How Dealerships really work?

I’ve said it before...I’m okay with them making some money. I mean, they aren’t charities. But I want to know the truth. What does the truck cost, and what was the mark-up? I’ve heard “dealer invoice” before. But that seems to vary too. Then there’s tax credits, dealer hold-back, factory incentives, performance bonuses, etc. WTF is the price?!!
I want a foolproof formula:
What the dealer paid
Plus extras
Plus dealer mark up
What I pay

Anyone seen behind the curtain?

 

Holdback is 2%
I believe it is off the msrp number.
You’ll never get an idea of the incentives and spiffs as they continually vary, and vary by dealer.
Pay invoice, plus destination, plus TDA plus TTL
If you get below that somehow, or get something for free, be happy
If you pay more than that, it’s your own fault.

 

I always felt the reason a vehicle devaluates 20 percent or so when you drive it off new the parking lot, was that was the dealership's keep

 

My dad used to work at a Cadillac dealership (he wasn't a salesman, drove a rollback truck for them), and invoice cost is definitely not what the dealer paid for it, but they want you to think that. I also know from working in a similar industry that dealers are able to sell at a cost lower than what they actually paid for it and they then turn around and get incentives back from Toyota.

 

I Lways figured invoice truly is what they pay for the car....BUT...they get bonuses and kickbacks depending on how many cars they sell throughout the year. They also get bonuses for parts and service. Customer satisfaction surveys, how many times they turn their inventory over for parts, incentives on certain items, like tires, etc.
it’s not a simple formula.

 

At least in Louisiana there is no "real" statutes that are enforced as far as "dealer invoice". There are some rules, but the regulating body known as the Louisiana LMVC is headed by a commitee of members who all own new car dealerships and of which most are practicing attorneys. So, no there is no enforcement.

Anyway, expect actual cost to be $6,000-$8,000+ less than sticker price, at least in Louisiana.

Hey, you have to give it to us, in Louisiana we score at the bottom of the list in about every statistic. But hey, we are at the top of 4 lists!

Good food
Good fun
Great people

and the most corrupt politicians!

Hey, 3 outta 4 aint to bad!

 

don't sell Louisiana short: https://www.youtube.com/watch?v=g9fT5QPolS0

 

I just bought my '18 Offroad (6spd manual) for exactly the invoice price with no extra added on. No destination charge, $7 to transfer my plates (OR has a deal where you get permanent plates if you're a disabled vet) and it only took me about 20min of chiseling on them to get there so they had to be making money somewhere on the truck. It's a "Cement" one, double cab, etc.

 

Don't forget GREAT music... 4 for 4. Politicians meh... they were better when the best fiddler won the election. At least being good at a musical instrument meant something which is more than can be said nowadays.

 

Edmunds.com is a good site for invoice vs msrp and what the holdback percentage. Also,has a section on first time new car buyers guide that has info on how dealerships work.

 

Funniest thread on TW !

 

They definitely over charge on parts. Have a friend in the dept. They have three prices on every part in the system MSRP, their "sales price", and their actual cost. I priced out some pro parts and the markup was around 30%

 

I just purchased a new Off Road in cement and was able to negotiate $5500 off of MSRP. It involved calling several dealers, but it can be done. I believe they were being pretty honest when they told me they were close to losing money if they gave me anymore.

 

I think it's intentionally confusing. All I know is that they don't build those super expensive new showrooms unless they are making a LOT of money somewhere..

 

I listened to a podcast a while back that profiled a day in the life of car dealership. Pretty eye opening regarding incentives.

https://www.thisamericanlife.org/513/129-cars

 

Here's the skinny on dealerships. Every step of the process is designed to separate as much money from you as they can, while telling you the whole time "you're getting a great deal". Dealerships, politicians and women have one thing in common....if their mouth is moving they're most likely lying.

 

46% markup is about what a company needs to charge to stay in business. how much do you think apple or samsung pays to have their phones manufactured? how about scott and paper towels? or the peanut butter in the lunchbag? or the new granite counter top mommy wanted so you could buy that new cordless power tool?

companies don't usually go out of business because they're making too much money. now i'm heading over to burger-Donald's to negotiate the cost of my juicy tasty grease infused luncheon and see if I can talk 'em down 10%. and throw in free fries, too.

 

maybe you need to look around more? http://www.tufflibuilt.com/#/rtcamper/

 

Don't forget they make alot of money on getting you to finance through them and getting extended warranties. When we got the Rav4 and later the Tacoma we were treated real good. Until, we said we didn't have to finance and we didn't want extended warranty. Then it was sign here and here's the keys. Treated like crap.