Originally Posted by Prouty33

Tell them you'll pay $300 over invoice and nothing more...they'll either take it then, or call you back within a day or two...

When I was deciding which dealership to buy from, I walked into all 3 and told them I'll pay $300 over invoice, I want this and this for options. Two of them handed me a paper and said sign at the bottom, one called me back the next day. Dealerships are hurting bad, if they want to sell cars they'll take the 300 and run...

Originally Posted by blackbird

You're calling me an idiot? What have you posted in this thread to help the thread starter?

You are correct in that most dealers do make more than $300 when they sell a new vehicle. The salesman has a commission (many times a percentage like 20-25% of the profit or a flat fee like a hundred bucks or two, whichever is higher), the dealer has to pay interest on the cars, overhead for the facility like the lot security and the electric bill, the secretary, the finance guy's pay, and on and on. So it is in their best interest to get as much money from the consumer as they can. What I'm trying to provide is information on how to negotiate the best deal in the interests of the buyer.

Since I don't know you and you don't know me, I'll give you a little back ground on my vehicle purchasing history. I like cars and have bought many used vehicles and have a ton of older turbo Dodge and GMs. I've also bought quite a few new cars over the years. Just in the last five years I've bought three new cars and a truck. All of them I've paid under sticker for before applying any rebates. A quick search shows you're 20-21 years old and I know myself I didn't buy a brand new car on my own until closer to my middle 20's. If you have bought a lot of them then that's great, but why aren't you helping this guy and giving him advice on how to get the best deal instead of calling me an idiot?


Since I have a feeling you're not fully aware where dealer profit comes from, what they make and also what they have to pay on a vehicle, I'll break it down "just a little" further.

When you look at the window sticker that comes from GM it lists a MSRP which is the manufacturers suggested retail price. It gives you a baseline what the manufacturer thinks the vehicle should sell for. When the dealer buys the vehicle from the automaker (or in the case of smaller dealers it may be an intermediate company commonly called a "floor plan" lender), they have to pay when ordering the car. The price they pay for the car is called the invoice price. Anything over invoice that they sell the car for is their profit that they make on the deal, but they also have other expenses and other things they make money on that we'll get to in a moment.

In order to keep their lot full of vehicles for consumers to shop they need to buy cars from the automaker. A lender generally provides them with capital to keep those cars on the lot (which can be millions of dollars in inventory). As just mentioned, a dealer has to pay for a car when ordering, not when it gets to the dealer or when it sells. Their lender pays for the cars and the dealer pays the lender an interest percentage in the vehicle (usually around 1% per month). To help keep its dealer profitable so they can sell more of GM's products (which in turn helps the automaker make money), GM will pay the dealer's interest to their lender for a certain period of time. I think as of December last year they bumped it up to 91 days (used to be only a month or so if I recall correctly). After that time if the car hasn't sold and is still on the lot the dealer pays the interest out of pocket which cuts into their profit margin.

There's another way dealers make money on new car sales and that is the dealer holdback. This is a percentage of the vehicle's invoice price or MSRP that the automaker keeps and gives back to the dealer every quarter. The invoice price the dealer pays the automaker for the car is "inflated" by the automaker a certain percentage and the dealer gets that money back after they sell the car (in their quarterly check). This is just a way to hide extra profit from the consumer (and also kind-of screws the salesman on his commission). There's a good explanation of it here. So even if you paid the dealer's invoice price that they paid the automaker for the car, when they sell the vehicle there is a "secret" amount the automaker held back that gets paid to the dealer. In the case of Chevy that's 3% of the MSRP.

In the case of the window stickers posted earlier in this thread, the dealer has put an additional "addendum" sticker on the car next to the manufacturer's window sticker. There's nothing that says the dealer has to sell a car for MSRP but there's also nothing that says they can't sell it for higher than MSRP if a sucker is willing to pay that. For example the people right now who just have to have a new Challenger SRT-8 in the first model year. Or in the case of this dealer, they're adding on a "market adjustment" and some other bogus number (i.e. profit) they tacked onto this Cobalt SS hoping someone has more money than brains and can't negotiate a better deal. And there's a lot of those people out there.


