How do you find out how much a dealer paid for a car?
There are two reasons you could be wanting to know how much a car dealer has paid for a car:
- You are buying a new car and are looking to find the true dealer cost, probably by finding out the (Actual) dealer invoice price.
- You are buying a used car that may have come from an auction you simply want to find out how much a dealer paid for that car at the sale.
You're In Luck
Because not only am I going to tell you what the dealer paid for your car if they purchased it from an auction, but I am am also going to tell you something ABSOLUTELY NO ONE ELSE WILL ABOUT NEW CAR INVOICE PRICES!
In This Post:
- What Do Dealers Pay For Cars?
- How To Find Out What A Dealer Paid For A Used Car
- We Will Price Your Trade/Car For Free!
- How Much Do Dealers Pay For Cars From The Manufacturer?
- Dealer Invoice Pricing (The Truth)
- What Is Reasonable To Offer A Dealer On A New Car?
- Best Method For Finding Dealer Invoice Pricing
- Dealer Holdback
What Do Dealers Pay For Cars?
Dealers will almost always pay around Wholesale Cost for a vehicle (used), which is calculated by averaging out:
- What the vehicle is selling for currently at auction
- What the vehicles are listed for on websites like Cargurus and Autotrader
- The availability/demand of a particular model/trim
New Car Dealer Cost
When it comes to new cars, you might think that wholesale is what they mean by Invoice pricing, but it’s not. It’s actually the low end of where the dealership hopes to sell you the car for. Essentially, it’s a second layer of hidden costs…
More on that below!
How To Find Out What A Dealer Paid For A Used Car
Although you are probably here wondering: “How much did the dealer pay for my car?”, if they purchased it directly from an individual, the only way you would ever know that figure is to look in their books…
Auction Data is widely available, and from that information I can either find the transaction on your specific vehicle of interest, or I can find out what identical vehicles are being sold for at the Auto Auctions and use that to get very close to the actual purchase price the dealership paid. What I will do is actually get the dealer’s invoice price by using the vin number to then identify the price that your vehicle is currently being sold for nationwide (Between Car Dealers).
Bonus Service: Price Your Trade/Car
If you are also looking to sell or trade your car to a dealership or car buying service, I can help you using this same method, which will show us what the dealers will pay for the car when it goes to the auction. That is actually how dealers evaluate trade-ins: They assume the worst by trying to determine what they can dump the vehicle for at auction if they can’t sell it for retail.
How We Can Determine what The Dealer Will Pay For Your Car?
Just leave the vin number of the vehicle in the comment section below then tell me a bit about it’s condition, Color, Milage, and where the vehicle is in the country. (For Condition- Estimate the best you can on a scale of 1-10). Also, please leave us a Review if this service is helpful. I will then run your vehicle across what Dealers are buying/selling that vehicle for in the market and get you a number you can count on. We will also provide you a Free Vehicle History Report (Free Vin Check)
How Much Do Dealers Pay For Cars From The Manufacturer?
Dealerships don’t pay invoice pricing on new cars anymore, and certainly not MSRP. (What Is MSRP?)
To cut to the chase, invoice pricing has been structured with bonuses and incentives so that if the dealer did absolutely nothing, and I literally mean sold zero cars, that’s what they might actually pay the manufacturer for the car.
Outside of that, the number you see when you are shown an invoice price is practically the MSRP of Present day (2018/2019). By that I mean: If the dealership were to sell a quota of vehicles entirely at dealer invoice price they would do just fine in profits.
Dealers want to maximize their profits (Like any business) so they would never do that on a large scale, but they do have that room readily available to them in order to move cars off the lot when necessary.
Dealer Invoice Pricing (The Truth)
Invoice pricing has been structured to be the modern car dealers buffer zone for a very obvious reason: The internet.
When pricing became too readily available to consumers via the net, especially what the dealers were paying, car dealerships needed a way to protect themselves and the manufacturers needed a way to keep the dealers making money.
So what they developed was a strategy to steadily increase the invoice price at a higher rate than the MSRP paired with more incentives that were built more around volume than margins.
The End Result:
What a dealership pays for a new car is determined more by their performance in total sales than any set standard across the industry. Because of this profits are not as instantaneous as they used to be, which is where Dealer Holdback comes in.
