| Author |
Message |
mzhang
Guest
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 Posted:
Wed Nov 24, 2004 12:31 am Post subject:
Why is the dealer willing to sell the car for a below invoic |
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Hello,
I am trying to buy a 2005 Corolla LE with ABS and side air bags. A
dealer offered $1000 rebate which brings the total (including doc fee,
tax, license fee) to $16498. The invoice price for such a car from
Edmunds.com is $15635. So after minus the license fee ($98) and the
tax ($984), the dealer can only make $15416, which is below the
invoice price. Can anyone explain how a dealer can make money from
such a deal?
I actually asked the dealer, but got the answer that they wanted to
empty the storage place. But since he said he did not have the car I
wanted and was going to order it from somewhere else, I don't quite
believe in it.
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car. Is
this possible?
Thanks!
Mike
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Ray O
Guest
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| Posted:
Wed Nov 24, 2004 2:03 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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"mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
| Quote: | Hello,
I am trying to buy a 2005 Corolla LE with ABS and side air bags. A
dealer offered $1000 rebate which brings the total (including doc fee,
tax, license fee) to $16498. The invoice price for such a car from
Edmunds.com is $15635. So after minus the license fee ($98) and the
tax ($984), the dealer can only make $15416, which is below the
invoice price. Can anyone explain how a dealer can make money from
such a deal?
|
The dealer can get sales incentives from the manufacturer as well as
holdback. Holdback is where manufacturers deposit a percentantage of paid
invoices into an account for dealers, kind of like a 401 K, except that
holdback is paid to dealers more often, like quarterly.
Depending on your trade-in, the dealer can also make money by taking your
trade-in, cleaning it up, and selling it.
A 3rd way for dealers to make money is through finance and insurance, also
known as F&I, where they will make a commission through referrals to finance
institutions, by financing the vehicles themselves, or through extended
service contracts.
Yet another way to make money is through add-on sales, also known as the
rust & dust department, where they sell "protective treatments" for paint &
upsholstry, rustproofing, and various accessories. The markup on some of
this stuff can be anywhere from a hundred to several hundred percent.
Yet another wrinkle is periodic price increases. For example, at the
beginning of a model year, the invoice and MSRP will be price "A". If there
is a price increase partway through the year, the invoice and MSRP will be
price "B". If the dealer is selling an A price car but your information
source lists B price cars, then the deal you're getting looks better than it
really is. By the way, you used to be able to tell what pricing level a
Toyota is by looking at the model number on the Monroney Label. A model
1601A is intro pricing, 1601B is the first price increase, etc.
<snip>
| Quote: | Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car. Is
this possible?
Whoever "reminded you that the dealer might order a defect car" probably |
means well, but has absolutely no knowledge of the car business and you
should ignore any vehicle purchase advice that person gives you, just like I
would ignore any advice about jewelry, flowers, or cosmetics coming from me.
First of all, dealers cannot place orders for defect cars because the
manufacturers don't purposely produce defect cars because it does not make
business sense. The manufacturer will end up repairing the defect under
warranty at the dealer's retail labor rate and list price for parts instead
of fixing it at the factory at the manufacturer's lower labor rate and the
manufacturer's own cost for parts.
Vehicles repurchased under state "lemon laws" usually must have their titles
branded as a lemon, and they are used vehicles, usually with thousands of
miles on the odometer and wear and tear on the vehicle. No matter how much
wax and spit and shine you put into a vehicle, a used vehicle will obviously
be used and not confused with a new vehicle.
Toyota does not produce many lemons so they don't have an inventory of them
sitting around for dealers to order for sale to unsuspecting customers.
Vehicles with serious problems are repaired, titled in the manufacturer's
name, put into company car service, and sold as a used vehicle, usually to
employees, or if they're not worth fixing, have VIN plates removed and are
donated to automotive tech schools for students to practice on.
Replacing parts with cheaper parts does not make business sense either.
Parts cost money, and the labor to replace parts also costs money. For
example, if the car has an engine or stereo, the dealer paid for the engine
or stereo with the price he paid the manufacturer. No matter how cheaply he
can buy another engine or stereo he would still spend more money on the car
and be stuck with a part he doesn't need.
--
Ray O
correct the return address punctuation to reply |
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Derald
Guest
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| Posted:
Wed Nov 24, 2004 3:11 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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Because the "invoice price" AWA the "below 'invoice price'" part are
purely fictitious.
--
HTH,
Derald
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Rich Lockyer
Guest
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| Posted:
Wed Nov 24, 2004 5:41 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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On 23 Nov 2004 11:31:00 -0800, mzhang33@yahoo.com (mzhang) wrote:
| Quote: | Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car. Is
this possible?
|
No.
