Learning The New Automobile Wholesale Cost
In the new car business, dealerships purchase their vehicles at the new car invoice price and then mark them up to what is known as the sticker price in order to sell them to the public. This is why it is important for car shoppers to know the new car invoice prices in order to get the best deals on new vehicles. It is safe to say that most people will attest to the fact that this number is quite secretive. Only a select few know what the real dealer’s cost is on a new vehicle. We all know that most dealerships quote different prices for the same vehicle but most of us do not know why. To begin with, every dealer pays the same amount to the manufacturer for the same vehicle. The numbers change with the added charges and fees that are tacked on to each dealer, like delivery fees and transportation charges, all of which increase the invoice price. However, this number is the same regardless of the location of the dealer. This figure is just tacked on to the individual cost of the vehicle that is passed on to the consumer. Where things change from one dealer to the next is the financing that dealers take out directly from the manufacturer to pay for their vehicle purchases. They must pay interest on this financing.
Floorplan is the term used in the industry to describe such financing to dealers. If a vehicle sells quickly, there will be less interest to pay, thereby reducing expenses so the dealer makes a bigger profit. What is commonly referred to as holdback is where the dealer gets a rebate from the manufacturer after the vehicle sells. In addition to the above charges, there could be advertising fees added onto the invoice price. These fees can come directly from the dealership or from a regional dealer group. After having pointed out all these various added charges and fees, the consumer has to figure out a way to purchase a brand new vehicle below the wholesale cost. The consumer should always be prepared to act and act quickly when opportunities arise, such as with a slowdown of sales. Car manufacturers will do all in their power to push out vehicles sitting on dealers’ lots because they end up losing more money. It is simple math that a dealer will not order new vehicles if his lot is full. So the manufacturers usually step in to provide incentives in order to push more sales. These incentives come in a variety of ways, such as rebates, interest free loans, reduced lease rates and other deals under this umbrella. The smart consumer will jump at the opportunity when it arises, but they must be prepared to do so when these special programs are available because they may not last long. They are created and offered only to entice buyers when new car sales are slow, and when these programs are not available, buyers are usually unable to purchase below the invoice price.