What is Dealer Holdback?
Auto Dealer holdback is a percentage of the MSRP or the Invoice price which is repaid to the dealer by the manufacturer after a sale. The make of the vehicle determines whether the MSRP or the invoice price is used to calculate dealer holdback. This amount is built into the price of a vehicle and enables dealers to offer higher financing amounts to customers, reduces the amount of commission paid to salespeople, and allows dealers to sell cars at invoice price and still make a profit.
Where can I find out the auto dealer holdback for a vehicle?
Edmunds.com provides a list of manufacturer holdbacks on their website. Make sure to review the sample calculations at the bottom of this article once you’ve collected the holdback percentage for a particular vehicle.
Is dealer holdback part of the dealer profit?
Yes and no. Dealer holdback is based on the time the dealer has had the vehicle. Over time (normally 90 days), the dealer holdback is reduced to zero. Dealer holdback is highest when the vehicle is first delivered to a dealership. If the dealer sells the vehicle immediately upon receiving it, the dealership will receive the holdback from the manufacturer. If the dealer sells the vehicle after holdback window has expired, then the dealer will not receive the holdback from the manufacturer.
How does dealer holdback help me negotiate the price of a new car?
Simply knowing about auto dealer holdback, gives you more knowledge and negotiating power compared to most new car buyers. If a salesperson claims to be taking a loss on a vehicle, let them know that you are aware of the dealer holdback and its total dollar amount. This will show that you have done your homework. Not all dealers will be willing to share dealer holdback funds with you. This can be affected by secret manufacturer-to-dealer incentives. (read more aCar Dealer Secrets )
How do I calculate the auto dealer holdback?
Auto dealer holdback is calculated based on the Base MSRP, Base Invoice Price, Total MSRP or Total Invoice Price.Edmunds.com provides a list of manufacturer holdbacks and the calculation basis to use.
When calculating holdback based on:
Before you negotiate, calculate the holdback on the vehicle. To find the holdback on a vehicle, check out the manufacturer holdback list at Edmunds.com