $15 under invoice which is about 6% off MSRP. Of course it's the middle of winter in the Midwest and we have snow on the ground so might be better deals in Florida or Texas, etc : ). I cannot even see a TEP in person and have only seen and drove TEs (and one Pro) here. Most dealers only have 4-5 4runners in stock which are usually SR5s or Limiteds. My local dealer is currently out of stock on 4runners, so definitely harder to make a killer deal then say with a mega dealer that has them lined up. Nice job on the 10% MSRP deal, I'm jealous!!

 

[philsey]

These detail the finance reserve and holdback for the particular vehicle. It will also show both MSRP and invoice price of each option.
.

Grant - Curious if you'd explain this "finance reserve" a little bit. It piques my curiosity as to what it is and what it's for.

 

[Granth77]

Grant - Curious if you'd explain this "finance reserve" a little bit. It piques my curiosity as to what it is and what it's for.

Finance reserve is basically Toyota reimbursing a dealer for a portion of the finance charges a dealer occurs from keeping that vehicle on the dealer's floor plan. No dealers own their inventory out-right. They finance it. This reserve is Toyota's way of offsetting a portion of that dealer's interest costs.

It's done across all car makes, Toyota just doesn't bury it or hide it as something else on their invoices.

Philsey, I noticed you're from IL. Where at?

 

[philsey]

Finance reserve is basically Toyota reimbursing a dealer for a portion of the finance charges a dealer occurs from keeping that vehicle on the dealer's floor plan. No dealers own their inventory out-right. They finance it. This reserve is Toyota's way of offsetting a portion of that dealer's interest costs.

It's done across all car makes, Toyota just doesn't bury it or hide it as something else on their invoices.

Philsey, I noticed you're from IL. Where at?

Understood. I knew it by a different term. So, just curious: is this a moving value based on time-in-inventory, or a fixed amount whereas the dealer "benefits" by moving the inventory sooner vs "loses" past, say, 90 days?

Not far - Rock Island. Assume your store is in Peoria?