If a car has a defect, the dealer is going to have to deal with it.
His labor costs for warranty work far exceed any profit that he might
realize from any (new) vehicle sale.
The rebate is not from the dealer... it's from Toyota. That's a
factory incentive.
The dealer DOES receive something called "dealer holdback". This is
the finance charge that he incurrs on all vehicles on the lot. Dealer
holdback is enough to cover the interest on the "loan" for the first
90 days, and is a set percentage of the base-model invoice price.
If the dealer moves a vehicle within the first week, then guess
what... dealer holdback is 100% profit for the dealer. If the car
sits on the lot for 120 days? He eats 30 days of interest on the
loan.
There may also be various factory incentives where the dealer actually
pays less than invoice.
--- Rich
http://richlockyer.tripod.com/ |
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Wolfgang
Guest
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| Posted:
Wed Nov 24, 2004 5:41 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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As Rich said a rebate is from the factory -- not the dealers pocket. He
pockets the big profit from undercoating, paint sealant, fabric protector,
extended warranty, GAP insurance, prepaid maintenance, processing fee, admin
fee, etc.
"mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
| Quote: | Hello,
I am trying to buy a 2005 Corolla LE with ABS and side air bags. A
dealer offered $1000 rebate which brings the total (including doc fee,
tax, license fee) to $16498. The invoice price for such a car from
Edmunds.com is $15635. So after minus the license fee ($98) and the
tax ($984), the dealer can only make $15416, which is below the
invoice price. Can anyone explain how a dealer can make money from
such a deal?
I actually asked the dealer, but got the answer that they wanted to
empty the storage place. But since he said he did not have the car I
wanted and was going to order it from somewhere else, I don't quite
believe in it.
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car. Is
this possible?
Thanks!
Mike |
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| Back to top |
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Scott in Florida
Guest
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| Posted:
Wed Nov 24, 2004 5:40 pm Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
<teggeratistopdotcom@changetheobvious.invalid> wrote:
| Quote: | "Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
"mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car.
Is this possible?
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
That one is right up there with the admonition to not buy a car built on a
Monday or a Friday.
|
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
.....or Tuesday, Wednesday or Thursday....
--
Scott in Florida |
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TeGGer®
Guest
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| Posted:
Wed Nov 24, 2004 5:40 pm Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
| Quote: | "mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car.
Is this possible?
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
|
That one is right up there with the admonition to not buy a car built on a
Monday or a Friday.
--
TeGGeR®
The Unofficial Honda/Acura FAQ
www.tegger.com/hondafaq/ |
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Ray O
Guest
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| Posted:
Wed Nov 24, 2004 5:40 pm Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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"TeGGer®" <teggeratistopdotcom@changetheobvious.invalid> wrote in message
news:Xns95AB59497A8A4teggeratistop@207.14.113.17...
| Quote: |
That one is right up there with the admonition to not buy a car built on a
Monday or a Friday.
|
Haven't heard that one in a long time! How about some more automotive words
of wisdom...
"Seatbelts are dangerous because you might get stuck in the car if it goes
under water or stalls in the middle of a railroad crossing"
"Premium gas burns cleaner"
"This car is great because it was only driven by a little old lady to church
on Sundays"
"I wanted to buy this car for my wife but since you're such a nice person,
I'll let you have it instead"
"This $500 paint and upholstery protection package will help the resale
value of your car"
"My Mercedes is in the shop" - oops, probably true!
--
Ray O
correct the return address punctuation to reply |
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TeGGer®
Guest
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| Posted:
Thu Nov 25, 2004 4:44 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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Scott in Florida <NotInTheNextLifetime@nope.ucan't> sprach im
news:2ih9q0l84hbd3sd9hfongfqt1ra9fbhobp@4ax.com:
| Quote: | On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
teggeratistopdotcom@changetheobvious.invalid> wrote:
"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
That one is right up there with the admonition to not buy a car built
on a Monday or a Friday.
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
....or Tuesday, Wednesday or Thursday....
|
....or Saturday or Sunday or any other day of the week nobody has thought of
yet...
--
TeGGeR®
The Unofficial Honda/Acura FAQ
www.tegger.com/hondafaq/ |
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Scott in Florida
Guest
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| Posted:
Thu Nov 25, 2004 4:54 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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On 24 Nov 2004 23:44:10 GMT, "TeGGer®"
<teggeratistopdotcom@changetheobvious.invalid> wrote:
| Quote: | Scott in Florida <NotInTheNextLifetime@nope.ucan't> sprach im
news:2ih9q0l84hbd3sd9hfongfqt1ra9fbhobp@4ax.com:
On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
teggeratistopdotcom@changetheobvious.invalid> wrote:
"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
That one is right up there with the admonition to not buy a car built
on a Monday or a Friday.
