Dealer Wont Deal???

whoady4shoady

Wow, I just made a thread and I am in the exact same situation looking at the exact same vehicle as you. That is just crazy. The only difference is I know what the invoice is, but i want to make sure that my price is fair for the mileage of 118 on the Z i am looking at.

Daishi

haha ditto.. i sell vw's and get the same thing from people.. thats just what i want to pay.. i merely tell them then your not going to own this vehicle haha have a nice day.

edeeZee

I read your thread, and this is what I gotta say. I'm not on the dealer's side, but then I'm not on the customer's side. I play this out, and maybe some get irritated by it, but I'm a former car salesman. What does this mean? I know what goes on from the dealers' side as well as the customers'.

This forum, along w/ the plethora of other internet sites mislead people into thinking they can cut below invoice.

There is nothing wrong with getting a deal i.e. between invoice and MSRP, but asking @ or below invoice is too much.

Customers will say, dealers are unethical and will rape you whatever way they can--TRUE. Why? Because so many customers go into dealers and DEMAND unreasonable figures. You got the pinstrip they charge $700 for but cost the dealer $25, the extended warranty that adds $50/month for 5 yrs. when it really cost $1,000; the Lojack that cost $175 but they "hook you up" for $600, and these added accessories and extended warranties make your payments jump accompanied by the fact you pay interest on them. This is "back end" make up for the fact you got it close to, or below invoice. The poor old salesman makes a flat or mini i.e. less than $100 while the F&I guy says "go get another one killer, the next one's a high gross!"

I understand that average customer isn't going to make a career out of studying the car business. But I did, thus I got lots of inside knowledge & experience. When I worked at Peyton Cramer VW/Lincoln/Hyundai, I was buddies with the GM. We had parties and get togethers at his home. Why do I give you this intimate but seemingly "irrelevant" info? Because I used to ask him the "behind the scenes" financial mechanics of a typical new car dealership.

A new car dealership spends several hundred thousand dollars PER MONTH to keep the doors open, YES--SEVERAL HUNDRED THOUSAND U.S. DOLLARS MONTHLY. It doesn't run on air like a lot of you seem to think.

There's something called "flooring." Flooring is essentially the dealership "renting" the new car from the bank that owns it. You see, dealerships do not own the cars they physically carry on hand at the lots. It's about 1% from what I remember my buddy telling me, the GM. So, for a 370 brand new, it's at least $300 per month to have that unit on the lot. If that 370 doesn't sell for like 3 months, then it costed the dealer $900 to have kept it. You see how expensive it is to run a dealership? This is the tip of the iceberg.

Lastly, a lot of you people need to stop approaching dealer with this "so and so got his for $300 beneath invoice, why can't I?"

370's are not LOSS LEADER nor ADVERTISER cars. A loss leader is essentially a bait & switch ploy.

Just go in there, and say: I want $500 over invoice + fees and no accessories nor extended warranty. I already test drove the car, I already ran my credit, no need to lower my FICO score anymore, I was here few days ago, let's go.

nogoodname

that just sounded funny....sorry doodoo

FricFrac

I think most people don't realize that there is barely any difference between MSRP and Invoice on these cars. I managed to get about $800 below MSRP and a bunch of extras thrown in and I was more than happy with the deal. Everyone else said MSRP and that's it. This is a pretty rare car and I would have happily paid MSRP on it. Everyone wants a deal...

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FuszNissan

Here is what I can tell you, if you feel like you got a good deal, and feel like you can trust the person you are working with and the dealership your at, then do the deal. But with the way the economy is I am selling Z's at invoice so I don't have to floor them and get my turns up so I recieve credits on my floor and recieve credits on my co-op. That is probably more than you need to know.

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LouFuszNissan
ZDAYZ 2012

edeeZee

Hey, your 370's move quickly, thus you don't need to floor them. I understand the economy is slow, thus you gotta wheel 'n deal. But when there's all this hearsay about 370's blowing out at or below invoice, then the seed will be planted in everyone's head, especially on this site, that 370's are as common and easy to steal as loss leaders--this is not true.

