In order to make money, dealerships aim to earn the most money possible on each car sale. However, other factors influence dealer pricing and can lead to unbeatable discount prices for new car buyers. Learn how to take advantage of unadvertised deals such as; factory to dealer incentives, dealership overstock clearance sales, and below invoice sale prices.
MSRP vs. Invoice Price
The MSRP or Manufacturer Suggested Retail Price is just that, a suggestion. The invoice price is what dealerships pay the manufacturer for a new vehicle. When shopping for a new car you should aim to pay less than MSRP. The closer you pay to the invoice price, the better the deal. Paying below car invoice prices will maximize your savings.
Factory to Dealer Incentives
Auto makers often provide factory to dealer incentives, to entice dealers to sell more of a specific model. Factory to dealer incentives allow dealers to pay less than invoice price for the new vehicle. Dealers are not obligated to advertise or pass along these discounts to consumers. Some may keep the extra profits, while other dealers may be willing to pass along some of the savings to consumers.
If you want to take advantage of factory to dealer incentives you’ll need to negotiate. Since dealer incentives are offered to all dealerships within a region, making dealers compete for your business will encourage them to drop their price below dealer cost.
Dealership Overstock Clearance
Dealers must pay to keep vehicles in stock. If a certain model is overstocked the dealer will be paying extra and earning little on sales. Often overstocked dealers are willing to sell new vehicles at or below dealer cost just to make room for higher demand vehicles.
The longer a specific vehicle has been on the lot, the more likely the dealer will be to drop the price. Shopping for outgoing models or at year end is a great time to take advantage of these kinds of discounts.
Meeting Sales Goals
Both car dealerships and salespeople strive to meet monthly sales goals. Meeting goals can mean cash bonuses to the salesperson, or increased factory to dealer incentives to the dealership. Either way, it’s an incentive to move inventory.
Shopping at the end of the month is a great way to take advantage of dealers struggling to reach target sales. If losing a few thousand on one vehicle means a large bonus, the dealer is likely to take the loss to gain more profit.