The Truth About "Factory Invoice" Car Prices

We’ve all heard the term “factory invoice,” but what does it really mean? Car dealers would love for you to think that the “factory invoice” price is the price they paid the manufacturer for the car they’re trying to sell you. In reality, that’s probably not the case. From Bankrate.com:

The invoice that most dealers are happy to show you represents a theoretical price the manufacturer would charge the dealer if the dealership sold just that one vehicle. Of course most dealers sell hundreds or thousands of vehicles a year and manufacturers offer all manner of incentives to encourage dealers to sell even more.

There’s no way to know what the dealer incentives are, so how will you know if you got a good deal?

It depends on the vehicle — cars and trucks that are in demand will always carry a lot of dealer profit, while slow-selling vehicles usually come with deep factory discounts and dealer incentives. But as a general rule, you’ve gotten a good deal if you’re final number is within $250 or so of the publicly available invoice price.

Somehow, we just knew they weren’t selling those cars at a loss.—MEGHANN MARCO


Invoice price on any car is a mythical figure
[Bankrate]

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  1. segfault, registered cat offender says:

    Incentives include not just the publicly-known incentives on specific models, but also, money for showroom renovation and construction, plus significant bonus money based on customer satisfaction survey scores.

    If a dealer gets more than a few negative (less than perfect) surveys in a month, they will usually lose all of their CSI bonus money for that month.

  2. It will make you dizzy, but there are a number of websites that help prepare you to go into the negotiation stage of buying a car, including learning the lingo and the tricks of unscrupulous dealers.

    I recently bought a new car and I ended up going back and forth for two days over the price. Stick in there and be ready for the long haul of negotiations.

    I believe Dealer Hold Back is what the bankrate article was talking about.

    Do your research and don’t let the dealer tell you that the factory rebates are part of their offer to you. Negotiate your best price THEN add the rebates.

    Don’t be embarrassed about haggling!

    And VIN ETCHING is a ripoff.

  3. RandomHookup says:

    Check out the documentary Slasher…it will confirm all your car sales guys preconceptions.

  4. LatherRinseRepeat says:

    My friend’s dad sells GM cars/trucks. He showed me his monthly worksheet. Yeah.. they still make money on each unit sold, even when it’s sold below “invoice” price. Holdbacks, dealer incentives, spiffs.. you should never feel bad for haggling because they get paid either way. If they tell you they’re losing money on the sale, just laugh in their face.

  5. Daemon_of_Waffle says:

    I work for a GM related company. We are given GM employee discounts as a company perk. When an employee goes to the dealer, he just tells the dealer/salesperson his special GM employee discount number. Grudgingly, the dealer/salesperson with confirm this number, and lo and behold no haggling necessary because GM employees get great discounts. The dealer/salesperson will tell you the price offered for an employee purchase, and thats it. You and the dealer/salesperson just work out the financing.

    Of course, you need to be a GM employee, or friend/family of one, to get this advantage.

  6. Bourque77 says:

    If you trade in a car please be aware that they have a black book (because its black) that they look up your value in and usually look up theirs on kbb or something. Also in their black book you dont add for cd player etc, they use base models and thats it. My friend builds wrecks and buys and sells used cars so I know from him how that works.

  7. oudemia says:

    My mother was recently shopping around for a Prius. Every single dealer said something along the lines of “You know there’s no negotiating the price on a Prius, right? We sell them all for their sticker price without a problem.”
    Yeah, right! She ended up getting one — in her first choice color, with the most expensive options package (which she didn’t need, even) — for something like 2K less than the sticker price. They will always negotiate.

  8. NoThru22 says:

    Someone at a Toyota dealership led me to believe that even if they sold vehicles below their actual invoice price, that at the end of the year (or possibly every month) Toyota gives them a percentage of their sales number as a total, and this percentage could fluctuate depending on sales events.

  9. vanilla-fro says:

    I love the “we’re losing money on this deal”. Really? then why are you doing it? God I hate buying a car.

  10. thrillhouse says:

    no, don’t worry about the dealer making money. They know good and well that the majority of the money is made in the service and finance departments.

    This is why you’ve seen all of this “dealer invoice pricing” BS for the past several years. Its just another gimmic – and a damn good one too. They know that the majority of the time, they’ll get the chance to screw you on the financing – even worse on the lease. Then, they’ll turn around and sell those car notes and make a tidy sum on those.

  11. infinitysnake says:

    Don’t forget, too- a lot of the “invoices” they’ll print out for a customer are complete fabrications.

  12. woohoo! That picture is of Bob’s Fine Cars in Eureka California!! ahh I miss home. (I didn’t live in Eureka, but near enough to drive by there a lot)

    I wonder where Meghann got the picture from?

  13. LatherRinseRepeat says:

    If you’re in the market for a used “luxury” car, let’s say a Lexus for example. Shop the used section at a non-Lexus dealer. Just like regular retail stores, car dealerships have loss leader products. The idea is to get you to come to the dealer, let you look at the used car, and then try to upsell you into getting one of their new cars instead. If you don’t fall for the smooth talking, you’ll get an awesome deal on that used car.

    I’ve gotten really good prices in the past for used cars that were only 1 – 2 years old. Buying a “certified” used car at the same brand car dealer is just another way for the dealer to pad the sticker price.

  14. Butch Huskey says:

    i bought a slow seller (accord hybrid w/o navigation), bought on last day of the month, did tons of research, brought that with me to the dealer (with a calculator, your cell phone probably has one) and was committed to walking away …

    and i got my car for under invoice

    do your homework beforehand, stick to your price, be resonable, deal with only the fleet or internet manager (they’re on salary, not just commission and stay away from the automall and you will do ok

  15. kenposan says:

    Negotiate everything separately: car price, trade value, financing.