C'mon, how many times did your dealer do the bait and switch w/ the loss leaders? And let's be honest, I worked at a few stores where they straight out lied about the loss leader already being "sold." A Ford store I worked at got caught when some customer who had suspicions called the DMV on when de facto it wasn't.

When I worked @ Penske Chevy/Cadillac (now it's Massey Chevy/Cadillac in Downey,CA), this guy came in wanting a new C5 Vette. The sticker was like $46,000 then. He wanted $500 + invoice, and he had his preapproval from the credit union. My sales manager politely told him that Vettes sell @ sticker, and nothing less. The guy complained and said a nearby Chevy dealer would do it. Then my salesmanager said, "Ok, then buy, it's a good deal." This same jack-off visited our store several times sporadically throughout the year--too good to be true.

In Los Angeles, they won't whore out 370's. I got mine for $2,000 below MSRP and was HAPPY! They tried to do the hackneyed but non-existent "Scotch guard plan" that added $20/month to my 48 mo. contract, but I asked, "what is this extra $960 you're charging me for?" I got a 800+ Experian, 2 paid off autos, student loans, etc. I'm with B of A @ 5.9% for 48 months, but I'm gonna switch to my credit union at 3.9% (unless this offer expires).

stag3

highest i've been quoted was 3500 markup over msrp ROFL
current quote i got was 1250 over invoice and fair price on my trade in.
i had invoice price on 1 and they tried to stiff my trade in @ 4500 under
kbb/nada

i am still deciding right now what i want to do.

Hi-TecDesigns

Barely any difference? The difference is nearly $2k for the base and $2.5k for the touring. Tack on another $400 difference if you want the sport package. Decreasing the cost of a car by 8% seems worth the fight, don't you? Well, maybe not you, as you already said MSRP would have been fine.

A $40k car costs around $133/month in interest on a 4% loan (and that's assuming a top of the line touring model with all gadgets). We're talking a 370Z, not a fully loaded GT-R.

And it's difficult to have sympathy for a salesman/manager who refuses an offer that nets them $1k in profit from holdback, not to mention what they'll make from financing, because it's not $150 over invoice like they wanted. Fine, I'll come back in a month, that car will still be sitting there. My price point hasn't changed, but the dealership just lost $150 in interest. If they sell it at invoice now, they lose $300 off of what they wanted... had they sold it to me last month, they would only sell it for $150 less than what they wanted. If they're unlucky enough to have a car that no one wants for several months, they can take a real bath in the loss department... sometimes it's better to sell at a known (and decent) profit than take the chance on getting a much smaller one months down the road.

If I go through USAA's car buying program, the dealership has pre-negotiated $825 below invoice (for the model I was looking at), and they're STILL making a profit off of that sale, so why bicker about invoice at all? It's called risk. The dealership is taking a risk that they can make me cave and buy the car for their original asking price before walking out and losing the sale entirely. Some dealerships are bigger risk takers, and the size of the risk will depend heavily upon their sales for the month. Dealers don't like guys like me... I'm willing to walk away (and have been for the last two months) if the deal doesn't strike me as good enough. When I was shopping for the Cube, I finally found a dealership willing to accept my price (invoice, since I knew it was a popular car that had just come out less than 3 months before) after 2-3 minutes... and they got my business. The car had just come in a day or two before, they made the sale, lost only a few dollars to interest, but most importantly they made almost their entire holdback as profit (not to mention helping increase their allotment). It cost them a few hours of paperwork, improved their business standing, and made them a tidy profit...

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FuszNissan

Well,
I do sell all my Z's at invoice, ask anybody on this fourm who has bought from me or recieved a quote. I will let them speak for me. And there is a strategic reason why. I understand where you are coming from. You are seeing the buisness through a different set of eyes. It's the same way a lineman sees a football game VS. an offensive coordinator. If you would like I can PM you and give you a 101 on Inventory Management. I think you would see things a little differently.

