What is this "invoice" you speak of?
- Thread starter philsey
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I'm not sure where you are heading with this, but here goes....
The invoice is essentially the bill from the distributor to the dealer for the vehicle. The "cost" is less than the MSRP to allow for dealer profit. That is the text book description. Years ago, savvy buyers would go to their bank to look at a Kelly new car bluebook to find out the invoice prices for the base vehicle and each option. Armed with this, they would go to the dealer and make offers like $300 over cost (which to them meant that they took the invoice totals and added $300). They would then brag to their friends that they bought a vehicle by only giving the dealer a $300 profit. As the information age unfolded, buyers found out that the picture was much more complicated. The dealers paid advertising fees on top of the invoice pricing, but they also benefited from "holdback," which was an eventual refund of part of the cost back to the dealer. Typical amounts are around 2%. Then there are unknown dealer incentives that award dealers with more money based upon units sold, etc. I don't think the common person has any idea what these amount to. They can vary from month to month, region to region, etc. Okay, that's everything that I think I know. I'll hand the baton to somebody/anybody who really knows this stuff....
philsey
New member
[MENTION=112567]NMJack[/MENTION] Am I correct Jack ... you work for a Toy dealer, yes? You mind revealing what capacity?
As to "where I'm headed" ... it's just that the term is soooo frequently used/abused, I'm just curious as to what it means to those who use it. So, nowhere really, forum fodder.
As to "where I'm headed" ... it's just that the term is soooo frequently used/abused, I'm just curious as to what it means to those who use it. So, nowhere really, forum fodder.
Nope, I don't work for a Toyota dealer. In fact, I've never worked close to retail of any form. That said, I am extremely "frugal," and have spent the majority of a lifetime trying to be an educated buyer. I bought my first new car over 30 years ago (a factory order), and have tried to understand new car pricing the entire time. I've since learned that we will never really know how much profit our dealer is making. We can know a minimum profit they are making (just on the sale, not accounting for their many costs). As a gross over-simplification, if I pay a dealer invoice plus advertising minus the silly doc fee he is making profit equal to the holdback plus any current dealer incentives. I think they also get kickbacks based on financing (both the sale and inventory) and advertising. Again, I'm sure there is somebody who really understands this that can step up and take the baton....
J.A.
Senior Member
I agree that the term "Invoice" is used inconsistently and as such you cannot make comparisons using this nor tell whether someones deal is good or not.
What it means to me is as follows and described on my site (linked below).
+ Dealer Cost
+ Dealer Holdback (2% of base MSRP)
+ Wholesale Financial Reserve ( 1% of base MSRP)
+ Destination charge
+ Advertising Fee
----------------------------
= Invoice
You should never deal down from MSRP. Always deal up from Invoice, keeping in mind that the Dealer's Profit is equal to the amount you paid over invoice as calculated above + Dealer Holdback + Wholesale Financial Reserve. Destination and Advertising are not dealer profit items as they need to pay these back to Toyota.
You need to account for "Manufacturer to Customer" and "Manufacturer to Dealer" incentives also. Manufacturer to Customer incentive or rebate reduces your overall cost while Manufacturer to Dealer incentive or rebate decreases theirs. To avoid polluting and further confusing the invoice calculation I prefer to do this outside of it.
Toyota 4Runner Purchasing and Invoice Pricing
What it means to me is as follows and described on my site (linked below).
+ Dealer Cost
+ Dealer Holdback (2% of base MSRP)
+ Wholesale Financial Reserve ( 1% of base MSRP)
+ Destination charge
+ Advertising Fee
----------------------------
= Invoice
You should never deal down from MSRP. Always deal up from Invoice, keeping in mind that the Dealer's Profit is equal to the amount you paid over invoice as calculated above + Dealer Holdback + Wholesale Financial Reserve. Destination and Advertising are not dealer profit items as they need to pay these back to Toyota.
You need to account for "Manufacturer to Customer" and "Manufacturer to Dealer" incentives also. Manufacturer to Customer incentive or rebate reduces your overall cost while Manufacturer to Dealer incentive or rebate decreases theirs. To avoid polluting and further confusing the invoice calculation I prefer to do this outside of it.
