I was convinced they'd seen this storm coming and built a shelter to weather it. Like I said, car dealers aren't stupid either. If we owned a retail business selling expensive merchandise, and suddenly our real product costs went viral on the ‘net, surely we’d have called our suppliers and said, “We’re getting killed here! If you don’t find a way to compensate us that consumers can’t discover, you won’t have stores to sell your stuff.”
New car dealer invoice price for free#
In a 1985 luncheon meeting where the industry’s most influential market researcher was the featured speaker, I asked him, “What percentage of car buyers walks into dealerships with invoice prices?” His answer was, “Not more than ten or fifteen percent.” Then 1995 happened, and any doofus with five thumbs and a keyboard could get invoice prices for free all over the Internet. Consumers could buy invoice prices then from Consumer Reports and publications like ConsumerGuide's New Car Price Guides, but most folks didn't. The invoice price probably was a decent vehicle-cost estimate before the Internet's arrival. I was convinced that the 1995 arrival of the Internet had compelled the auto industry to take action to offset the negative impact of the sudden easy access to invoice prices. Read more: The truth about new-car incentives that no one else is telling youĤ. Were the dealers really losing that much money on those deals? If so, why? And if they weren’t, what was the source of all those extra dollars? Regularly $500 to $1,500 below and sometimes $2,000 or more below, excluding the impact of any cash incentives. Talking to tens of thousands of new-car buyers for over 20 years, I frequently hear transaction prices that are light years below any “invoice price minus holdback” number. So how can ‘the dealer invoice price,’ which those ‘trusted’ Internet sources use as the foundation for their ‘target price’ advice, be a bona fide dealer cost number?ģ. In addition, it needs to make a profit to provide a decent return on investment. Over and above the vehicle’s cost, every dealership has at least a 10% overhead expense. (It's 7% on every Mercedes.) And that's at the sticker price! Who pays that? (Only the guy who thinks Taco Bell is a Mexican phone company.) Today there isn't a single new vehicle with more than a 10% difference between the invoice and retail prices. Anyone with the savvy to run a profitable lemonade stand should be able to look at the difference between the invoice and retail (sticker) prices on any new car and conclude that no business could survive if those invoice numbers were the real deal. Isn’t that naiveté on stilts? Does stupidity get anyone to $10 million?Ģ. Yet we’re willing to believe that people with a $10 million net worth, half or more of which is sunk into their new-car dealership, are going to let you and me know what they pay for those cars.
You and I buy hundreds of products and services every year, and no one can tell us what the seller paid for any of them.
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