Secret Prices For Car Dealers

The following is an email I received from one of my website visitors along with my response:

Hello Tony,

I read through your website at InsiderCarSecrets.com. Well said.

I wanted to know a little more about dealer pricing. After a lot research on numerous web sites, I find that the information is redundant unlike your website. However, one website that I found indicates that there is a "secret price" that the car dealer has.

How do I know how much this factory-to-dealer price might be? How can I find out how much the car dealer actually paid for the car? Is dealer invoice really what the dealer pays?

Thank you for any information you may give me on this issue.

Michael

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Hi Michael,

Listen Michael, I spent 37 years in the car business. Trust me on this . . . there are no "secret prices!" This website you mention is just using a gimmick so you will get a new car price quote through them. Why? Because they earn a commission on each free price quote they generate through their site. There's nothing wrong with that, but the hype to get people's attention is way over the top.

When it comes to new car prices, the dealer pays the invoice price, which is readily available on the internet. They also get a sum of money back from the factory - usually on a quarterly basis - which is generally about 3% of the retail price of the vehicle. This is called "holdback." You can read more about this at: Dealer Holdback.

Essentially this is money the factory gives the car dealer to offset the interest charges the dealer pays each month on his inventory. You see, the new cars that you see on a car lot are financed by the dealer and the dealer only pays for each vehicle as it is sold. However, the car dealer has to pay a monthly finance or interest charge on each car that sits on the lot. Don't expect the dealer to lower the selling price into the "holdback." Most won't.

The other area for reducing the price of a vehicle are rebates which are widely publicized. Every once in a while however, the factory will give the dealer an additional factory-to-dealer incentive for selling certain slow moving models. These are not widely publicized and the dealer may or may not choose to pass this discount along to the customer. One place to find out about these factory-to-dealer rebates is at: checkbook.org It will cost you $15 to get a complete list of all rebates.

Also, sometimes the factory will give the dealer a small break on left over models from the previous model year. The dealer will almost always pass this discount along because they want the new, year old cars gone.

I'm sure the so called "secret price" being hyped by the website you mention is a combination of the above things. Remember, just because you know the dealer cost on a vehicle doesn't mean they are going to sell to you at their cost. They must make a profit to stay in business. Nevertheless, knowing the dealer cost does strengthen your hand when you are negotiating a price.

But "secret price?" No, it's all hype. This website you mention is doing exactly what car dealers do in their ads; exaggerate the truth to get you in the door! Shame on them!

All my very best to you . . .

Tony Iorio