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
....or Tuesday, Wednesday or Thursday....
...or Saturday or Sunday or any other day of the week nobody has thought of
yet...
|
<g>
--
Scott in Florida |
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Mark A
Guest
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| Posted:
Thu Nov 25, 2004 5:40 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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I assume that this question has already been answered, but I will answer
anyway.
Car dealers get a kickback from the manufacturer, which is sometimes called
"holdback". The amount depends on the brand, and sometimes based on whether
the dealer meets certain sales targets. I believe that the average holdback
for Toyotas is about 2%, which enables a dealer to sell below invoice and
still make a profit. |
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Bruce L. Bergman
Guest
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| Posted:
Thu Nov 25, 2004 11:00 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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On 24 Nov 2004 23:44:10 GMT, "TeGGer®"
<teggeratistopdotcom@changetheobvious.invalid> wrote:
| Quote: | Scott in Florida <NotInTheNextLifetime@nope.ucan't> sprach im
news:2ih9q0l84hbd3sd9hfongfqt1ra9fbhobp@4ax.com:
On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
teggeratistopdotcom@changetheobvious.invalid> wrote:
"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
|
The only thing that a dealer might have control over is to resell a
car to you that was bought back from the last customer under a "lemon
law" ruling. But they couldn't resell it as a "new" car.
| Quote: | That one is right up there with the admonition to not buy a car built
on a Monday or a Friday.
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
....or Tuesday, Wednesday or Thursday....
...or Saturday or Sunday or any other day of the week nobody has thought of
yet...
|
"Never buy a Ford built on any day ending in a 'y'." Isn't saying
it that way a whole lot simpler? ;-P
--<< Bruce >>--
--
Bruce L. Bergman, Woodland Hills (Los Angeles) CA - Desktop
Electrician for Westend Electric - CA726700
5737 Kanan Rd. #359, Agoura CA 91301 (818) 889-9545
Spamtrapped address: Remove the python and the invalid, and use a net. |
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Another Tom
Guest
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| Posted:
Thu Nov 25, 2004 5:45 pm Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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Scott in Florida wrote:
| Quote: | On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
teggeratistopdotcom@changetheobvious.invalid> wrote:
"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
"mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car.
Is this possible?
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
That one is right up there with the admonition to not buy a car built on a
Monday or a Friday.
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
....or Tuesday, Wednesday or Thursday....
--
Scott in Florida
Or a toyota with the 3.0 engine. |
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Scott in Florida
Guest
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| Posted:
Thu Nov 25, 2004 5:45 pm Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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On Thu, 25 Nov 2004 16:33:29 GMT, Another Tom
<thamilt_anda_5@snet.net> wrote:
| Quote: | Scott in Florida wrote:
On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
teggeratistopdotcom@changetheobvious.invalid> wrote:
"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
"mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car.
Is this possible?
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
That one is right up there with the admonition to not buy a car built on a
Monday or a Friday.
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
....or Tuesday, Wednesday or Thursday....
--
Scott in Florida
Or a toyota with the 3.0 engine.
|
That had Charlene do the oil changes....I would agree.
With a 'normal' person that changes the oil as requested by Toyota...I
would not agree.
The 3.0 is fine...
Fords are not...
--
Scott in Florida |
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HachiRoku
Guest
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| Posted:
Fri Nov 26, 2004 3:19 am Post subject:
Re: Why is the dealer willing to sell the car for a below in |
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On Thu, 25 Nov 2004 16:33:29 +0000, Another Tom wrote:
| Quote: | Scott in Florida wrote:
On 24 Nov 2004 13:45:51 GMT, "TeGGer®"
teggeratistopdotcom@changetheobvious.invalid> wrote:
"Ray O" <rokigawa@tristarassociatesDOTcom> sprach im
news:b76e9$41a3a596$44a4a10d$30907@msgid.meganewsservers.com:
"mzhang" <mzhang33@yahoo.com> wrote in message
news:cc99a212.0411231131.771840cb@posting.google.com...
Somebody just reminded me that the dealer might order a "defect" car
that have some problems, or even replace some parts of the new car.
Is this possible?
Whoever "reminded you that the dealer might order a defect car"
probably means well, but has absolutely no knowledge of the car
business
That one is right up there with the admonition to not buy a car built on a
Monday or a Friday.
but but but....it is true....
Never buy a Ford that was made on Monday or Friday....
....or Tuesday, Wednesday or Thursday....
--
Scott in Florida
Or a toyota with the 3.0 engine.
|
WHICH 3.0 engine? |
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