Chevrolet Prices: MSRP, Factory Invoice vs True Dealer Cost - w/Holdback
Why You Should Know the True Dealer Cost...
Most people mistakenly believe that the Chevrolet 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 Chevrolet price guides strip these hidden dealer profits out and illustrate the MSRP, the invoice price, Holdback and the true dealer cost. (See Chevrolet price definitions below.)
Knowing the dealer cost 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.
Chevrolet Price Terms & Definitions
There are many terms that must be understood for the benefit of an automobile consumer. The more a customer knows about the retail process, the more they can save during their purchase.
MSRP stands for manufacturer suggested retail price, which is the price recommended for their wares. It is manditory for US dealerships to display the MSRP on each new vehicle, which is often referred to as the "sticker price". This must be the base price of the vehicle. Other associated costs are typically listed separately on the sticker. Many people will attempt to negotiate this price down, but other fees can drive up the total cost.
Dealer Invoice Price
The price term Dealer Invoice Price is the cost that the dealer paid the manufacturer for a vehicle. This is not necessarily the full cost of the vehicle for the dealer.
Dealer Holdback is the cost the dealer is paid by the vehicle factory. Dealers often need loans to purchase several hundred cars from the manufacturer. This Holdback covers the interest from these loans. Sometimes, dealers will unethically directly charge the consumer, doubling the Holdback.
Manufacturer Incentives and Rebates
In order to promote the sale of slow-selling vehicles or extra inventory, the manufacturer may offer direct incentives or Rebates to the buyer.
The manufacturer will charge dealerships a fee for transporting a vehicle to the showroom.
The dealer is often given incentives by the factory that reduce the complete cost to purchase the vehicle from the factory. The dealer has no obligation to pass these incentives to the customer.
Regional Ad Fees are paid by the dealer to the manufacturer for promotion in their territory.
True Deal Cost - The actual price Chevrolet dealers pay for their new vehicles. Here is how it is calculated:
Formula for Calculating Dealer Cost of a New Chevrolet:
- Base Chevrolet 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 Chevrolet is 3% of the Total MSRP. (See the New Car Dealer Cost Example.)
Total Dealer Cost - Rebate and Incentive + Taxes / Licensing Fees = True Dealer Cost.(See Chevrolet Rebates and Incentives.)