"Lost leader." That's funny. Read my post above. That's a lost leader.

I think you meant "loss leader."

They might say that initially. Then you could show them your ACTUAL numbers (not the fake "invoice" that the dealer shows you which isn't his true cost) and prove them wrong. If they still felt like they weren't getting a good deal they can down down the street to Cheatem Motors and see what kind of a deal they get the old way. If you really have a good product and a good deal, they won't get any better at Cheatem Motors and they will be back.

When they go do to Cheatem motors, Cheatem will argue for a while and then match your deal (or beat it by $20) and the customer will say "heck, they're all crooks so why waste time going back to the other guy?".

One thing I've been wondering: what are these "fake invoices" I hear about? When I sold cars there was only one manufacturer's invoice. The dealers would try to tack on aftermarket stuff with a high markup but invoice is invoice.

I think a fake invoice is illegal. What an invoice does not show is flooring allowance and it does not represent what the dealer will pay for the cost of all cars sold in a year because of various background incentives and rebates. It's sort of the MSRP of the wholesale price, or MSWP.

As a business owner, MY numbers shouldn't be anyone's business but my own. Whether the price matches what YOU as a customer are willing to pay is the only question. Let's say the dealer showed the actual numbers. There is no number shown for risk, opportunity cost, time away from family, stress, etc.

Everyone thinks they know how to run a business better than the actual business owner, and they all think it's their business to determine a "fair" profit for the owner. Bullshyte. Where are these same people when the business is bleeding money? Will they set a profit for the dealer then?

Purchases are made between a willing buyer and willing seller. If you think $100 is worth driving across town from the reputable dealer to the scumbag dealer (which many people unfortunately do), then you got yours. CarMax has figured out how to set a price and stick with it. They paid a lot less for the same car than you are, but that's their secret. Are they screwing you? Not if you've done your homework.

There's a reason the Porsche dealer treats me much better than the Dodge dealer. It has to do with the type of customer and their expectations.

Now see I disagree. If I had information that a dealer was truly giving me a decent deal with up front numbers I would go to them simply to encourage that behavior. Unfortunately this mythical dealership we are describing does not exist.

Even Kaisen's utopian dealership in Minnesota has an F&I guy and I'm pretty sure he doesn't tell his salesmen to tell every customer the true price they are willing to take up front. Maybe I'm wrong.

Oh, and the "fake invoice" (if you can ever actually get to an invoice, most dealers I have been to won't show it to you) I am referring to is the one where they add in all sorts of fees and such and don't show all the back end money they are making on the deal. I mean if invoice is $28000 and the manufacturer is paying you $2000 to sell that model car, then even if you sell the car at "invoice" then you are making $2000 on the deal. So, the true "invoice" would be $26000. Of course no dealer pays invoice, they pay a fraction of the cost and then pay interest to the manufacturer for the balance of the value of the car which is then paid back to them partially as holdback. But, I'm sure you know all this stuff already.

Why do you care what the dealer's costs are? Should it then be his business to know where your money came from? Did you work hard for it, or was it given to you? This reminds me of Obama deciding that $250K was enough income. None of his business.

I applaud successful business owners who achieve wealth through honest means. Who wants to do business with a loser? One who chisels employees, cheats on his taxes, and doesn't contribute to the community?

Same reason why I just left a sales position in a Lexus dealership...no F bombs, but plenty of yelling and scolding. And I had such high expectations for a Lexus dealer...seems like they're just all the same.

no greasie hair gold chain fat sales/men/managers

simple fast sales without guys running away to consult all the time
give a price without pulling teeth first

open the place 24/7/365 it is a service biz

I think most people just want to feel they got a fair deal. The more informed the customer, the easier it can be. Whether negotiating or no-haggle. Trouble is, the information on the internet can be incorrect, although it's generally pretty good. One-price no-haggle stores are everywhere. They are almost always a very decent deal. Otherwise no one would buy there.

Every dealership needs someone to take care of the legal paperwork, even for those paying cash. MOST dealerships offer financing as MOST customers can't pay cash. It started as a service to customers so they could do it all in one trip. Then dealerships started offering loans from more than one source/bank. Then the banks started incentivizing dealerships to use THEIR loans by paying the dealer a flat fee. Then they allowed dealers to mark up the rate and participate in the difference. Pretty soon the finance department became a profit center. And we're not even talking about the insurance products yet.

