% Below Invoice -- how can they guarantee?

[LARSONEM]

I think where the confusion is, is that the “invoice price” is not actually the price the dealer pays for the vehicle. It maybe was once upon a time, but it seems to be a made up number assigned by the manufacturer now along with MSRP. The actual price the dealer pays will be much less than “invoice” which is why they can offer you 6% under or whatever - they probably pay 10% under invoice or something (I am just throwing out numbers there).

All dealers get a Holdback. It shows as HB on the initial Price Order Confirmation where the status shows as BA - Pending Order. The Chrysler Holdback is 3 percent of invoice price. So if they sell at invoice they still get that kickback. So on a $60,000 invoice they still get $1800. The dealer sells a vehicle for $800 below invoice and they still make a grand. This works great especially on ordered vehicles that don’t sit on a lot incurring floor planning interest charges. Hustle people through, minimize the time you spend with the customer and make a quick grand. Obviously it’s not easy for the dealer to sell below invoice for lot vehicles that are accruing interest charges.

Sponsored

 

[morph860]

4EA is actually “Sold Vehicle”. This gives the vehicle a build priority to get it built ahead of those just going into inventory on the dealers lot. My understanding of a Sold Vehicle is that if delivery doesn’t take place to the customer who ordered the vehicle, that opens a “cooling off” period whereby the dealer must hold the vehicle for a certain time period before it can be sold to another customer. This prevents the dealer from ordering vehicles as “sold” to bump up inventory on their lot while taking “build priority” away from customers who have actually ordered a specific vehicle.

I believe it’s code “3AQ Price Protection” that locks in the price of the vehicle.

I went through this when I ordered my 2022 Rubicon. After 3 trips to the dealer they finally agreed to order/sell the Jeep at invoice price. Four days after ordering, the final/order accepted Price Order Confirmation (POC) came back with a $2335 price increase. I went ballistic. The salesman said I’d still get it for invoice but he couldn’t tell me exactly what the invoice price would be. So I waited nearly 12 weeks. First thing I wanted to see when the Jeep came in was the invoice. Yes the window sticker came in higher than the MSRP on the initial POC before the order was accepted by Jeep, but they honored the original invoice price through the price guarantee. In the end I had a Chrysler retiree friend who got me a Friends and Family discount code that put the Jeep at $493 below invoice.

At the end of the day, the dealer gets a Holdback on every vehicle sold. It’s about 3 percent of invoice. So even if the dealer sells at invoice, the still get a kickback. In the case of my Jeep, that amounted to $1753 (shows on the POC as HB) on a $60,000 plus Jeep. There are probably other incentives dealers get for multiple orders, volume sales, specific models or packages, etc that the average consumer has no way of knowing and the dealer holds those cards close to their chest.

https://www.jlwranglerforums.com/fo...-2024my-jeep-pricing-action-dmail-pdf.813513/

 

[Victory]

All dealers get a Holdback. It shows as HB on the initial Price Order Confirmation where the status shows as BA - Pending Order. The Chrysler Holdback is 3 percent of invoice price. So if they sell at invoice they still get that kickback. So on a $60,000 invoice they still get $1800. The dealer sells a vehicle for $800 below invoice and they still make a grand. This works great especially on ordered vehicles that don’t sit on a lot incurring floor planning interest charges. Hustle people through, minimize the time you spend with the customer and make a quick grand. Obviously it’s not easy for the dealer to sell below invoice for lot vehicles that are accruing interest charges.

I still don’t think “invoice” is what the dealer actually pays regardless of holdback. It probably was at one time, but they don’t really share what the dealer pays, and it probably differs depending on how many vehicles are sold. I paid 6% under invoice, now I see some advertising more than that below invoice. Plus dealer fee of course, but the dealer fee was less than 3% of the purchase price, and I had one of the cheapest builds possible, with no trade in or financing to make money on either.

I still think to answer the original question, the reason they can sell below invoice is that invoice is not what they actually pay for the vehicle, only they know what they pay, so they know what they can sell it for and make a profit.

 

[Ratbert]

At the end of the day, the dealer gets a Holdback on every vehicle sold. It’s about 3 percent of invoice.

