"Sticker Price" on new cars question (The last brand new car I bought was in 1977)

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Is there any rule of thumb one can use to know how much above actual dealer cost and sticker price in order to effectively negotiate with a dealership.? Any help on how things run now is greatly
appreciated.
God Bless,
Ray Miller snipped-for-privacy@localnet.com
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At the dealership here, they told me when I ordered a new vehicle that my price was $500 above their own. That was when I ordered one, but I think the lot vehicles have a bit higher markup on because my parents told them on a blazer that if they would come down 1000 they'd take it, and the dealer did so. I think that the markup really depends on what vehicle it is really.
--
twins0203


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You cant go by what the dealer tells you. The dealers cost is different per vehicle but generally a little over half what the sticker shows. If you go to a retail store & buy merchandise, it is usually marked up at least 200% or more. On a $36,000 vehicle, the dealer is probably invoiced around $27-28K. At the end of the year the dealer will get a rebate back from the manufacturer around $6-8k. If they have a big sale & let everything go at invoice, they still make a decent profit of $6-8k.
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Where did you ever get the idea that a dealerships net invoice is half the MSRP? 150% to 300% wholesale discount may be common to furniture and jewelry but certainly not to automobiles. The spread on a 36K vehicle is more like 5K not 9K. The spread on base models is only around 10% of MSRP rising to abound 17% on luxury models, before the expenses. The invoice is generally 83% to 88% of MSRP, depending on the MSRP, including the holdback. When a dealer sells a vehicle he must pay his finance source the invoice price that they paid the manufacture, plus interest, within seven days. The purposes of holdback is to reduce the number of monthly credits that would be going back and forth between the dealership and the manufacture. Dealers are paid the holdback, that averages around 2% to 4% of MSRP quarterly not annually, after the floor plan and parts account balances have been deducted.
mike hunt
Micah wrote:

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That is correct. If you can knock @12% off the sticker you got a good deal. If you can get 15% off then you really hit a good deal. About the only time you may do better is on a special ordered vehicle because they know that it is gone as soon as it comes off the truck and all the financial and inventory headaches of a stocked lot vehicle aren't there.
One of the best times to buy a new car from stock is a few days after a particulary bad snowstorm. One of the last things anyone buys at that time is a new car but the dealer's bills still go on even though sales are almost at a standstill. Dealers who also sell 4 wheel drive vehicles will be less likely to cut you any slack as their sales remain steady or even increase during severe winter weather.
No matter how much you wheel and deal you have to remember no dealer is going to lose money on a sale, ever.
-- Mike.................................................... "Opportunities are spawned from crisis"
Where did you ever get the idea that a dealerships net invoice is half the MSRP? 150% to 300% wholesale discount may be common to furniture and jewelry but certainly not to automobiles. The spread on a 36K vehicle is more like 5K not 9K. The spread on base models is only around 10% of MSRP rising to abound 17% on luxury models, before the expenses. The invoice is generally 83% to 88% of MSRP, depending on the MSRP, including the holdback. When a dealer sells a vehicle he must pay his finance source the invoice price that they paid the manufacture, plus interest, within seven days. The purposes of holdback is to reduce the number of monthly credits that would be going back and forth between the dealership and the manufacture. Dealers are paid the holdback, that averages around 2% to 4% of MSRP quarterly not annually, after the floor plan and parts account balances have been deducted.
mike hunt
Micah wrote:

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The spread on a 12K base model is around 10% of MSRP rising to abound 17% on 45K luxury models like a Lincoln. The invoice is generally 83% to 88% of MSRP, depending on the MSRP, including the holdback. Foreign manufactures have a spread that is generally 2$ to 4% higher than domestics and foreign manufactures are more likely to add more expensive smoke and mirrors ad on packages and less like to reduce the MSRP. The market is so competitive that today you are more likely to get a higher discount as a PERCENTAGE of the MSRP than you did in 1977, and the dealer will most likely not earn many more dollar than he did on you previous car. When I began selling cars in the early fifties the dealership would net around $300 on a car with a selling price of $2,300. Today the dealership sells more than three times as many cars and is happy to net $500 on a $23,000 car.
mike hunt
"Raymond A. Miller" wrote:

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"Where did you ever get the idea that a dealerships net invoice is half the MSRP? "
I did not say the invoice was half the MSRP. Raymond wanted an idea of what the dealers cost was. With this info he could decide what he would be willing to purchase the vehicle for. I'm sure he doesn't expect to purchase a vehicle at cost. If that was an option, there would be no dealerships. Every business is in business to make profit. By my calculations $27,500 (Average of 27-28k which I stated earlier) is 76.4% of $36,000 not 50%. They vary anyway. I may be a little low & I may not, depends on the vehicle.
Today the

