2014 ES 350 base model for 33850 ?
Lead Lap
Joined: Aug 2013
Posts: 4,279
Likes: 1,034
From: Illinois
The invoice price to a dealer is not the actual price that the dealer pays the manufacturer for a car. In addition to the various incentives offered by the manufacturer, there is "holdback money". A percentage of the vehicle value that is given to the dealer to assist with bank financing. It is a complicated formula that is computed based on how long the car stays in inventory after delivery to the dealer. So if one buys a car "below invoice" this does not mean that the dealer is losing money on the sale. Far from it. Holdback can be several thousand dollars.
Once, while negotiating a deal I mentioned holdback to the salesman who got highly annoyed that I even knew about it, and stated that it had nothing to do with the price of the car. It does because it's profit.
Once, while negotiating a deal I mentioned holdback to the salesman who got highly annoyed that I even knew about it, and stated that it had nothing to do with the price of the car. It does because it's profit.
You are absolutely correct. When Lexus lowers the difference between MSRP and invoice, it could well be that much or all of that reduction is compensated for by an increase in the hold back. And the levels of the hold back can vary from one area to another, from one dealership to another, and from one time of the year to another.
As more and more car buying information becomes available to consumers, there is no question that there are other factors, information about which is not easily obtainable by consumers, that the manufacturers and dealers use to maintain their profit levels.
I'm not even sure why we feel a need to know how much a dealer is actually making on a car deal. When I eat in a restaurant, I don't feel a need to know how much the restaurant owner or the cook or the waiter is making on my meal, and I don't really need to know how much Lexus, the dealer, the salesperson, or the sales manager is making off of my car deal. Years ago, I felt a need to try to squeeze every possible cent of discount out of a car purchase. Now, I realize that life is too short, and, if I know that I'm paying a fair price compared to what others in my area are paying, I'm happy to buy the car and to move on.
Last edited by lesz; Jul 24, 2014 at 06:55 AM.
Lexus Champion
Joined: Apr 2002
Posts: 1,897
Likes: 11
From: SF Bay Area, CA
The invoice price to a dealer is not the actual price that the dealer pays the manufacturer for a car. In addition to the various incentives offered by the manufacturer, there is "holdback money". A percentage of the vehicle value that is given to the dealer to assist with bank financing. It is a complicated formula that is computed based on how long the car stays in inventory after delivery to the dealer. So if one buys a car "below invoice" this does not mean that the dealer is losing money on the sale. Far from it. Holdback can be several thousand dollars.
Once, while negotiating a deal I mentioned holdback to the salesman who got highly annoyed that I even knew about it, and stated that it had nothing to do with the price of the car. It does because it's profit.
Once, while negotiating a deal I mentioned holdback to the salesman who got highly annoyed that I even knew about it, and stated that it had nothing to do with the price of the car. It does because it's profit.
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