Let's throw out some numbers just to give an example of how this works. Say the dealer orders a car that has a $20,000 MSRP window sticker. The automaker in this example is charging the dealer $18,000 to buy the car from them (i.e. the invoice amount). Theoretically we'll say the dealer is massive and has their own in-house lender they own or they order the car and it ships and arrives the same day and is immediately sold. Either way they're not paying another company interest in those scenarios. Now before they put that car on the lot and sold it they decide to add an addendum with a market adjustment of $2,000. That raises their asking price to $22,000 for that car. If someone came in and bought the car for that price the dealer would make that $2,000 addendum over MSRP as profit plus an extra $2,000 since they didn't pay MSRP to the automaker for the car and instead only paid them the $18,000.

That brings the dealer's profit up to $4k but that's not all they're going to make. Remember that the automaker "held back" some of the MSRP. We'll say this is the same as Chevrolet and is 3%. That means at the end of the quart GM cuts the dealer a check for 3% of the $20,000 MSRP (sticker) which comes out to an additional $600. Even if you as the buyer got them to come down to "sticker" price the dealer is still making $2,600. And if you bought the car on a newspaper "loss leader" sale where they advertise one car at their invoice, if you paid $18,000 for the car they still get $600 back from the automaker and are still making a little money.

It's not all as cut and dry as that but it give you the general idea of how the process works. Remember that if the dealer gets the car and it sits on the lot GM is also paying the first 91 days of interest to the lender the dealer used to purchase the cars for them. If the car ends up sitting on the lot for four months the dealer is going to have to eat into their profits to make that months payment. On the other hand, back in December of last year I read that GM changed a policy to benefit the dealers (many of which are sitting on trucks and SUVs they can't sell), so if they sell a car the day it arrives or anywhere up to the 91 days GM will still pay them a full 91 days worth of interest. Switch to the other side, the regional advertisements on TV and print such as "Southern California Chevy Dealers" or "Pacific Northwest" ad campaigns come out of the pockets of each dealer in that region in the form of a small percentage of each vehicle's cost that GM charges the dealer (similar to some restaurant franchises having to share their part of a regional ad campaign).

Some times there are addition dealer incentives in the form of a manufacturer-to-dealer rebate that the dealer has no obligation to pass on to the consumer. If you didn't know they were getting that money and didn't ask for it to be put towards lowering the sale transaction price, then the dealer has just made more money they get to keep. That's where the internet has been extremely helpful in showing consumers all this info. Even then there are many little things like this that make it difficult for the consumer to calculate exactly how much a dealer makes on a sale.


So yes, there is more than $300 profit on a car, but I did mention it was additional profit and why I starting mentioning things like that dealer holdback in my last post. Nor did I ever say it was their only profit on a car. I know there's not a whole lot of margin on smaller cars and the new Cobalt SS should be a fairly hot model right now (like most smaller cars in general have become with the rising cost for fuel). For me I think $300 over invoice is a reasonable amount on a car like this but you're free to try to go lower. Just try to cut into their holdback profit and see what happens.


Like I said, they have lots of expenses to include facility overhead, paying staff and commissions, financing fees to their lenders, etc. The truth is a dealer doesn't make much money after all is said and done from their new car sales. So where does their profit come from? It's a question that when you can answer may also save you money if you're in the market for a new car.

While many times a dealer will say things like they want to keep you as a repeat customer, if all you do is come in and buy a new car, pay not much over invoice, pay cash, then never come back in until you're ready to buy a new car again, they're not making a whole lot off of you. Unless your dealer is a mega-sized dealer in the top fifty in the country and can sell on big volume, they're going to make money off you n other ways. Such as if you bring your car back for an oil change. If you come back and buy parts and accessories. If you have an accident and use their body shop. That's where their big profit comes from.