You had better sell a boat load of cars to stay in business at a $500.00 profit. I didn't say profit was a bad word either. If the dealership is happy to make a sale & net $500, what's the big deal about a big sale "$1000 over invoice... at invoice & so on". I wouldn't want to average a net of $500 on a $23000 vehicle.
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Then why did you say;

Nor does a dealer but unless a trade is involved, that we can get from the buyer at wholesale or less, a $500 net profit is often the case.
mike hunt
Micah wrote:

Micah wrote:

different
shows. If

up at

invoiced
rebate back

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Yea, I'd say Mike was pretty close on that estimate.
I have a parent who worked at GM and I get dealer net price on all my vehicles. And though it seems to vary from 10% on the entry models to 15%+ for luxury and trucks, I can tell you precisely that I paid 11.3% under MSRP for my 2002 Yukon.
Now if you ever eget a brain fart to go price a Yukon, you'd swear the margin has got to be closer to 100%, but apparently not.
But that's not what really hurts. Add on the gas guzzler tax, dealer prep & delivery and administration charges .... not to mention the other various taxes ... all of which, by the way, you 'non-GM employees' would also pay and the price tag inflates another 15 - 20% ... ouch.
I love the Yukky, but I had to sell my first born to pay for it. Oh well, at least I get to see him on weekends.

half what the sticker shows?

of
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purchase
dealerships.
$27,500
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"Then why did you say;
The dealers cost is different per vehicle but generally a little over half what the sticker shows?"
Cost not invoice. I know what your gonna say. If you sell 100 cars per month $500 profit. Thats $50,000 per month to pay overhead & stay afoat. You have 10 good salemen. Johny sold his ten cars this month at 25% commission. He made $1250 this month. Hope he don't have a bad month. Poor ol Johny is just barely getting by. I think he's looking for another job. Good luck! Vehicle MSRP = $25568.18, 88% invoice = $22500 Sold @ $23000 $500 profit + 3% rebate of $767.05 = $ 1267.05
"Today the dealership sells more than three times as many cars and is happy to net $500 on a $23,000 car."

Nor does a dealer but unless a trade is involved, that we can get from the buyer at wholesale or less, a $500 net profit is often the case."
Foreign manufactures have a spread that is generally 2$ to 4% higher than domestics and foreign manufactures are more likely to add more expensive smoke and mirrors ad on packages and less like to reduce the MSRP.
Smoke & Mirrors!
I have sold new cars also. Seen all the Smoke & Mirrors but never have I seen a new vehicle sold for $500 profit, be it a 14-23k vehicle. Anyway I'm done with this one... you can have the last word.
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Most of the dealership's income/profit comes from servicing customers' cars (warranty/mon-warranty repairs) and used car sales. As far as new car customers go, there are 2 kinds: the ones who did their research and know exactly what car what they want and the dealer price on it and then there are those naive folks who pay more, sometimes a lot more for the same car. I know a new car salesman (friend from school) who has some interesting stories to tell. He recently made a deal with a woman. She traded her '99 Neon (with only 50K miles) in on an '04 Toyota Corolla. He convinced her that her car wasn't worth much. She got $500 trade in value for it and paid retail for the Corolla! He turned around and bought it back from the dealership for the $500 (a perk of working there; you get to buy used cars at cost). He sold the cream puff Neon for $3000 a few days later. I told him: "ever hear of ethics?" Ethics are for losers, is sort of what he replied. It sucks. But of course ethics are relative. Perhaps the woman is well-off and could afford to be soaked for $2500 for my friend's benefit (a friend who has 4 mouths to feed).
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People that buy Toyotas are not too smart.. They are willing to pay more because they think Toyotas never break down. A friend of my wife bought a left over loaded V6 Camry, all the bells and whistles with and MSRP of near $30,800. She believed she got a great deal because they gave her a $1,000 rebate of the MSRP. She got 12K, 3K less than wholesale, for a two year old trouble free Buick LeSabre Limited with 19K on the clock because they told her 'Toyota is number one now and people don't want American cars anymore.' She also got sucked into $4,995 for an extended warranty, under coating, rust proofing, paint sealant, door edge guards and mud guards. The dealer charged $300 to do the transfer plus state fees and 6% state tax. This lady could pay cash for her cars but she settled for a 24 month contract 'because they only charged .039%.' The dealer got $18,800 from her $1,000 for Toyota, plus the $300 'fee' and around $2,900 on the smoke and mirrors package. Total cash on the deal, around $23,000. After he pays the invoice of around $27,000 and the sales crew he will have about $5,500 in a Buick that should bring around $18,000 retail. Later on he will get around $900 in holdback plus another $1,500 in carryover on a 2004 and 1% on the finance contract. That is why I stopped buy Lexus' a few years ago after owning three. The dealers think they can charge whatever they want, because people think Toyotas never break down.
mike hunt
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On Wed, 22 Sep 2004 19:32:35 -0400, snipped-for-privacy@mailcity.com wrote:

Straw man. Reality, they think they don't break down as MUCH. After all your spouting, you actually never addressed that key point of relative liability. You only addressed relative costs.
I'm not expressing an opinion on it, just pointing out you only talked about half an equation.
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Yes, the person got suckered, but that can happen with any car, foreign or domestic. Sounds like they would have gotten suckered by any dealer if they were that uninformed.
Also, as the other poster stated, you need to look into 'relative' reliability. Anyone can have good or bad experience with any one car. However, in general, looking at all surveys and information sites you will see that in general toyota is a much more reliable brand than others.
Keep things in context!
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snipped-for-privacy@mailcity.com (mark) wrote in

I bought a '95 Toyota Pickup (last year for the 22RE 4 cylinder) with 45K miles in '97 for $4800. I put 150K miles on it and in all those miles, the only things that went wrong were the starter and alternator (which I changed out myself). I used it to move a lot of furniture for family members/friends; used it to tow my brother's VW's around and the clutch STILL lasted for 200k miles. The cylinder head finally cracked at 200K miles in 2001. I sold the truck to a mechanic friend for $1500. I paid only $3300 for 150K miles. My friend still has it (it has 200K miles now). The new cylinder head was only $500. He changed the clutch, but the original clutch still had life left in it. That's what you call value.
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Justin wrote:

I did the same with a Chevy S10. Bought it in 1990 from a guy that got it from a repo auction. Had to unbolt the seat and hose out the interior and took off the 3" body lift. It had 75k on it then. I still have the same truck with 170,000k on it. I used to get 27mpg on the highway and have hauled everything from lumber to cows to million dollar ANI/ALI controllers for E-911 systems. Up and down the mountains of WV, MD, PA, through OH, IL, IN, KY, TN, driven it for 9 hours straight once. I jumped it over railroad tracks, plawed through snow drift that coverer the hood, it was stolen, wrecked and shot. Now tell me how does an almost 10 year old toyota that got less abuse than my chevy and lasted just as long make the toy a good value?
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You are entitled to your own opinion but it's likely based on vehicles you may have purchased several years ago. From what we see in our fleet service business today, serving thousands of vehicles from every manufacture, they are all building good vehicles at this time. The only 'relative' reliability differences among brands is minor, certainly not 'much more reliable.' That fact is reflected in those surveys as well. There is no question Toyota builds good vehicles but any perceived advantage that Toyota may have is certainly not worth the 20% to 30% more they cost to drive home as well as their higher maintenance and repair costs. Corporate fleets must keep their vehicles is service for five years because federal depreciation tax laws. Therefor they look at the overall cost of acquiring, insuring, maintaining, repairing and replacing a vehicle, and few acquire Toyotas. Motor Trend came to that same conclusion when it tested five leading 2004 FWD V6 cars and rated the Camry LAST based on cost 'relative' to it competitors vehicles..
mike hunt
mark wrote:

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I'm not spouting anything merely sighting an example of the kind of people that buy cars like they buy appliances, based on something they read in a magazine, rather than talking to people in the business. I could not car less how some people choose to spend their own money. ;)
mike hunt
SgtSilicon wrote:

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There is no reliable rule of thumb as this varies from company to company, and then there are dealer incentives, etc. to factor in.
The good news is that you can use www.edmunds.com or www.kbb.com to get a pretty accurate invoice cost for a vehicle you are considering. Also check their incentives and rebates information. This stuff changes all the time, like airline fares, so lots of research is required. You can also submit a request to a local affiliated dealer through either of those sites and the dealer's fleet/internet salesperson should contact you with a bid for your business. I've found that to be a much less stressful way to get a good deal then is the traditional buying process.
Another good resource is www.carsdirect.com where you can configure a vehicle and find out what they would sell it to you for.
John
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I second what another poster said - go to www.edmunds.com. Find a car or cars that you like and write down every option in the car exactly, then go to www.edmunds.com and pick the car and those options and it will tell you the invoice price and an average of what most people are paying for the car. (Depending on the car, some cars will have a average price closer to the sticker if it is a "hot" car, others will have big discounts off the sticker.)
Don't take the Edmunds number as gospel, but it's a good start.

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