I'm not sure how that's possible when many of us get discounts that are significantly better than 3% under invoice.

 

[jhmartin]

For example, dealer 'pays' 50K for a jeep, and 10 others. Jeep throws in a 10k marketing allocation, and if they sell all 10 in a certain timeframe they get a 50k bonus (all made up numbers here); plus perhaps they get extra bonuses when someone finances through their partner, etc. So they can show you invoice all day long but that has only a tangential impact on their actual cost-of-goods-sold once you factor in all the ways they get renumerated. Of course there are other costs vs invoice (people, floor space, lights etc) so it works both.

 

[sunset]

Is there anything that affects the dealer's cost after the vehicle is ordered?

You're concerned about a bait and switch, yes?

I was made an offer via email to which I agreed, an itemized price list that included the discounts from MSRP, the sales tax, any fees, and license. They called it their OUT THE DOOR PRICE. I assumed it was firm and binding. Good enough for me, or ultimately I would walk, I'd have told myself.

Then, I kept reading in the jeep forums a lot of emphasis on getting the price "locked in". Besides it coming from members, some discount dealers who post here spoke about signing some document to lock it in. This made me wonder if I overlooked something critical with my dealer.

I called them, anonymously, and asked the sales rep who answered what locks in their prices once a deal was made. He replied, "We do it on a handshake."

Now that fits my experience. I'm from Wyoming, where I see your profile indicates you live, and I grew up around no shenanigans. A deal is a deal.

But I had residual doubt now from reading these forums. So, I emailed my dealership contact and, like always, I laid out my cards transparently, explaining how reading of other dealerships' requirements to sign something has now made me wonder if I needed to sign something with them.

They replied no document necessary, the price is locked in at what we agreed.

I'm good.

Also, at time of the original offer, I was told "plus any rebates available." When I am told my vehicle has arrived, supposed to be Jan 2024, I will ask what available rebates are there to now apply to my purchase.

If it helps any, I have heard that buying homes in the eastern USA seems to require an attorney whereas here out west I never hear of that and I've never had to do it myself. I am guessing here, but maybe the eastern dealerships have to have actual signed documents to defend the locked price whereas we out west did it on an email "handshake". YMMV.

 

[Ratbert]

You're concerned about a bait and switch, yes?

I was made an offer via email to which I agreed, an itemized price list that included the discounts from MSRP, the sales tax, any fees, and license. They called it their OUT THE DOOR PRICE. I assumed it was firm and binding. Good enough for me, or ultimately I would walk, I'd have told myself.

Then, I kept reading in the jeep forums a lot of emphasis on getting the price "locked in". Besides it coming from members, some discount dealers who post here spoke about signing some document to lock it in. This made me wonder if I overlooked something critical with my dealer.

I called them, anonymously, and asked the sales rep who answered what locks in their prices once a deal was made. He replied, "We do it on a handshake."

Now that fits my experience. I'm from Wyoming, where I see your profile indicates you live, and I grew up around no shenanigans. A deal is a deal.

But I had residual doubt now from reading these forums. So, I emailed my dealership contact and, like always, I laid out my cards transparently, explaining how reading of other dealerships' requirements to sign something has now made me wonder if I needed to sign something with them.

They replied no document necessary, the price is locked in at what we agreed.

I'm good.

Also, at time of the original offer, I was told "plus any rebates available." When I am told my vehicle has arrived, supposed to be Jan 2024, I will ask what available rebates are there to now apply to my purchase.

If it helps any, I have heard that buying homes in the eastern USA seems to require an attorney whereas here out west I never hear of that and I've never had to do it myself. I am guessing here, but maybe the eastern dealerships have to have actual signed documents to defend the locked price whereas we out west did it on an email "handshake". YMMV.

Hopefully you got a good deal. Check the spreadsheet in my sig for examples.

 

[sunset]

Hopefully you got a good deal. Check the spreadsheet in my sig for examples.

Yes, I got the equivalent of 6% below invoice and only 94 miles away from me. I used dealers from your list as bargaining leverage.

Sponsored