Working on replacing my wifes 300 with an 06 330 AWD. Have two dealers in the running, one basically at invoice and one a little lower but not at true invoice plus transportation.

Now, invoice obviously means different things to different people. Both dealers started at invoice per Edmunds or where ever but added the following: Shipping, Processing Fee, Dealer Holdback, Financing Reserve and TDA. One has backed off this but not all the way per the items I am not going to pay- see below.

I understand transportation costs and don't have a problem paying. I am paying cash. So, Financing Reserve is something I understand to is be applied toward financing to enable a "better" finanacing arrangement (profit for financing arm), therefore I don't feel obligated to pay.

Dealer Holdback I don't really understand, have gotten differenct explanations. What is this and should I expect to pay?

TDA, nobody has been able to even explain this one. What is it and should I expect it to be a negotiating point?.

 

The "Hold Back" is a percentage of the car value which the manufacturer will give to the dealer to cover the expense of keeping the car on their lot so to speak. It varies but I believe it is around the 2% range but I think it is higher with Lexus. This would allow a dealer to sell you a car at invoice but still have them make money. I forget exactly how it works but I think they may get a percentage per month for the first two months or so. Therefore a dealer can sell you a car, they just get from the manufacturer, at invoice and they would make their money from the manufacturer on the hold back. You shouldn't never be paying hold back. If anything, you should be negotiating with the dealer for them to give YOU some of it.

 

I assume the processing fee is some sort of documentation fee - the $50 or so for all the paperwork the dealer generates. (Silly, but part of the game.)

mike0311 is right on with the dealer holdback. That's added money the dealer gets from the manufacturer after the car is sold, not an extra cost to him.

Never heard of a finance reserve or TDA. Have heard of advertising pools, though.

You haven't mentioned taxes, title, or license plates. Maybe TDA covers some of that?

Anyway, no matter how you slice it, the dealer has to make something on the transaction. Unless a dealer is really, really desperate, you're not going to get it for (Edmunds or KBB Invoice + Destination Charge - Rebates, if any). A benchmark for a fair deal (you did really well, and the dealer made money) is 3% over that invoice + destination number. On an RX, that
3% is around $1,100. Given that the difference between sticker and invoice on the RX is about $5,500, you've got a great deal if you're within $1,100 of invoice. You have to pay for that "Lexus Experience" somehow!

 

I agree, the dealer has to make money on the car. Also agree that $1100 over invoice is probably as good as you are going to get on a Lexus. They don't do any better than that, because given demand, they don't have to. Yes, dealer holdback is already built in to the price, so while it is nice if they are telling you how much it is, it doesn't get added to invoice, rather subtracted from it, as they get it after the sale, no matter how much you pay. If you don't know what TDA is and they won't tell you, then you should not work with that dealer.

rxdriver, I was right with you until you wrote that. Excellent customer service, reliability, comfort, convenience, and all of the other qualities that make up the so-called "Lexus Experience" should not automatically dictate that I pay more for the car. Giving me a good ownership experience should be a way of getting me to stay with the brand, not something that explicitly or implicitly costs me money.

 

I agree that the "Lexus Experience" is a bunch of BS... that comment was meant to be somewhat sarcastic. But on the other hand, just look around the dealership. Fancy building, fancy furniture, free good food/beverages in the service department, $40K+ loaner cars. You could probably argue that any dealer should be able to offer those things, but the reality is that they can't pay more for all that stuff without the profit margin getting bigger. If a car dealer needs to make x% regardless of the brand to stay in business, then you need x+y% to furnish a Lexus or other high-end dealership. So, I'm sure we are implicitly paying extra for the Lexus dealership "extras".
Good attitude and desire to serve the customer is free, however, with the right people. You should get good service anywhere - I agree that customer service is not an extra cost.

 

Todd,

I'm not sure if you live in So Cal, but Longo Lexus, Lexus of Cerritos and Westminister Lexus have all priced a RX 330 FWD w/ Navi for around 38500 without tax and license. I'm sure you could probably get lower than that. They priced me a RX 330 FWD w/o Navi for 35500. Longo Lexus will even throw in free Sirius Radio with a 9 month subscription which you could probably get them to make it a full year if you haggled.

Good Luck and Have a Happy New Year!

 

The "Lexus Experience" at my dealer includes a $5 charge for a "courtesy loaner." That bugs the heck out of me! They are already overcharging for service, and this $5 charge is an insult.

To me, that nickel-and-diming drives me away. I have a Ford dealer down the street, where the "courtesy" loaner is actually free. That's what I thought "courtesy" meant!

 

My guess is that the $5 is more of a legal thing then anything. If you don't pay anything, you are "borrowing" their car. If you pay $5 you are "renting" it for the day. It probably reduces their insurance as well as liability.