Don't understand why you are asking this, but all my qoutes are OTD prices, and I don't advertise loss leaders.

It also depends on the market. Also depends on your philosophy

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LouFuszNissan
ZDAYZ 2012

edeeZee

HiTec: do you even know what "holdback" or "dealer cash" is for?

If not, it's in the event the dealer cannot sell the new unit above invoice, and it works as a "base salary" from the manufacturer, in this case, Nissan.


"And it's difficult to have sympathy for a salesman/manager who refuses an offer that nets them $1k in profit from holdback, not to mention what they'll make from financing, because it's not $150 over invoice like they wanted."--where'd you get the accounting from? I think you're arbitrarily making this up.



My friend who was the general manager of Peyton Cramer VW/Lincoln/Hyundai told me flooring costs about 1% the price of the car per month. So for a base 370 @ $30K it's 0.01 x $30K = $300/month. I don't know where you got this 4% per year arbitrary figure, at 0.04 x $40K = 1,600/12= $133/month? Regardless of your perception of this cost, these cars DO NOT sit on the lot for FREE. Seriously, I doubt it only costs $133/month to floor a $40K 370. A GTR from my understanding is $90K x 0.01 = $900/month to keep that unit on the lot, not $900 for 3 months. There's more than flooring that entail the expenses of a dealer; there's the lease on the property i.e. land & improvements and the seperate lots that hold the excess inventory, electricity (the lights are on literally 24/7 inside and outside the store), phone bills are crazy high; salaries/commissions of workers in the dealer and service/parts dept; advertisement (I've seen invoices of $20,000 to run Fri,Sat, &Sun in the L.A. Times) and so forth. If I remember correctly, my friend said it was about $400,000 a month to run that SMALL VW/Hyundai/Lincoln store. It ain't cheap bottom line, but you make it sound like dealers are making killings off the "poor little" consumers.

Fusz: you're in St. Louis, the rest of the country is different in how they work prices or get allocation from Nissan. I do believe you that you sell @ invoice, never doubted it. I'm well aware of concepts of inventory and cost control. I studied operations management/finance in college. But thank you, I don't doubt your word.

It was 2001 when I mentioned my Vette anecdote. I'm pretty sure the bad economy changed that in today's times. But even around here in S. Cali, Nissan stores are reluctant to let you steal a Z near invoice. I know, I tried at 3 different dealers. The one I ultimately dealt with, the F&I guy tried every trick up his sleeve to get me to buy extended warranties and accessories.


I'm all for people getting deals. But when people come up with their "entitlement attitude" of dealers owing them 370's at or below invoice, this is ridiculous. Not all dealers will do this, as a matter of fact, many will turn you away if you lowball like this. If Fusz Nissan will sell to you @ invoice, so be it. Go over to St. Louis and get your 370 there. Go do VPP if you know someone who can hook it up.

Just my 2 cents.

Hi-TecDesigns

I'll preface this long post with the following: I've been known to be wrong in the past and I will gladly admit when I'm proven to be so (sorry, but proving me wrong will have to be more than "My uncle's mother's monkey told me so). My posts are rarely meant to be inflammatory, but they are often taken as such. As always YMMV...



Yes, I'm aware, but I'm questioning whether you understand the basic business principles in play here. Nissan's holdback is 2% of total invoice and their floor is 1% of total invoice, but the names are irrelevant. Call it a 2% 'dink' and a 1% 'cluck', it amounts to a chunk of money that Nissan returns to the dealer every quarter based upon the total invoice price of the cars they have purchased for that quarter. If the dealer sells the car the moment it hits the floor, 3% of the car's total invoice ends up on the dealer's bottom line. The longer the car sits there costing them interest, the smaller the bottom line is at the end of the quarter. Period.

