Eric Gonzalez Blog

When dealerships purchase new cars from the manufacturers, they pay the new car invoice price, then they mark up the price to somewhere around the sticker price when reselling to the public. This is why smart shoppers learn the new car invoice prices before negotiating with dealers, to make sure they are buying at rock bottom prices. 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. The wholesale cost the dealer pays to the manufacturer is the same across the board, meaning that Dealer A pays the same price as Dealer B for the same vehicle. However, there are further costs added to the new car invoice price that the dealer must pay, such as the transportation and delivery fee. No matter where the dealership is located with regards to distance from the manufacturer, each one pays the same amount for delivery. These fees are simply added on at the retail level. An interesting fact is that most dealers will order vehicles from the manufacturer with borrowed funds whereby they are responsible to pay interest on those loans.
It is quite easy to do the math, meaning if a car sells quickly then there are minimal interest charges. However, if the car sits on the lot for an extended time, its costs add up. These loans are known as floorplans and in addition to these, there are also other fees known as holdback. After the vehicle is sold, the holdback fees are rebated back to the dealer by the manufacturer. Advertising on a regional or individual basis could also be a factor in increasing the wholesale cost which will affect the consumer at the point of purchase. That being said, it is time to do some calculations and discover one or more ways to end up with a new car but at a discounted price below wholesale. One way to do that is through taking advantage of slow car sales where there is a buildup of inventory on a lot. It certainly is not the ideal situation, for both the dealers and the automobile manufacturing company. If there is an abundance of inventory on a lot, the dealer simply won’t order more vehicles. When this situation occurs, the automakers will offer incentives. Look out for these sales that offer zero percent financing or large rebates. Before making a move, do the calculations to figure out exactly how much you will be saving. 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.