The good news is that the rates banks offer dealers are extremely competitive, as they realize that dealers will just use another bank with a lower rate. Even credit unions that do not allow rate mark-up (but typically offer very low rates) will pay a $100-200 flat fee. Win/win. The dealer and customer win by convenience, the credit union wins by having one more loan officer drumming up business and doing the paperwork.

**Even with the flat or reserve, dealers can almost always beat the rates you can find**

I'm not sure what you mean by telling prices. The departments are separate. There are so many laws about quoting rates and terms that salespeople are strictly verboten from quoting them....that's the finance manager's job. The salespeople have a hard enough time knowing all the details of their own products.

My utopian dealership does not do F&I. It was a hard choice as it truly is a revenue center. But the legal exposure is pretty big too. And it's easy to find financing if you need it. Most of my customers do not. Only a few times a year. And then I can help them indirectly by referring them to good people, usually local credit unions.

The average finance office adds $550 to the profit of the deal. Half of that is usually a flat or reserve based on the loan. The other half is from products like warranties. True insurance, like credit life or disability, is getting quite rare. Some customers really want it. The vast majority do not. About 40% buy extended warranties, and not all of them are coerced. I hear people GUSH here on Pelican over their Certified Pre-Owned (CPO) used cars ...... hate to tell you, that's an extended warranty you paid for.

Like it or not, people will SUE if NOT offered warranties and insurances. So they must offer it to every customer, every time. Dealers now have people SIGN that they are declining extended warranties and other offerings. Yes, people really would sue, claiming they didn't know they could protect themselves from the expense of a blown motor or transmission.

The only invoice is a real invoice. The invoice is what the dealer ACTUALLY PAID the manufacturer (via electronic transfer) when the car was shipped. There are things in there like co-op advertising and shipping, because the dealers DO pay for that. BTW, Co-op advertising is where the manufacturer will 'match' dollars where dealers have grouped together to advertise their collective dealerships in an area. Like "your Northland Ford dealers", rather than an individual dealership.

Holdback is clearly listed on the invoice, but it isn't subtracted in the invoice math because they don't get that credit at the time they pay the invoice. They get it 'back' after they report that car sold, up to 120 days later. Other required franchise costs, like brochures, tools, training, POS materials, etc are debited to that account so the dealer may not actually see all of that money. Most dealers do not account/calculate holdback into the profit of a deal. It also depends on the franchise/brand. Holdback is usually 1.5-3.0% so on a avg $25,000 car it's $375-750.

Holdback is like the dealer loaning the manufacturer some money for some period of time. I've never quite understood why it works that way.

Interest is NOT paid to the manufacturer. Ever. It is paid to whatever bank or finance company that holds the floorplan (they can be subsidiaries of the mfr like Ford Credit, or Mercedes Benz Financial, etc). Very rarely, the cars are owned in cash and there is no (direct) expense. Usually, however, dealers pay interest to float their inventory. The average new car 'turns' every 60 days. So a $25,000 car at 5% cost the dealer $200-250 to keep on their lot until sold. The actual average number (NADA statistic) is $345. Used cars, while less expensive, have very different floorplan rules and rates and usually have similar totals.

I really don't know why showing the invoice is a big deal. It doesn't change the market value of the car. It's worth what the market bears, regardless of invoice. Some cars sell for quite a bit above invoice, some for under invoice. Most are a $100-500 above. So why make a big fuss? It's not secret. I would show it if asked. Of course there were some douchenozzles who wouldn't believe it anyway.

her sales guy told me..
folks hate us..
assume we are out to rob them..
so if I only take a little bit..
and drop the ..
your my best friend crap..
you feel good..I get a referral ..
= a little bit from the next guy...

another mistake..
is how they treat women..
'where is your husband..'
my lady's Volvo sales guy & service writer..
have her for life..
first.. great service while under warranty..
out of warranty now..
she broke down..
wrecker sent / rental taken care of..
new battery ...her bill
$ 50.00..
sure they lost some $$..
but my lady is sending all her friends there..
& the next Volvo is coming from you know where..

Rika