To try and obfuscate where the money goes and how it is split up is just hand-waving. My post had nothing whatsoever to do with what the dealership pays to keep the lights on, healthcare, etc. as it has no effect on my point... the cost of them keeping the lights in no way has any affect on the difference in money between what they paid for it (quarterly) and what comes out of my pocket. Business expenses are an entirely different matter.

Yes, my numbers are made up as it's an example... but it's not funny accounting. Read what I wrote again. My example was about a dealer requesting $150 over invoice to sell me a car, whereas I wanted to only pay invoice. If he lets the car sit on the lot for a while and decides to sell me that car for my asking price (invoice) at a later date just to sell it, he's not only out the $150 over invoice he wanted initially, he's also out the interest he paid on that vehicle while it sat on the lot. If he sold me the car at my asking price when I initially offered it, he would only lose his requested $150 over invoice, not the same $150 plus interest. There's no magic there.

BTW, your use of the 1% floor as the dealer's cost per month in interest is incorrect. The 4% APR (i.e., annual, not monthly) was only partially arbitrary... I based it upon going car loan rates out there (though it could certainly be higher/lower based upon Nissan's desire to move a specific vehicle). At 4% interest, a $40K vehicle costs about $133/month in interest. Again, no magic there, pull out the calculator and punch in your own numbers. If your numbers are correct ($300/month interest for a 370Z), a dealership is getting that same $40k car at a 9% interest rate... the dealership would be better purchasing cars on their American Express Gold

And frankly, I don't consider this an attitude of entitlement. It's a matter of business negotiation. Both parties know what the product costs to roll off of the trailer and onto the showroom floor. I'm willing to pay 'X' and the dealer wants me to pay 'Y'. If 'Y' > 'X', then negotiation begins. Even if 'X' is below their cost, that doesn't make it a sense of entitlement, it simply means I don't consider the product worth what it cost the dealer to obtain it. 3% profit on the product for a dealer looks pretty good to me, but I'm not a moron... if I can get it for less than 3%, I'll take it. That's not a sense of entitlement, that's simple economics. The dealer always has the final word, so it's not like I'm robbing the guy.

Waiters expecting 20% tip on a meal because that's the "accepted" or "prevailing" rate, even if the service is poor... now that's a sense of entitlement. I pay around 20% as a matter of course because I feel that is typically a proper amount of remuneration for their services when you consider they live off of that money, but I'll give them 5% or less if they treat me like I'm bothering them during their vacation. If a waiter refused my tip for whatever reason, I'd be happy to oblige him. But it's up to me to give him something... he can't force it out of me.

And the numbers your friend is telling you about running the dealership simply do not make sense. $400k/monthly to run the place? Stop and think about those numbers for a second. Let's assume everyone who came in purchased their car for MSRP, letting the dealer make $2,500 profit off of each car sold... that's a huge assumption that would never hold in real life, but let's err on your side for the moment. Even in that case, this small dealer would have to sell 160 cars per month just to keep the doors open... that doesn't include profit for anyone. Now, I could understand if that $400k included new car purchases from the manufacturer and not include car sales in the figure, but as you can see, the numbers just don't add up. How many small dealerships do you know that sell 7+ cars/day (assuming closed on Sunday) every day at MSRP? And then you have to add in many more car sales per month so the dealer can actually make a profit over and above capitol costs and utilities/salaries.

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FuszNissan

Floor is 5.5% and it's free for the first 60 days. I go for gross turns and credits.

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LouFuszNissan
ZDAYZ 2012

fly yellow

I basically paid invoice on mine, and so did a lot of people on this forum. If the dealer stuck it to me anywhere, then it was on my trade, but I basically went to 5 different Nissan dealers and 2 Infiniti dealers, and where I bought gave me the best price for the trade. They beat Carmax by 500 bucks. I had my own financing and I didn't buy any extended warranties or extras. The car had Lojack already installed. I told them I wasn't paying for it and they could take it out, but they just left it there and gave it to me.

