Dealers would love for you to believe that MSRP (aka "sticker price") is the price you should pay for a car and that dealer incentives cut into their profit. Other sites would have you believe that the invoice price is as low as a dealer can go. If you or anyone you know still believes either of these ideas, have someone pinch you, because you need to wake up. It simply isn’t true. Those beliefs can cost you thousands of dollars when purchasing a new car. Why? Bottom Line: Dealers are motivated by money and manufacturers pay dealers incentives to sell more cars! A quick visit to Edmunds.com will show you a few of these factory to dealer incentives that go un-noticed by consumers each month.
Manufacturer to Customer Incentives:
These incentives are offered directly to customers from the manufacturer in the form of cash rebate, low APR, and lease payments. These incentives are public knowledge and are frequently mentioned in commercials and newspaper advertisements. They are more commonly offered on slower-selling vehicles and are offered nationally and regionally. Don’t be surprised if you don’t see these incentives offered on high-end cars, cars in high demand, or all-new models. Manufacturers are not going to bribe you to buy a car that everyone wants to buy.
Sorry to break it to you, but you aren’t likely to see a publicized incentive offered on a Porsche. Depending on where you live, it may be unlikely to see incentives offered on Mercedes-Benz, BMW, and Honda models. However, some of these manufacturers do offer manufacturer to dealer incentives. (Honda typically hides their incentives in the form of Manufacturer to Dealer Incentives - see below.)
By requesting online price quotes from sites such as Yahoo! Autos and Edmunds.com , you’ll be able to see which dealers are desperate to collect on their manufacturer to dealer incentives. In June 2007, Southern CA Honda dealers were offering as much as $1837 under invoice – to buyers that took our advice. (There was no published incentive offered on the vehicle at that time!)
Manufacturer to Dealer Incentives:
These secret dealer incentives are typically not public knowledge and are not always available on the internet. Edmunds.com provides a list of incentives, but not all of the manufacturer-to-dealer or local dealer incentives appear on this site. These manufacturer-to-dealer incentives can amount to $100,000’s for each dealership and may run on a quarterly basis. So, dealers keep a pretty tight lid on what they are getting paid by manufacturers for these secret dealer incentives.
In Car Dealer Secrets , you learn that dealerships may be compensated based on reaching sales goals and based on C.S.I survey results. The lowest price quote won’t always come from the same dealer. If a dealer is desperate to meet a sales goal – your negotiating power will increase. Dealer participation varies with manufacturer-to-dealer incentives. The only way to weed out the dealers that are very motivated to sell a car is to use the multiple car quote approach.
The automotive industry is a volume based business and these car dealer incentives can play a major part in the price you receive on your car. “Turn and earn” is the term used to describe how many cars a dealer sells (turn) in a given period and how many vehicles the dealer will receive (earn) for the next period as a result of those sales. High Sales = More Vehicles in the Future. Unfortunately, there is no way to know which dealers are participating in a manufacturer-dealer incentive or how close they are to reaching their sales goals. Due to these manufacturer-to-dealer incentives, it is also impossible to know how much a dealer really paid for a car. By using sites like Yahoo! Autos and Edmunds.com to get multiple car quotes, you increase the competition among dealers and those that are aggressively participating in the manufacturer to dealer incentives will compete. When Dealers Compete You Save!