There's also other things they make money off during the sales stage. If you come into the dealer and look around and don't see anything you like, many times you'll notice the salesman gently pushing you to consider a used car. On a per vehicle basis, a used car sale will usually make the dealer (and therefore the salesman) a lot more money. They buy the cars at auction for dirt cheap prices using industry trade publications not available to the consumers (such as the Black Book which lists those auction prices kind of like the Blue Book or NADA Guide shows consumers retail prices). That $10,000 used truck they have for sale might have only cost them $4-5k to buy at auction. They also use those proprietary guides to determine what your trade-in is worth if they send it to auction like nearly all cars do.

Speaking of which, if you trade in a car they're going to do one of a couple things. Either low-ball you and give you around what it would fetch at those auction prices, or to make you feel better they might give you a little more for it but then they'll tack on or won't come down as much on the new car sale the trade-in is going towards. That's why you're generally better off selling your car privately but many consumers don't want the hassle. And as mentioned, a lot of times the dealers can hide and manipulate the numbers to make you think you got a decent deal when in reality they're going to make profit off your trade-in and off the new car you just bought.

What else can they make money on? Just sit down at the finance manager's office and get suckered into dealer add-ons. How about those $15 "security locking lug nuts" they added onto the addendum but charge you $129 for (like I recently saw at a dealer in my area). Or the body kit and wheels that they bought at wholesale and sell to you at over retail. Or the pin striping or tint that cost them next to nothing. Or the underbody/interior/paint "protection" package that's a couple cans of Scotchgard and some $5 spray-on sealant in an aerosol can. And the dealer installed anti-theft "chip" or alarm. And who can forget the service contract that is sold as an "extended warranty".

All those things go straight into the dealer's pockets, and nine times out of ten you could add the items on yourself for a fraction of the cost or skip them altogether. But those alone aren't the only way they make money. On a lease for example, they get lease interest rates from their lenders they use but GM recently allowed dealers to add on additional points to that number. So while your lease has an internal 5% rate they may be charging you 6% (which factors into your payments and appears invisible to you) and then are pocketing the extra one percent. Same thing happens with sales. GMAC or the bank/lender give the dealer finance department a rate you qualify for but that's not to say they're not underwriting the loan at 4.75% but the dealer is giving it to you at 7% and making that extra 2.25% interest which can be a significant amount.


To recap my deal, I sat down and researched the invoice pricing the dealer paid to GM. Research sites like Edmunds.com and intellichoice.com aren't going to be exactly correct but get you in the ballpark numbers. My dealer put a $1500 additional addendum on another SS and it sold earlier in the day when I was shopping around. Someone was suckered into it and the sales pitch probably went something like "it's a rare car", "other dealers are ask xx more", or maybe they did sell it at sticker and use the "tell you what we can do, lets knock that fifteen hundred off if you'll buy it today".

I knew that my chances of getting this car at exactly invoice was almost nil and thought $300-500 over invoice would be reasonable and still well under sticker. Remember they have their holdback and GM financing money, but they also have many expenses and overhead the consumer never factors in. After negotiating and agreeing on that price I then used the rebate to further reduce the out the door price. I did not buy any additional "stuff" and I used my own credit union financing which was a much better rate. So tell me again how I'm the idiot?

If you can go in and get them to sell you a new SS Turbo for a few hundred less than what I paid, great, you got lucky or you knew how to negotiate and they really wanted a sale. But for many, many people they'll end up paying more. What I'm trying to do is give some insight into the dealer's margins and how to negotiate and where to at least start. When you know pretty close to what they have into a car you can work out a better deal. Imagine all the people that walk in and don't know what invoice is. Or don't know how much their trade-in is worth. Or don't bring a finance calculator and the salesman starts running numbers and working monthly payments numbers along with interest rates all the while inflating the transaction price. There are a lot of them out there. If you've got some better advice them lets hear it.





And on a side note for people sharing what they paid, when talking about how much the "out-the-door" price was that means practically nothing to people in other parts of the country if we don't know your tax/licensing/fee stuff. Also that doesn't tell us if you're including any additional special incentives (such as friends & employee discounts), if there was a trade-in (which makes it a nightmare to figure out what you really paid for your new car), or if there was a down payment and how much. That's why it's best to tell the price you actually paid for the car before all those incentives and fees and state so in your post. Hopefully everyone got a good deal and just didn't think it "sounded" like a good deal but actually knew that it was and what they really paid.







