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Invoice is the New MSRP

Silent Bob

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Invoice is the New MSRP

Paying invoice is now paying full price.

I sent this simple email to over twenty dealerships.

"I am looking to order a 2021 Ram 1500 Limited. I am sending this to multiple dealers and will go with the lowest price below invoice not including rebates or incentives. Please send me your lowest price. Build attached."

Not one quoted me a price above invoice. Many quoted me invoice or 1% below. My lowest initial quote was 6% below.

If you pay invoice minus all available rebates and incentives, you are paying full price.

As most of you know invoice minus holdback is no longer what the dealer really pays for vehicles.

The below is from James Bragg.

Today about 90% of “dealer cash” dollars are allocated to secret, “below-the-line” programs that are typically tied to multi-month total sales targets and other non-sales objectives that are set dealer-by-dealer. And no one can tell you who’s got what targets, where they stand against them, or even when those programs start and end.

I get the straight skinny on these programs right from the horse’s mouth.

• A woman who got her popular import-brand midsize sedan for $800 below invoice was thanked by the sales manager, who told her that her purchase and the others that day got the dealership to the automakers’ multi-month sales target, earning them another $1,000 for each vehicle sold. (That brand’s average dealer sold 1,197 new vehicles last year, 100 per month.)
• When a couple paid $2,000 below invoice for Detroit’s best-selling pickup in December, a friend at the dealership told them, “Your purchase got us to the sales level for that truck that earns us an extra $750 for every unit we’ve sold this year.”
• A customer paid $2,317 below invoice for one of the most popular Japanese midsize sedans. The sales manager said he lost over $1,500 on the sale. Then he added, “I did that because the automaker has us on a ‘stair-step’ incentive program. As we reach each higher total sales target, we get more money per car for all the cars we’ve sold. Your sale got us to the next plateau.”
• A Detroit automaker ran an “Employee Price” consumer promotion. That was about 5% below the total dealer invoice. But at the end of two quarters some customers bought their vehicles for as much as $2,000 below that price. A salesperson told one of them: “The factory is running quarterly promotions in which we can earn six-figure bonuses by reaching our sales targets. So we didn’t care how much we lost on your deal.”
• It can be tough to deal on an all-new design because the early demand usually exceeds the early supply. But a customer’s wife wanted a “hot” redesigned import sedan in its first week on the market, and as he told me, “It’s a lot cheaper to trade in cars than to trade in wives.” Nine of the ten price proposals he received were at the full MSRP. But one dealer sold the car for $2,500 less, $500 to $600 below the invoice price. In week #1! The owner took him aside quietly and said, “Here’s why I did that. My sales target is 1,000 new cars. I’m so close to that bonus check I can almost taste it.” I guessed that was about $500 per vehicle — a half million bucks. I learned later from a reliable source that the real number for that brand was $1,200 to $1,800 per vehicle. (You can do the math.)

Rebate vs. lower interest: Which car incentive is right for you? LINK

The Best Time to Buy Your Ram LINK

How to Get the Best Price on Your New Ram​


The myth about dealer cash incentives

 
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Maconi

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As you said, "invoice" doesn't really mean anything anymore and it's nearly impossible to know what the dealer's final cost is after everything is said and done. All I know is I was able to get around 22% off MSRP last year with 0% financing (for a fully-loaded 2019 Ram 1500 Limited MSRP $70k). I'm sure the dealer still made some money on it. The only way to really know if you got a good deal is to compare what others are paying (for the exact same year/make/model/options).
 

jdmartin

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There's only one thing that matters at the end of the day: are you happy with your purchase and the price you paid? If you are, the rest of it doesn't make a bit of difference. Some people feel cheated unless they got the best price on the planet earth for something. Other people are fine paying the asking price and having a smooth, happy experience. Most everyone else is somewhere in the middle. None of it is rational. People will spend days and weeks researching prices of stuff, dickering with dealers and finance departments to save an extra $1-2k on something they're going to be paying for over 72 or 84 months, but won't spend anywhere near the same amount of time making themselves more valuable at work, getting an education, or working a side hustle to make $1-2k extra per month for the rest of their working lives.

