Dealer Invoice Is Not Dealer Cost

If you’re trying to be a smart shopper by paying as little as possible for that new car or truck, here’s a common mistake: thinking that “dealer invoice” is the same as “dealer cost.” (It’s not.) While it is true that dealers buy cars from the manufacturer based on the invoice, there are items built into the invoice price that are rebated back to the dealer later. A good example of this is dealer holdback. Holdback is usually a percentage (2% to 3%) of the MSRP, but some manufacturers base it on the invoice amount. So a dealer selling a $30,000 car at the invoice amount with a 3% holdback is actually making AT LEAST $900 profit. Plus there are lots of factory-to-dealer incentives that rebate even more money back to dealers, allowing them to potentially make several thousand dollars even when selling at invoice. For more on this subject, see the Car Buying Secrets page at CarInfo.com.