Can You Really Buy a New Car Below the Invoice Price?

When purchasing a new car, it's important to know the current new car invoice price and MSRP for that vehicle, to help you negotiate. The invoice price of a new car is supposed to be the price that the manufacturer charged the dealer for that vehicle. However, some dealerships advertise that they sell their cars at or below invoice prices. So, how do they do this and still make a profit? The secret is that the new car invoice prices that they show you at the dealership aren't necessarily what they are actually paying for those vehicles. Sometimes they are getting the car well below the invoice price themselves. This is because manufacturers offer incentives to the dealer to encourage them to sell more vehicles and to sell them faster. You can use this knowledge as a bargaining tool.

Here are some of the most common incentives used:

• Dealer holdback: Some manufacturers offer the dealers holdbacks. A holdback is a financing plan that allows the dealer to save money on the cost of the vehicle if the vehicle is sold within 90 days. The amount that the dealer gets back is usually a percentage of the original invoice price.


• Manufacturer to dealer incentives: Manufacturers sometime offer the dealer incentives for specific models, usually this is applied to slower selling models. When the dealer sells one of those vehicles, they get money back. For some models that can be thousands of dollars.


• Volume incentive: This incentive is based on the number of vehicles the dealer sells. Basically the dealer gets a reward for selling a certain number of cars. This creates a greater urgency for the dealer to sell more vehicles in order to get that cash reward.