Anyway, your point of the article is right, in that invoice may not mean anything for the dealership. Good for them; I don't begrudge them making an extra $1k per car if they can sell that many. If my dealer got an extra $1k per vehicle when I bought my truck, I'm happy for them. It means more money in my local economy, more people working, more money spent on Italian tile and nude portraits of the owner's trophy wives :ROFLMAO:
 

laramie4x4

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There's only one thing that matters at the end of the day: are you happy with your purchase and the price you paid? If you are, the rest of it doesn't make a bit of difference. Some people feel cheated unless they got the best price on the planet earth for something. Other people are fine paying the asking price and having a smooth, happy experience. Most everyone else is somewhere in the middle. None of it is rational. People will spend days and weeks researching prices of stuff, dickering with dealers and finance departments to save an extra $1-2k on something they're going to be paying for over 72 or 84 months, but won't spend anywhere near the same amount of time making themselves more valuable at work, getting an education, or working a side hustle to make $1-2k extra per month for the rest of their working lives.

Anyway, your point of the article is right, in that invoice may not mean anything for the dealership. Good for them; I don't begrudge them making an extra $1k per car if they can sell that many. If my dealer got an extra $1k per vehicle when I bought my truck, I'm happy for them. It means more money in my local economy, more people working, more money spent on Italian tile and nude portraits of the owner's trophy wives :ROFLMAO:
That makes no sense to me. When you go buy an iPhone, do you offer to pay a price that you "are happy about", or do you know exactly what the price is, not only to you, but to everyone else? When you buy a burger from McDonald, do you care to pay $5 more so there is "more money in your local economy"? Why should car buying be different? A car is a commodity after all...
 

jdmartin

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That makes no sense to me. When you go buy an iPhone, do you offer to pay a price that you "are happy about", or do you know exactly what the price is, not only to you, but to everyone else? When you buy a burger from McDonald, do you care to pay $5 more so there is "more money in your local economy"? Why should car buying be different? A car is a commodity after all...
In theory it shouldn't be different. Or maybe all other products should be sold the way cars are sold. It doesn't matter. Reality is reality. Car makers have tried the "this is the price, no haggling" approach before (Saturn) and it was a flop. I suspect that's because there's a history of haggling over cars, and because cars are more expensive than a Happy Meal or an Iphone (at least for now!).

And you apparently didn't understand my post. I didn't say *I* am personally going to pay more so there is more money in the local economy - I said that if my truck purchase gets the dealer a big bonus from the car maker, more power to them - why should I begrudge that they didn't give me part of that bonus? Should they find all the people who bought a car that made the bonus possible and send them a rebate? Or should only the person that puts them over the edge get something back? That wouldn't be very fair, would it?

The original post describes that invoice - holdback isn't the true price of the car to the dealer any more, and then goes on to quote other articles that (apparently) think poorly of car dealers because the buyer isn't getting an even better price because the dealer gets good bonuses from the car maker. As far as I'm concerned, as long as I'm happy with what I paid it really doesn't matter. To suggest otherwise is to say that I'm too stupid to make an informed purchase and that I should feel bad that other people are getting that item cheaper - as if the price you paid the seller is the only consideration that matters in a purchase. I can think of plenty of times I paid more for something than someone else because price wasn't the prime, or only, factor. Ever buy a quart of oil at a gas station when you were low? How about a cold Pepsi in the convenience store instead of the cheaper, warm ones in the grocery store? One time when I was in the military I had a blowout of the spare in the middle of the night. I drove 10 miles on the shoulder on the rim until I found an all-night gas station that sold me a bald-*** tire for $50 (back when new tires were $20 each). I could have said "nope, too expensive" and missed ship's movement, but in that moment cost was virtually no concern and time and consequence were huge.

Finally, back to your original gripe: I'm sure I pay more or less for a phone than someone else. Maybe I don't know all the discounts, or someone else gets the sales person to throw in some hidden discount. Do you think that cars are the only commodity that is sold that way? What about when you walk into Lowe's and buy something today, and tomorrow I go in and buy the same thing on clearance? Should Lowe's send you a rebate?
 
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Adrianp89

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^^^ Perfect example is JC Penny. The case study of Ron Johnson fits well here. A lot of things went wrong but primarily he tried to get rid of the heavy discounts and just put one cheap price. The end result was a massive failure. People like to feel they got a deal. The exception in this regard is Tesla, which has such a superior and unique product, they can pull it off.
 

