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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. Although it may seem like a mystical figure to most, it could be uncovered. When a client does some comparison shopping they will see that there is a often a big difference between dealerships’ asking and selling prices. Because this difference exists, one must search for the wholesale cost in order to save money. The consumer should understand that the wholesale cost any dealer pays is the same, regardless of their size or location. Expenses are added to the new car invoice prices as the dealers factor in the delivery fees charged by the manufacturer. 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. 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. New car dealers can only have these special sales when the manufacturer steps in. Therefore, a consumer cannot expect to purchase below the invoice price if incentives are not in place. They are expected at some time throughout each year, and they have expiration dates. When one ends, a new program may begin in order to do away with the old and bring in the new.