    My wife and I did this when we bought our first new car and it worked great. The salesman was at a loss when we refused to discuss certain points until others had been settled.

    And to make it more fun, my wife did all the negotiating while I sat there. She would look at me periodically and say “right?” or “isn’t that what you were thinking?” and I’d answer. It was hilarious to watch this salesman deal with her when it was clear he wanted to deal with me.

  16. qazwart says:

    Consumer Reports gives you both the invoice price (which is available everywhere) and the “whole sale price” which is the price after the dealer gets their holdback. The service is $25 for three quotes on three different models. It includes all options, their list price and wholesale prices. It is definitely worth the price.

    The last two times I bought a car, just having the CU printouts were enough to get a good price without any haggling. The only problem is that CU doesn’t list dealer incentives. That you can get from Edmunds. (However, Edmund’s car car prices are not very good.)

    My suggestion is to visit a few Internet sites, get prices, get the CU and Edmunds information, go to the dealer and lay your cards out on the table. No tricks, no haggle. A good dealer will realize that you have the information and will quickly give you a good price. A bad dealer will attempt some shenanigans, but just walk out. There are dozens of cars and each brand has a half dozen dealers in your area.

    In the bad ol’ days when dealers had all the information and held all the cards, you had to play the game. Now, there’s no reason to put yourself through hell to buy a car.

    One more thing: get approved for a car loan before you start looking. Search the Internet, check your local credit unions, and find a good rate. Many dealers will give you a good price knowing they can make it up via the loan. Most dealers get paid a commission for setting up a loan, and for many dealers, they make more money on the loan commission than the car. It’s stupid to get a great deal on a car, then take the dealer’s loan and blow whatever savings you had.

  17. Her Grace says:

    All of the reccomendations are good. My stepdad is a car salesman (actually, now he’s an independent used car salesman), and I’ve picked up a lot of little bits from listening to him. The basic point is to know what you are willing to spend and be prepared to walk away if the dealer goes over it. They want your business. Salespeople work on commission, or partial commission. They would rather have a few hundred bucks from your sale than 3 hours wasted because they couldn’t compromise a little and make everyone happy.

    I’ve seen a similar phenomenon on ebay: people think they know exactly what they want. They see it, and the price is acceptable but a bit high. It continues to rise, and they get into a bid-war, impressed by features they don’t need and what a “deal” it is with extras x, y, and z. In the end, they pay far too much and the seller wins. The same thing happens in cars–people think they want Car A, and are talked into Car A + x, y, and z “upgrades” at a “great deal,” making the dealer a ton of money and ruining the budget the buyer had set for himself.

    One plea, though? Since salespeople do work on commission, please keep track of who sold you the car, if you make multiple visits to the dealership or call multiple times. I’ve seen my stepdad burned because he worked his butt off to make a sale (he did largely internet sales when he worked for dealerships), and then when the buyer arrived at the dealership to drive their car and pay, they didn’t mention he’d been working with them the whole time (nothing nefarious, usually, just that it didn’t occur to them to say so). Some other salesguy would get to be their helper on that end of the deal, and then the two salesmen would have to split the commission. Not fair to the workers at all.

  18. SexCpotatoes says:

    LatherRinseRepeat… that is a really stupid idea. That you get a much better deal on a used car from a non-brand specializing dealer. The salesmen at dealerships make maybe $250 on the sale of a new car, but the commission can be MUCH, MUCH higher on a used car. Used cars are the bread and butter of dealership profits. Buy for $3000 at auction, sell for $8000 to some dumb shmuck that thinks he’s getting a good deal on a 7 year old Lexus.

  19. LatherRinseRepeat says:

    @SexCpotatoes

    Who said anything about a 7 year old car? The cars I’ve bought were 1 – 2 years old. They were trade-ins, not auction cars. Please learn how to read.

  20. cstatman says:

    dealer? huh? no comprendo?

    Craigslist. But from someone who is “upgrading” know what you are looking for. Beat the 30% depreciation hit of a brand new car.

    of course, if you “need” a brand new car? well, you probably aren’t reading consumerist. You are probably having a $12 coffee that you took 8 minutes to order.

  21. thrillhouse says:

    Woohoo, cstatman.

    A dealership can be a great place to check out various makes and models prior to a purchase (Carmax works great), but thats about it. I too drew the line in the sand, and chose not to take the enormous hit on new cars anymore.

    Do your homework, get a Carfax report, and buy used. I sold my last car on Craigslist (for top dollar, $2000+ above what any dealer would offer on trade), and bought another under value – also via Craigslist. And all with cash.

    If you do go that route, get familiar with transfering titles and tax law for your state. They’re all different. And never accept a cashiers check without verification from the bank it came from.

  22. JLam4911 says:

    a GREAT site to check out is http://www.carbuyingtips.com

    Lots of great info there.

  23. bob9 says:

    Saturn cannot do that. They have a printed invoice from the factory. I love Saturn.

  24. 160medic says:

    @bob9: Hey retard EVERY manufacturer has a printed invoice. Saturn has just perfected the art of price fixation. The have hordes of consumers swearing up and down what a good deal Saturn is because there is no negotiating. Well being in the car business for a little more than 12 years I know for a fact that you get a better deal by negotiating. Ever heard a salesperson sa “stickers quicker”? Thats because they want to get you in and out quick if you just nod like a bobblehead and say OKAAAAAY Ill take it DUH (sounds like Saturn buyers)You would be better off buying a year old Saturn because it is cheaper used, and you can negotiate the price.