Auto Dealer Invoice Price

Dealers often advertise that they sell "at invoice" or even "below the invoice price". However, not many car buyers understand well what that really means and how the final price they will pay for a car is formed.

In order to assess better what price you can expect to pay for a car and to be able to negotiate a better deal you must first understand how auto pricing works.

What is an auto dealer invoice price?

Dealers represent businesses. They buy wholesale but sell retail. The price at which dealers buy cars from manufacturers is called "auto dealer invoice price" (sometimes also "factory invoice price"). Each vehicle's invoice price is the same for all dealers.

How is selling below auto invoice price possible?

Selling below or at invoice price is possible mainly due to the help from auto manufacturers. They provide various incentives to dealers, such as sales bonuses, special fees, factory-to-dealer rebates, etc, in order to make dealers order more vehicles from the factory.

Thus, the auto invoice price is not the only factor that determines the total dealer's cost. All incentives should be taken into account plus all other dealers' costs.

Some of the costs dealers should cover are:

• destination cost (a fee for transportation and delivery that is also the same for all dealers),
• finance cost (dealers also borrow money to buy cars for their lots and pay interest on these loans),
• advertising fees (for newspaper ads, TV, etc.),
• employee salaries,
• etc.

Some of the incentives that dealers receive are:

• holdbacks

  Holdbacks vary by manufacturers and represent a fee that is returned to dealers when cars are sold. Usually holdbacks amount to about 2%-3% of the Manufacturer's Suggested Retail Price (MSRP).

• factory-to-dealer rebates

  In times of slow sales factory rebates can be significant and dealers may choose to pass a portion or all of them to their customers.

• other bonuses

Many car buyers expect dealers to sell at invoice prices but this is not always possible. Selling at or below invoice prices is possible only with the help of manufacturers and the incentives they offer; therefore, look for deals that include manufacturer incentives so that you can buy a car at a lower price.

The auto loan calculators and the information available on this site are intended to serve only as general guidance regarding auto loans. Since they do not take into account your individual circumstances, we cannot and do no guarantee their accuracy or suitability to a specific purpose. We highly recommend you to consider the appropriateness of any information to your objectives before acting on it, and encourage you to consult a qualified professional regarding you particular personal situation.

Related terms: new auto invoice price, auto dealer invoice price, automobile invoice pricing, car dealer invoice price, automobile invoice prices, car payment calculator, car loan calculator