Toyota 4Runner Purchasing and Invoice Pricing
hearno
Senior Member
As I understand it, dealers don't actually "buy" the cars from the manfr. They are "leased' by the month. I forget what I was told it was called but we'll say it was "floor plan" or something to that effect. Basically, the dealer strokes a monthly check to the manfr for every new car on the lot and the cost varies depending on the model. I worked for a dealer service dept while I was in high school but I was very interested in how the sales side worked because it is such a mystery. Whether or not they were blowing smoke or that was how Honda did it at the time, I don't know. But, that's how the new car manager explained it to me back then. So, invoice might be a number but it's not as simple as invoice + options + XYZ = cost etc.
Yeah, here we go: http://en.wikipedia.org/wiki/Retail_floorplan
Yeah, here we go: http://en.wikipedia.org/wiki/Retail_floorplan
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BettysNephew
New member
I worked for a small town Iowa Chevrolet dealer in the sixties so much of what I know is very dated. So said, yes there are invoices. They were printed on on a very thin tissue type paper which I recall was called fish skin. It had the amount the dealer was billed for the vehicle. At that time, and I know for certain in some cases at the present the dealers floor plan was done through banks. The reason I am sure that this is still done is a fairly large local dealer who happened to graduate with me had our old hometown bank build a branch office in one of his present locations. Other dealers may use the makers for floor plans but I cannot truthfully comment on that. There is also a holdback that is paid to the dealer. Back when I was in the business it was 2% paid quarterly but again that could be by agreement or franchise. So even if you paid the dealer the price on the invoice, he made money unless he had paid out too much interest on the floor plan fees. In reality though back then the profit was in the service side of the business and the sale of the trade ins. The new sales were just the attraction to get folks in the door.
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NoDak
Senior Member
<TABLE><TBODY><TR><TH>Make</TH><TH>Holdback</TH></TR><TR><TD>Acura</TD><TD>2% of the Base MSRP</TD></TR><TR><TD>Audi</TD><TD>No holdback </TD></TR><TR><TD>BMW</TD><TD>No holdback </TD></TR><TR><TD>Buick</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>Cadillac</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>Chevrolet</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>Chrysler</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>Dodge</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>FIAT</TD><TD>3% of the Total MSRP</TD></TR><TR><TD>Ford</TD><TD>3% of the Total MSRP</TD></TR><TR><TD>GMC</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>Honda</TD><TD>2% of the Base MSRP</TD></TR><TR><TD>Hyundai</TD><TD>3% of the Total MSRP</TD></TR><TR><TD>Infiniti</TD><TD>1.5% of the Base MSRP</TD></TR><TR><TD>Jaguar</TD><TD>No Holdback </TD></TR><TR><TD>Jeep</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>Kia</TD><TD>3% of the Base Invoice </TD></TR><TR><TD>Land Rover</TD><TD>No Holdback </TD></TR><TR><TD>Lexus</TD><TD>2% of the Base MSRP </TD></TR><TR><TD>Lincoln</TD><TD>No Holdback </TD></TR><TR><TD>Mazda</TD><TD>1% of the Base MSRP </TD></TR><TR><TD>Mercedes-Benz</TD><TD>1% of the Total MSRP </TD></TR><TR><TD>Mercury</TD><TD>3% of the Total MSRP </TD></TR><TR><TD>MINI</TD><TD>No Holdback</TD></TR><TR><TD>Mitsubishi</TD><TD>2% of the Base MSRP </TD></TR><TR><TD>Nissan</TD><TD>2.8% of the Total Invoice</TD></TR><TR><TD>Porsche</TD><TD>No Holdback </TD></TR><TR><TD>Ram</TD><TD>3% of the Total MSRP</TD></TR><TR><TD>Scion</TD><TD>No Holdback</TD></TR><TR><TD>smart</TD><TD>3% of the Total MSRP</TD></TR><TR><TD>Subaru</TD><TD>2% of the Total MSRP (Amount may differ in Northeastern U.S.) </TD></TR><TR><TD>Toyota</TD><TD>2% of the Base MSRP </TD></TR><TR><TD>Volkswagen</TD><TD>2% of the Base MSRP </TD></TR><TR><TD>Volvo</TD><TD>1% of the Base MSRP </TD></TR></TBODY></TABLE>
