TOrpheus

Hi,

Can anybody explain how in the US (I'm up in Canada), dealers are able to sell cars "under invoice"? I've seen so many of you talking about getting it.... BUT how does the dealear make any $$$?

Thanks,

T

tfischer

Well, duhh. He makes it on volume.

rxdriver

There are lots of ways for the dealer to make money on a new car sale.
If you go by the dealer's definition of "invoice price", then there are lots of additional amounts in there like an advertising fee and other costs of doing business that are not specific to one car. If you let them tell you what invoice price is, then they'll get some extra padding in there.
There's also an amount called "manufacturer's holdback", which is a fixed percentage of the actual cost of the car to the dealer. The dealer gets that money from the manufacturer when the car is sold. In theory, that money supposed to offset interest costs on loans used to pay for the car while it sits on the dealer's lot for a couple of months. But if the dealer can turn the car quickly, then it ends up being pure profit.
Dealers also make money on the lease or car loan you take out. For example, if you buy the car, the dealer is marking up the APR by as much as 1%, and the bank sends them a check for that difference as commission. If the dealer sells you GAP insurance, term life insurance, or any of the other BS that they bury in a loan or lease, they also get a kickback on that.
Finally, there can be additional cash rebates or incentives from the manufacturer that you don't always know about, even with Edmunds or KBB. Those incentives are often based on volume - that's why the "end of the month" is such a big deal if they haven't hit their sales target yet.
And I didn't even mention your trade-in or a car you return from a lease. They'll make money on that, too, one way or another. If you owe money on your trade-in, then that's more you'll have to finance on the new car, and more money for them on the new loan or lease.
From a profit perspective, the dealer's worst customer is someone who wants to pay rock-bottom price, is paying cash, and is not making a trade. That's the scenario where they have the smallest opportunity to make money.

crapz1

^^^
Haha...if what you said is true, I guess I'm one of their worst customers. I got them to $1k under invoice at the end of the month, paid cash, and did not trade in.

Dinomon

my cousin bought the '06 RX350 last weekend for $4000 under invoice.

Lexibabe

Was your cousin in Texas? If so, where? Did he do it via Internet and then hit the dealership? We'll be buying in the next couple of months. Just wondering how specific can I be to get the right price? Example, I want bamboo pearl, heated front seats, no nav, no ML, BUT I do want it from Japan. Will it be tougher trying to get ALL these specifics AND get the price I want. Or should I go for all the options listed especially the Japan thing, and then more flexible on the color options? I'm not mentioning I have trade-in until the I get the price I want. Thoughts???

Thanks!

tfischer

I'm no expert in car buying, but I think the more specific you are, the more trouble the dealer will have in getting that car, and the less room he will have to move.

If you want the best price, then offer to take something off his lot immediately. That will get you lots of attention.

Dinomon

That's correct.. Just buy one from their lot and you might end up with more options and less price. My cousin bought it from Texas, and he got everything loaded. I think he went to Park Place Grapevine.

JorgeGVB

Some of you guys must live in areas where the economy is hurting to get those prices. I could not get them down anywhere close to what I read here. Although part of the problem here might be the only 2 Lexus dealerships within a 100 miles are owned by the same person. The economy is good here and gas was $2.59 today.

I wanted a loaded silver RX with the NAV system which is tough to find here. I have been looking for nearly a month for what I wanted and one was finally delivered on Friday. The sticker was nearly $46K and I paid $43K. They did throw in a XM radio sysem for free to make the deal, which they wanted $675.

BatKing

You sure it is a RX350? I never know Lexus is making any RX 350 for the 06 model

RX_brain

If your cousin got it from Park Place Grapevine/Plano 4k under invoice, he must be very lucky. Both Park Place dealerships are about 1-2k over the price I got from Sewell. But 4k under invoice is almost unheard of, are you sure it's invoice, not MSRP? Can you clarify that?

rxdriver

Yeah... let's check that. $4,000 under invoice would be about $10,000 under MSRP sticker price. That's HUGE. I can't believe a dealer is that hard up to make a sale, even if it is last year's model.

crapz1

Pretty sure he meant 06 RX330.

rx300mm

I am from Ontario, Canada, what I am reading is new for us here, buying less then the invoice price ?

This is a question is for all Canadians on this forum, what is the lowest you paid for your RX330/350 (i.e was it less then the invoice price ?)

Thx.

ndorjee

Fixed costs for many of the import manufacturers are much higher in Canada -- small customer base! US with bigger market, there is also more competition. There is also the other factor of Canadian $$ appreciation of over 40% within the past 4 years!!!

In the current market, one can save over 30% by purchasing in the US (in other words, many cars cost over 50% more in Canada).

About half of your savings come from the stronger Cdn $, the other half from the fact that you can actually negotiate in the US... unlike the fixed price (MSRP) in Canada.

To your question about what did Canadians pay for the RX330, I bought from the US $800 over invoice last August. (Around $20K below quoted price in Canada) for a RX330 AWD with all options except for Mark Levinson and RES.

Even in the US, below invoice for Lexus is bit unusual ... Southern California appear to have the best prices but CA does not allow tax free purchase even for export vehicle so it is not practical for out of state/country purchase.