Jako

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^^^ Perfect example is JC Penny. The case study of Ron Johnson fits well here. A lot of things went wrong but primarily he tried to get rid of the heavy discounts and just put one cheap price. The end result was a massive failure. People like to feel they got a deal. The exception in this regard is Tesla, which has such a superior and unique product, they can pull it off.
Festool from Germany also pulls this off, similar to Tesla. High prices and supposedly superior products.
 

jsteinm1

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Thanks for posting, this makes a lot of sense. I was struggling on my last purchase to do any kind of negotation as my previous strategy was based around invoice. Instead went with a comparing all offers strategy that fortunately worked out. I guess that's probably the best way to go so you find the dealer trying to hit that number and wanting to push vehicles hard.
 

arod412

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If you can get a dealer to show you invoice.... you are already ahead of the game. I’m telling first hand knowledge...using several tools like YouTube (your auto advocate, Kevin hunter...etc)...dealers hesitant on giving you that price. Hell...even internet pricing matching is hard to get because of those incentives. So negotiating starting from invoice might not work if you don’t have that.

I tried 15 dealers in my area ( and I know I’m lucky that in my area, I can search a 50 mile radius and find more dealers. So I don’t have to go fly anywhere) and only 1 got to dealer invoice.

Sites and apps like CarGurus, truecar, kbb will help a lot better in giving you realistic numbers then trying to ask for invoice.

Not trying to say that your methods are flawed, I’m just saying that as much as we want a great deal, dealers want a deal too, and googling invoice pricing won’t get you the results you need because each dealer/ incentive/ pricing might be different by a couple hundreds off.

I’m no expert, just giving some advice.


Owner of a 2020 Ram Laramie, 16 Dodge Charger scat pack and my wife 21 Jeep Wrangler Unlimited Sahara
 

Silent Bob

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The original post describes that invoice - holdback isn't the true price of the car to the dealer any more, and then goes on to quote other articles that (apparently) think poorly of car dealers because the buyer isn't getting an even better price because the dealer gets good bonuses from the car maker.
You missed the point of that bit. It was to show how and why dealers can go below invoice and still make money. Some dealers still try to make you think that invoice is still the final price they pay for a vehicle.
 

Silent Bob

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If you can get a dealer to show you invoice.... you are already ahead of the game. I’m telling first hand knowledge...using several tools like YouTube (your auto advocate, Kevin hunter...etc)...dealers hesitant on giving you that price. Hell...even internet pricing matching is hard to get because of those incentives. So negotiating starting from invoice might not work if you don’t have that.

I tried 15 dealers in my area ( and I know I’m lucky that in my area, I can search a 50 mile radius and find more dealers. So I don’t have to go fly anywhere) and only 1 got to dealer invoice.

Sites and apps like CarGurus, truecar, kbb will help a lot better in giving you realistic numbers then trying to ask for invoice.

Not trying to say that your methods are flawed, I’m just saying that as much as we want a great deal, dealers want a deal too, and googling invoice pricing won’t get you the results you need because each dealer/ incentive/ pricing might be different by a couple hundreds off.

I’m no expert, just giving some advice.


Owner of a 2020 Ram Laramie, 16 Dodge Charger scat pack and my wife 21 Jeep Wrangler Unlimited Sahara
For most FCA products any website (Truecar) that suggests a number above invoice is garbage. As we know anyone can easily get 1% off the factory invoice before any incentives/rebates. This can be a starting point to negotiation.

Check out this link for a very simple method for pricing. LINK
 

arod412

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For most FCA products any website (Truecar) that suggests a number above invoice is garbage. As we know anyone can easily get 1% off the factory invoice before any incentives/rebates. This can be a starting point to negotiation.

Check out this link for a very simple method for pricing. LINK
I appreciate the info...but just because WE can get that information, it doesn't translate to the REAL world. Dealers can 100% say NO to any pricing information we have. Your info just gives us a little power back

Definitely not sounding like a grouch, but at the end of the day, the dealer has alot of power to say and do what they want. You have given us some great tools that are usefull.

By then...the anxiety of buying a new car kicks in, questioning every incentive, and the odds that someone else that isn't knowledgeable will just swoop in and buy the car without any incentives and pay more for it becomes real and real.

I got my laramie with 15% off msrp (20% off if you don't include tax and tags) and incentives, rebates, tread lightly/access fund discounts weren't even in play. I let them deal with it...I just told them my price out the door. Sure I could have gotten more, but was it worth it...nah. I got my truck and I'm happy. Funny part is that I got my truck at a smaller dealer, and not one of the big dealers in my area.




