It’s something of a Holy Grail for new-car shoppers.
Stated simply, a new vehicle’s invoice price is what a dealer pays to an auto manufacturer for a particular car, truck or SUV, and it’s the same for every dealer across the country.
The invoice price doesn’t include any of the dealer’s costs for advertising, selling, preparing, displaying or financing the vehicle, according to Kelley Blue Book in an article “10 Steps to Buying a New Car.”
“There are some instances where a dealer might be inclined to sell a car at or below invoice price,” writes Suzanne Kane at The Car Connection online. “It may be that the dealer has a vast quantity of a certain make and model on the lot and wants to clear the inventory so he can turn it for new models.”
However, selling vehicles at dealer invoice price is the exception rather than the rule, she indicates.
“The price the dealer starts at with negotiations is the sticker price (MSRP), which often turns out to be hundreds to thousands of dollars above the dealer’s invoice price.”
That’s because dealer profit may be the difference between the selling price and dealer invoice price. For example, at Kelley Blue Book and Edmunds.com, a 2014 Ram 1500 Tradesman listed with a dealer invoice price of $23,777 and an MSRP of $25,295, a difference of $1,518, or 6.5 percent.
Still, incentives and manufacturer-to-dealer cash can reduce dealer prices below the invoice.
“What you’ll need to find is the market price, which is what others are actually paying for that car in your area,” wrote Trent Looms in an advice column at NewCars.com. “Depending on the popularity of a car, the market price may be higher than MSRP, or even lower than invoice.”
What you pay likely will be somewhere between the invoice price and suggested retail price.
In our example of the 2014 Ram 1500, Kelley Blue Book listed a “Fair Purchase Price” of $24,728 (range: $23,867-$24,728), while Edmunds.com listed the “True Market Value” of the same pickup at $24,026.
“When all is said and done, knowing the dealer invoice can be an extremely helpful bargaining tool,” says kbb.com. “However, it does not always tell the entire story.”
For a more complete discussion of MSRP, see yesterday’s blog post on The Open Road.
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