Volkswagen Prices: MSRP vs Factory Invoice vs True Dealer Cost
The Dealer Invoice Price has hidden mark up such as holdback and other fees built into the price.
The following Volkswagen price guides strip these hidden dealer profits out and illustrate the MSRP, the invoice price, Holdback and the true dealer cost. (See price definitions below.)
Why You Should Know the True Dealer Cost...
Knowing the dealer cost of a new Volkswagen gives you needed leverage when it comes time to negotiate a great price. Negotiating from the cost up and not the MSRP down can save you thousands on your next purchase.
Volkswagen Price Terms & Definitions
When shopping for a new car, it is very important to have a basic understanding of commonly used industry terms.
MSRP, or, Manufacturer Suggested Retail Price, is also sometimes referred to as list price. It is the price suggested for initial sale by the car manufacturer.
The Dealer Invoice Price refers to the price that the dealer pays the manufacturer to obtain the vehicle. It includes the price of the vehicle itself, and any additional accessories.
Dealer Holdback - Dealers must buy their vehicles from the manufacturer, which can be very expensive for the dealer and often requires obtaining a loan. Manufacturers will offset the interest rate in order to make the process more manageable for the dealer. This is called Dealer Holdback.
Rebates & Incentives - Factories will often offer incentives for dealers to move stock in order to receive a discount or a rebate on other vehicles. These are referred to as Dealer Incentives. For example, if a particular model is not selling well, the manufacturer may establish a rebate that takes effect after a certain number of cars are sold, thus reducing the price of subsequent cars purchased by the dealer.
Regional Ad Fees are paid by the dealer for advertising promotions the manufacturer runs in the area where the dealer operates. They are generally nonnegotiable and itemized on the dealer invoice. As such, they make up part of the MSRP.
Destination Fee - Shipping charges for vehicles can be quite expensive. Manufacturers charge dealers the cost of transporting the cars from the factory to the showroom. This is known as a Destination Charge, and can be several hundred dollars per vehicle.
Rebates & Incentives - Sometimes, the manufacturer itself will offer incentives or rebates directly to the purchaser of a particular vehicle, often to reduce excess inventory or move slow-selling items. These Manufacturer’s Rebates are often the best way for a purchaser to save money on a new car.
True Deal Cost - The actual price Volkswagen dealers pay for their new vehicles. Here is how it is calculated:
Formula for Calculating Dealer Cost of a New Volkswagen:
- Base Volkswagen Invoice Price + the dealer Invoice price of Options + Destination - Holdback = Total Dealer Cost.
- What is Dealer Holdback? A hidden amount that manufacturers give back to a dealer. It is a percentage of the MSRP or the Invoice price. The holdback for Volkswagen is 2% of the Base MSRP. (See the New Car Dealer Cost Example.)
Total Dealer Cost (calculated above) + Taxes / Licensing Fees - Rebate / Incentive = True Cost (See New Car Rebates and Incentives.)