I don't think invoice is hard to get on this car. Maybe it's different in SoCal, everything else is screwed up there, so why wouldn't buying a car be the same? Maybe your crazy emmision laws which make it impossible for you to buy out of state have caused some sort of colusion amongst dealers.

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edeeZee

Source: Dealer holdback at Edmunds car price guide

What Are Holdbacks For?
Dealerships must have an inventory on hand so that consumers can browse and ultimately select a vehicle. Dealerships must pay for this inventory when it is obtained from the manufacturer, and the amount the dealer pays is the price reflected on the invoice from the manufacturer to the dealer, the so-called "invoice price."

Now the twist: with the introduction of holdbacks some years ago, most manufacturers inflated the invoice prices for every vehicle by a predetermined amount (2-3% of MSRP is typical). The dealer pays that inflated amount when it buys the car from the manufacturer. But later, at predetermined times (usually quarterly), the manufacturer reimburses the dealer for that excess amount. This is the "holdback," so named because funds are "held back" by the manufacturer and released only some time after the vehicle is invoiced to the dealership.

Why the sleight-of-hand you might ask? Because holdbacks can benefit dealers in three ways:


1.Dealerships borrow money to finance cars based on an invoiced amount that includes the holdback. So the higher the invoiced amount, the more the dealership can borrow from its lender.


2.Inflating the dealership's "cost" can have the effect of increasing profit, since sales personnel are paid commissions based on the "gross profit" of each sale. Holdbacks have the effect of lowering the gross profit and thus the sales commissions.


3.Holdbacks enable dealerships to advertise "invoice price" sales and sell their vehicles at or near invoice and still make hundreds of dollars on the transaction.
Holdbacks Allow "Invisible" Dealer Profits
This holdback amount is "invisible" to the consumer because it does not appear as an itemized fee on the window sticker. For example, let's say you're interested in a Chevrolet with a Manufacturer's Suggested Retail Price (MSRP) of $20,500, including optional equipment and a $500 destination charge. Let's also say that dealer invoice on this hypothetical Chevy is $18,000. The cost of the car includes a dealer holdback that, in the case of all Chevy vehicles, amounts to 3% of the MSRP, or $600. (Note that the $500 destination charge should not be included when computing the holdback.) So, on this particular Chevy, the true dealer cost is actually $17,400. Even if the dealer sells you the car for the invoice price, which is unlikely, he would still be making as much as $600 on the deal (when his quarterly check from GM arrives).

Dealer holdback allows dealers to advertise attractive sales. Often, ads promise that your new car will cost you just "$1 over/under invoice!"

Almost all dealerships consider holdback money "sacred" and are unwilling to share any portion of it with the consumer. Don't push the issue. Your best strategy is to avoid mentioning the holdback during negotiations. Mention holdback only if the dealer gives you some song-and-dance about not making any money on the proposed deal when you know that isn't true.

However, the standard dealer holdback is not the only form of financial assistance provided to dealers by manufacturers. There are many other types of holdbacks and dealer credits that may be available from specific manufacturers at various times — some of which consumers may hear about and others of which are never disclosed to the public — but each of which can have the effect of reducing the net cost of a vehicle to the dealer. These include:


•Advertising credits


•Flooring assistance


•Floor interest reserve


•Floor plan allowance


•Transfer balance


•Wholesale reserve


•Wholesale credits
Negotiate Using Incentives, Not HoldbacksIn addition, the dealer stands to reap further benefits if there is "dealer cash" being offered by the manufacturer on the car you are considering. In many instances you can learn about dealer cash in our Incentives and Rebates section. However, unless you know all of these other fees (and who does?), establishing the dealer's true cost can be frustratingly elusive. It's for this reason that Edmunds.com has established True Market Value® pricing that accurately reflects "what others are paying" by taking into account all of these fees. The Edmunds.com True Market Value Price® is the "bottom line" and what you really need to know in order to negotiate a fair deal. Check it out at: New car prices, new car reviews at Edmunds.

In summary, holdback is nice to know, but is just one small piece of a complex puzzle.