acdii Report post Posted June 26, 2013 (edited) From Hybridbear Dealer invoice price is publicly available on sites like kbb.com or Edmunds. The dealer should also have no problem telling you this number. The dealer invoice printout will show you AZXD plan pricing, MSRP & dealer invoice. The dealer makes a profit even when selling you a car at dealer invoice. The dealer does not pay Ford the dealer invoice price for a car. They pay less. When dealers sell a car at invoice price they're still making money because every car has a "holdback" which on the FFH is somewhere between $500 & $1000. That is their margin even when selling at invoice price. Higher volume dealers are more likely to sell cars at invoice price because they also get volume rebates from Ford. These numbers are purely for the purpose of illustration and are not necessarily accurate. My dealer explained this process to me because I asked about how they make profit selling at invoice (but I didn't ask this until after we had signed and paid that price for our car). He didn't tell me how much they get in volume rebates, he just said that they get volume rebates every month at their dealer. Say for example that Ford sets a target of 100 Fusions per month per dealer to get a volume rebate of $300 per car. If that dealer sells 110 Fusions in one month they would get a rebate from Ford of $33,000 or 110 x 300. That increases their margin on every Fusion by $300. This is why shopping at the end of the month is good for buying cars off the lot. The dealer might know on the 29th of the month that they need to sell 15 more Fusions to get their volume rebate so they'll sell those cars cheaper knowing that the volume rebate will make up for it. Buying cars off the lot is more expensive because the dealer typically doesn't pay cash up front to Ford when taking delivery for their lot. They have a finance company who pays Ford and they pay a fee for every month the car goes unsold, and then they pay the full cost of the car once they have received the money from the buyer. This is another reason why they sell cheaper at the end of the month. Because every car still on their lot on the 1st of the next month costs them another fee to the finance company. When you order a car the dealer doesn't go through the finance company but instead pays Ford cash up front which is why you can order out at a lower price. Edited June 27, 2013 by hybridbear 4 2014FordFusionSE, FusionRose, hybridbear and 1 other reacted to this Quote Share this post Link to post Share on other sites
bcrisp Report post Posted August 31, 2013 Thanks for posting this - it's a great topic! Ford has a 3% holdback rate, based on MSRP minus destination. I just priced a 2014 FFHyTi on ford.com for $36,675. Subtract $795 destination = $35,880, x .03 holdback = $1,076. So, if you manage to negotiate invoice pricing on your sale (good luck, and please share the dealer's name if you do), they still get 'at least' $1,076. There are numerous other incentives, too, such as Ford-to-dealer cash, volume incentives, and related. Also know that invoice prices can also be inflated. Holdback is typically released to the dealer quarterly. There's a very good article on Edmunds that explains more details for holdback, including a table for holdback rates for all manufacturers: http://www.edmunds.com/car-buying/dealer-holdback/ The FFH competes with Camry but Toyota only has a 2% holdback, and it's figured on base MSRP (before options); unlike Ford which is calculated on total MSRP. Therefore, Toyota dealerships have much less wiggle room, so you clearly have an opportunity for lower pricing on a comparably equipped Ford. Another item to consider is buying a current year model when new year models arrive. Dealerships get another 1-2% holdback for selling prior year inventory on top of the normal holdback. I've leveraged this info in the past by buying a vehicle in Oct/Nov when the newer model year cars are on deck. I wouldn't consider making a purchase on a prior year unless I could get below-invoice pricing. The dealership is extra anxious to rid themselves of prior year cars so that's about the only time (if ever) they'd be willing to dip under invoice. Otherwise, negotiating into holdback territory is verboten. The only real value in educating oneself on holdback rates is simply to know with certainty that if a dealer indicates they're not making any money on a sale (say, when you offer an at-invoice price), they're flat out lying. Dealers and salesman don't make the money they used to because of much transparency provided by the internet and organizations such as Consumer Reports. However, we all must be believers in a free-market capitalist economy and the dealer must make a profit. So the question to the consumer is, how much over invoice are you willing to pay; nevermind the holdback. 1 hybridbear reacted to this Quote Share this post Link to post Share on other sites