To give a real world example I'll walk through the numbers for HellbillySS. We'll start with assuming the car is located in "Harrisonburg", VA and the zip code is 22801 (not sure if that's just a spelling error in your location or not). You already know the sticker/MSRP on the car is $24,240 including destination. The invoice price the dealer paid for the car according to Edmunds.com is $21,107 plus $660 for the sunroof plus $436 for the LSD. There is no invoice discount for destination (delivery) charges so add $660 to those for a total of $22,863.

You're not going to be able to get them to give you any of their holdback, so best case scenario is if they will sell it at invoice and then you'd be looking at $3,762 less than what they are currently asking with the mark-up addendum. Your region is showing $1500 in rebates for that zip code so we'll subtract that from the $22,863 invoice price and get $21,363. I looked on your state DMV web page and it shows a $38.75 registration fee, $10 to title, and a 3% sales/use tax which would be about $686 on the $22,863 price (the rebate generally is money going to assist with down payment, taxes, or whatever you want and doesn't take money off the sale transaction price of the actual car which is why I used that number). That would bring the price up to just under $22,098 but doesn't include any local taxes, fees, etc. that you'd probably know better about than me. If you're not sure I'd say add an extra $100 onto that for a grand total rounded up to $22,200.

From that number you can add on what you think is reasonable or if you have a ton of SS Turbos for sale in the area keep shopping around to see if someone will sell for invoice. As I was mentioning in my last post, I generally consider $300-500 over invoice a good number that I'm comfortable with for hot/new models and most of the time will save me days of hassle trying to save that last dime. I try to set a max amount I'm willing to pay which sometimes will be that $300-500 over invoice, maybe less if it's a giant dealer, or maybe a little higher if it's still well under sticker.


I'd say see if they have an internet sales or fleet department and contact them when you're ready to make an offer. If it were myself, I'd offer $22,500 out-the-door (might be more if you have additional taxes or fees to figure in for your area). Or if they are a small dealer and don't have fleet sales sit down and crunch the numbers in person by starting off telling them you have an exact out the door price of xx amount you will pay today, right now, and not a penny over. Either they'll accept or they won't and if they don't, they'll certainly come back with a higher counter offer. If that's under the max amount you want to pay you'll have a deal. If not, get up, walk, and don't be pressured.

If you have additional money to put down figure that into your numbers prior to going and realize a trade-in will be very tricky. I'd still bring a loan calculator and stick to your price and be prepared to figure out what they're trying to manipulate if they try throwing numbers at you (interest, monthly, sale price, etc.). Avoid buying any dealer add-ons, an extended warranty, service packages, etc. and try to shop for interest rates with your local bank/credit union prior to car shopping. And always make sure to check insurance rates before you start any of this.

Originally Posted by Araldo

I have a question...
When i get Gm employee pricing does gm take the hit for that discount or does the dealer? Im wondering because i have salesmen tell me that they cant haggle with me at all because i get gm employee discount.

Originally Posted by Cougarguy

if you wanna negotiate gm pricing i will laugh at you. legally the price is what it is. gms pricing for me makes my deals near minis on the "front end." people think we make millions off of these cars, but if they only knew! ps, 29000 must be a canadian thing. lol.

Originally Posted by Cougarguy

if you wanna negotiate gm pricing i will laugh at you. legally the price is what it is. gms pricing for me makes my deals near minis on the "front end." people think we make millions off of these cars, but if they only knew! ps, 29000 must be a canadian thing. lol.

Originally Posted by FiscalFizz

Umm.... the Canadian Dollar is now worth MORE than a U.S. Dollar I believe... so if anything... **** now cost less over in canada but also very in reality

Originally Posted by Supabalt

Holy ****...i almost bought a 2010 for 18k sticker

Originally Posted by Supabalt

Holy ****...i almost bought a 2010 for 18k sticker

Originally Posted by Supabalt

Holy ****...i almost bought a 2010 for 18k sticker

Originally Posted by Cuda009

Walk in, tell them you want it for 23k, laugh at them, walk out. Make sure they have your phone number. Wait.