Explain dealership "invoice" on vehicles

[RiverRat1]

You always hear the "I'm selling you this car $5 over invoice so we're not making any money" BS

Obviously they get kickbacks or something when they sell a car. I assume they actually pay say 20k for the car just so they can show the customer the invoice.
How can someone find out what the car actually costs the dealership or how much under invoice a car can be bought for?

Looking at a Toyota Highlander for the wife. Sticker is 41k any guesses how low they could go?

[Pineywoods]

There is meat left on the bone for them after "invoice". The invoice they show you and the actual invoice are gonna be different. I'm at the dealership right now and just worked a deal where i am paying 1600 under what their invoice shows. Msrp is much more. Japanese dealerships dont have as much negotiating room as some domestic but there is some. From what i've seen you will be lucky to get 2500-3k off sticker on a toyota. They use dealer "add ons" to get the profits back up too. Dealerships get incentives from vehicle manufacturer for hitting certain sales numbers each month/year so they can afford to take a loss or break even from time to time. They make more from hitting the quotas than what they lost on car. It's usually better to buy from high volume dealerships during the slow time of year (now).

[Texas1980]

If you're buying something at invoice then make sure you are getting invoice price minus the rebates. It's easy for them to say youre buying it at invoice if they use the rebates to get to that price. Rebates should be subtracted from the invoice price. Then have them show you the invoice and it will have a holdback amount on it. That is the amount that the dealership is paid by the manufacturer no matter what they sell it to you for.

[tvc184]

You always hear the "I'm selling you this car $5 over invoice so we're not making any money" BS

Obviously they get kickbacks or something when they sell a car. I assume they actually pay say 20k for the car just so they can show the customer the invoice.
How can someone find out what the car actually costs the dealership or how much under invoice a car can be bought for?

Looking at a Toyota Highlander for the wife. Sticker is 41k any guesses how low they could go?

If they still do it, they have what is called holdback money from the manufacturer. It may run 1-3% of MSRP and is/was sometimes based on time of sale. Like a 3% might go to 2% if the vehicle isn't sold in the first 30-60 days or whatever their rules are. The incentive is for the dealer to move it off the lot to save money.

For example let's say a vehicle list MSRP at $20,000 with an "invoice" price of $17,000. If they take out 3% of the $20K MSRP it comes to a $600 holdback or money held by the manufacturer but later paid "back" to the dealer after the sale. Even if a dealer sells it to you at the invoice of $17K, he is still making at least $600 in a kickback from the manufacturer. Then they have all their destination charges and other forms of profit.

I knew a couple of sales managers a few years ago and found out about the holdback which I don't think is a secret now anyway with the internet. I haven't bought a new car in about 8 years but I am assuming they still get that money back in some form from the manufacturer over what is listed in the claimed invoice. If it still holds true, they have a built in profit even when they sell at invoice and I am sure there are other incentives that are hidden.

I doubt you will ever see what is actually paid for a car in the end unless you are the owner/manager of the dealership.

[Mike Murphey]

I was on a trial years ago where someone was suing a dealership, and we got to hear the low down on MSRP and invoices....All dealers pay a contracted amount for the new cars, but depending on how well the dealer does on selling cars per month, quarter per year, etc...they can get rebates from the car manufactures, it is very well managed on how much dealerships make depending on how many new cars and select car packages they sell to the public each month....so you might see an invoice but that doesn't mean the dealership paid that for the vehicle in the end...

[adnoh]

Depends on the manufacturer.

[TallTexan]

If you're buying something at invoice then make sure you are getting invoice price minus the rebates. It's easy for them to say youre buying it at invoice if they use the rebates to get to that price. Rebates should be subtracted from the invoice price. Then have them show you the invoice and it will have a holdback amount on it. That is the amount that the dealership is paid by the manufacturer no matter what they sell it to you for.

This is what I was told before