To make money, dealers aim to make as much money as possible on each car sale. However, other factors influence dealer prices and can lead to unbeatable discount prices for new car buyers. Learn how to take advantage of unannounced offers such as; Factory-to-dealer incentives, dealer overstock clearance sales, and below-bill sale prices.
MSRP vs. Invoice price
The Manufacturer’s Suggested Retail Price or MSRP is just that, a suggestion. The invoice price is what dealerships pay the manufacturer for a new vehicle. When you buy a new car, you should aim to pay less than the MSRP. The closer you get to the invoice price, the better the deal. Paying prices below your car bill will maximize your savings.
Factory to distributor incentives
Automakers often offer factory-to-dealer incentives to entice dealers to sell more than one specific model. Factory-to-dealer incentives allow dealers to pay less than the invoiced price for the new vehicle. Distributors are not required to advertise or pass on these discounts to consumers. Some may keep the additional earnings, while other distributors may be willing to pass on some of the savings to consumers.
If you want to take advantage of factory-to-dealer incentives, you’ll need to negotiate. Since distributor incentives are offered to all distributors within a region, having distributors compete for your business will encourage them to lower their price below the distributor’s cost.
Liquidation of excess dealer stock
Dealers must pay to keep vehicles in stock. If a certain model is overstocked, the dealer will pay more and earn little from the sales. Often times, overstocked dealers are willing to sell new vehicles at or below the dealer’s cost just to make room for higher-demand vehicles.
The longer a specific vehicle has been on the lot, the more likely the dealer will lower the price. Buying extroverted or end-of-the-year models is a good time to take advantage of these types of discounts.
Compliance with sales targets
Car dealerships and salespeople alike live to meet monthly sales targets. Meeting the targets may mean cash bonuses for the seller or increased incentives from the factory to the dealer for the dealer. Either way, it is an incentive to move inventory.
Buying at the end of the month is a great way to take advantage of distributor difficulties in reaching target sales. If losing a few thousand on a vehicle means a big bonus, the dealership is likely to take on the loss for more profit.