New Volvo Prices: MSRP, Factory Invoice vs True Dealer Cost
Most people mistakenly believe that the Volvo Invoice Price reflects what the dealer paid for a new vehicle - The true Dealer Cost. It is not!
The Dealer Invoice Price has hidden mark up such as holdback and other fees built into the price.
The following Volvo 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.)
Knowing the dealer cost of a new Volvo 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.
Volvo Price Terms & Definitions
There is a lot of leg work that goes along with purchasing a new vehicle. In order to make the process as seamless as possible, it is helpful to have an understanding of the various new car price-related terms that one will see and hear when looking to purchase a new vehicle.
MSRP
The Manufacturer's Suggested Retail Price is also commonly called the listing price and it is the price that the manufacturer recommends the dealership should list the car for.
Dealer Invoice Price
The price that the dealer pays the car manufacturer for the vehicle is called the Dealer Invoice Price. It is the cost to the dealer that the customer is generally not informed of because customers pay more than the Dealer Invoice Price.
Dealer Holdback
A Dealer Holdback is a small percentage of the MSRP that manufacturers mark up on the vehicle in order to increase the Invoice Price. This benefits dealers when it comes to paying employees commissions.
Manufacturer Incentives and Rebates
Just like with any other product, Manufacturer Incentives and Rebates are various offers to the dealership as well as the customer to encourage them to purchase a particular vehicle.
Destination Fee
Generally costing between $250 and $950, Destination Fees are fees that the manufacturer charges the dealer for transporting the vehicle to the lot. The customer is expected to pay this fee.
Dealer Incentives
Manufacturers often offer Dealer Incentives to encourage the dealers to purchase specific vehicles at a discounted price that they want to be sold. These tend to vary by region.
Regional Ad Fees
These fees tend to be the easiest to negotiate because they are not clear cut. Regional advertisement fees are the fees dealers charge customers for things like advertising and promotions as a way to continue to increase sales.
True Deal Cost - The actual price Volvo dealers pay for their new vehicles. Here is how it is calculated:
Formula for Calculating Dealer Cost of a New Volvo:
- Base Volvo 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 Volvo is 1% of the Base MSRP. (See the New Car Dealer Cost Example.)
Total Dealer Cost - Rebate and Incentive + Taxes / Licensing Fees = True Dealer Cost.