What Is Reasonable To Offer A Dealer On A New Car?
Because you couldn’t possibly expect to pay the same on your vehicle as someone across town buying the exact same car, what is reasonable is to expect that there will be no standard response to what is “Fair”
No matter what companies like TrueCar put in their advertising!
That being said, a fair place to start would be to make an offer to the dealer just above their cost. I wouldn’t go above Five Percent if it can be avoided, but I wouldn’t also expect anything below three percent. Even there, certain circumstances:
- In demand vehicles
- Dealership not hitting quota for the month or quarter
Can quickly put you outside of those boundaries (For better or worse). Remember-
Every Car Deal Stands On Its Own.
Best Method For Finding Dealer Invoice Pricing
Can I ask for the dealer invoice?
Believe it or not, you can actually get the invoice price by contacting a dealership and you can even get the invoice price by the vin number if you have it available. Be sure to ask politely, however. Remember, they will likely be very willing to show you the invoice pricing because that is not what they will actually pay for the vehicle in the end. They will also assume that you “THINK” the invoice price is what they pay for the cars, and that by asking, you must be uninformed.
Let them think that…
However, if asking the dealership is not your cup of tea, you can check out websites that will allow you to look up dealer pricing by the vin number or other details of the vehicle:
If you are going to make any attempt to get near the Dealer’s actual cost on a car you are going to need to factor in the dealers holdback percentage. This is going to be what the manufacturer is, well, “Holding” from the dealer until:
- The vehicle is sold
Dealer Holdback Explained:
Let’s put this as simple as possible-
- Dealer orders vehicle from manufacturer
- Dealer requests to Floor (Take out a loan) the vehicle as payment
- To get the dealership more money from the lender, the manufacturer inflates the cost
- Dealer pays interest while car sits on lot (This is why they are so eager to sell)
- Car sells an Dealer Pays off loan (Floorplan)
- Dealer receives check, including the Holdback amount, from the manufacturer.
Essentially, as we stated earlier, the invoice price has been inflated so as to confuse the entire process and thus, you the buyer, so that when you walk in desiring to pay invoice, they can be happy to do so and still turn a decent profit.
Dealer Holdback Calculation
The exact figures on dealer holdback change, but generally you can expect it to be anywhere from zero to three percent (0%-3%). That’s correct, I did say zero- Some manufacturers, like Land Rover, do not use dealer holdback. Here is a table for 2018 (By AutoCheetSheet) as a gauge if you are trying to calculate your dealers holdback amount:
- Acura 2% of base MSRP
- Audi No holdback
- BMW No holdback
- Buick 3% of total MSRP
- Cadillac 3% of total MSRP
- Chevrolet 3% of total MSRP
- Chrysler 3% of total MSRP
- Dodge 3% of total MSRP
- FIAT 3% of total MSRP
- Ford 3% of total MSRP
- GMC 3% of total MSRP
- Honda 2% of base MSRP
- Hyundai 3% of total MSRP
- Infiniti 1.5% of base MSRP
- Jaguar No holdback
- Jeep 3% of total MSRP
- Kia 3% of base invoice
- Land Rover No holdback
- Lexus 2% of base MSRP
- Lincoln No holdback
- Mazda 1% of base MSRP
- Mercedes Benz 1% of total MSRP
- Mercury 3% of total MSRP
- Mini No holdback
- Mitsubishi 2% of base MSRP
- Nissan 2% of total invoice
- Porsche No holdback
- Ram 3% of total MSRP
- Scion No holdback
- Smart 3% of total MSRP
- Subaru 2% of total MSRP (May vary in the Northern U.S.A.)
- Toyota 2% of base MSRP
- Volkswagen 2% of base MSRP
- Volvo 1% of base MSRP
Dealer Pricing Conlusion
Unfortunately, you will never know everything that goes into a car dealers true cost. Fortunately, because there are so many factors behind the scenes, there is room for flexibility:
Enough that you can get a better deal than the person who came before you!
The key is to research and ask, but more importantly, be patient.
The chances that you contact the dealership the day they realize they need to make a sale to hit a bonus are slim, what actually happens is that they get out the book of people who said:
“I’ll think about it”,
And call them to offer the best prices. Be one of those people, because it’s a lot more of a headache trying to beat the dealer than it is to let them come to you.