Owner of a 2020 Ram Laramie, 16 Dodge Charger scat pack and my wife 21 Jeep Wrangler Unlimited Sahara
 

Silent Bob

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I appreciate the info...but just because WE can get that information, it doesn't translate to the REAL world. Dealers can 100% say NO to any pricing information we have. Your info just gives us a little power back

Definitely not sounding like a grouch, but at the end of the day, the dealer has alot of power to say and do what they want. You have given us some great tools that are usefull.

By then...the anxiety of buying a new car kicks in, questioning every incentive, and the odds that someone else that isn't knowledgeable will just swoop in and buy the car without any incentives and pay more for it becomes real and real.

I got my laramie with 15% off msrp (20% off if you don't include tax and tags) and incentives, rebates, tread lightly/access fund discounts weren't even in play. I let them deal with it...I just told them my price out the door. Sure I could have gotten more, but was it worth it...nah. I got my truck and I'm happy. Funny part is that I got my truck at a smaller dealer, and not one of the big dealers in my area.




Owner of a 2020 Ram Laramie, 16 Dodge Charger scat pack and my wife 21 Jeep Wrangler Unlimited Sahara
Anyone can easily get 1% off the factory invoice before incentives and rebates.
Most (if not all) dealerships will honor affiliate pricing. It is an offer from the factory. If you are not the type who likes to negotiate or put in much effort 1% below invoice can be your final price and you will be happy. For those who like to pay less, 5-8% below invoice before rebates and incentives is the goal.
 
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MarvsAMartian

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Anyone can easily get 1% off the factory invoice before incentives and rebates.
Most (if not all) dealerships will honor affiliate pricing. It is an offer from the factory. If you are not the type who likes to negotiate or put in much effort 1% below invoice can be your final price and you will be happy. For those who like to pay less, 5-8% below invoice before rebates and incentives is the goal.
5-8% Below invoice? Damn. I wish I could find these sort of deals. Every dealer I talked to basically stopped returning emails/texts/calls after I told them the price range I was looking for. Guess I have to work on my people skills.
 

Silent Bob

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5-8% Below invoice? Damn. I wish I could find these sort of deals. Every dealer I talked to basically stopped returning emails/texts/calls after I told them the price range I was looking for. Guess I have to work on my people skills.
Try contacting the dealers listed in my post

 

MickeyH

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No idea what invoice is, but if your not getting at least 20% off msrp , your getting hosed.
I am new to all this jargon. When you say 20% off MSRP are you including rebates and incentives (all discounts) in that 20%. Thanks for all replies
 

Silent Bob

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Example of percentage off MSRP

2021 Ram 1500 Limited
MSRP $73,640

$61,119 Sale Price
$1,200 Paint and Fabric Protector and Window Etching
$150 Doc Fee
$944.31 lic/plates/title
$6,501.28 tax
$71,914.59 OTD

You must include all non government required fees in the price.
$61,119 Sale Price
$1,200 Paint and Fabric Protector and Window Etching
$150 Doc Fee
$62,469 Total
62,469 is a 15.16% decrease of 73,640

You can then deduct rebates and incentives.
$62,469 Total
-$1,000 PenFed Rebate
-$1,500 Website Popup Rebate
New Total $59,969
59,969 is a 18.56% decrease of 73,640

You do not include any government fees or trade ins.
$944.31 lic/plates/title
$6,501.28 tax

In this example the final percentage off MSRP is 18.56%
 

MickeyH

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Example of percentage off MSRP

2021 Ram 1500 Limited
MSRP $73,640

$61,119 Sale Price
$1,200 Paint and Fabric Protector and Window Etching
$150 Doc Fee
$944.31 lic/plates/title
$6,501.28 tax
$71,914.59 OTD

You must include all non government required fees in the price.
$61,119 Sale Price
$1,200 Paint and Fabric Protector and Window Etching
$150 Doc Fee
$62,469 Total
62,469 is a 15.16% decrease of 73,640

You can then deduct rebates and incentives.
$62,469 Total
-$1,000 PenFed Rebate
-$1,500 Website Popup Rebate
New Total $59,969
59,969 is a 18.56% decrease of 73,640

You do not include any government fees or trade ins.
$944.31 lic/plates/title
$6,501.28 tax

In this example the final percentage off MSRP is 18.56%
Thanks for the breakdown......CHEERS
 

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