SnoMan wrote:
> On Fri, 01 Sep 2006 16:49:57 -0700, SMS >
> wrote:
>
>> A lot of people don't realize that true dealer cost, and dealer invoice
>> are two entirely different things. $500 over dealer cost is invariably
>> still well under invoice, is a pretty fair price to pay. Of course a
>> dealer can't survive if everyone paid $500 over dealer cost, but
>> fortunately there are enough people paying invoice or more to make up
>> for those people that pay less.
>
>
> GM used to have a minimum 3% hold back of invoice price that they
> would give dealer after sale and 3% of 30K is 900 bucks so even a
> invoice they are making at least 900 bucks on a 30K sale. They are not
> starving as long as they can sell something it is when they cannot
> sell anythiong at all that they feel the squeeze. BTW, my price
> factoed in hold back too when I got cars 500 or less over true cost.
> -----------------
> TheSnoMan.com

Yes, you always want to factor in the hold back when calculating the
price to offer. On Toyota's they had some other stuff as well, 1% for
"Wholesale Financial Reserve," 2% for hold back, and 2% for TDA (ad
fee). Actually the dealer does have to contribute to the regional
advertising fund, but some dealers try to add that contribution back
onto the invoice price, even though Toyota gives them back the 2%. In my
area, it's a $500 contribution per vehicle, so if the invoice price is
greater than $25,000, the $500 is more than covered by Toyota.

Sometimes it's nearly impossible to find the factory to dealer
incentives, but if a dealer is advertising "all at this price" at well
under invoice, then you know that there are some factory to dealer
incentives in place.