Should we expect anything better than 4-5% below invoice for now?

[Saejin]

Ok so HB puts them even further below invoice than 3%. And they get 2% back from the factory on an affiliate deal not 1%. Not saying they shouldn't make money. I'm just saying there are lots of ways they can sell 5%-6% below invoice and still make money.

My HB was $1595 with an MSRP of $54,365 and invoice of $51040. So HB ended up being 2.9% of MSRP and 3.1% below invoice...not much difference there, however could vary depending on model and overall pricing.

Then the affiliate deal gave me an extra 1% discount based on the invoice pricing which was $510. So now we’re at 4.1% below invoice. So if they really get back 2% from FCA if a customer uses the program and pass on half the savings to the customer the dealer makes back $504.
Can you verify this somehow. I would think if this were the case every dealer/salesman would want prospective owners to become affiliate members as it’s a win/win for them. Customer is happy by saving and extra 1% and the dealer gets back 1%. I only knew about the program based on this forum...dealer didn’t volunteer info on this program.

So, let’s just say the dealer doesn’t get anything back from FCA when selling this Jeep. That would mean 4.1% (includes the affiliate 1%) below invoice would be their cost and making this deal would net them $0.

So how does a dealer make money especially on a deal like Chicago had where it was 6% below invoice which was like an additional $1,100.
- add back in mandatory doc and protection packages...that didn’t happen on his deal...only a $129 doc fee was added.
- if the 2% for affiliate deals holds true then the dealer gets back $550


Now there are probably other ways dealers make money like kickbacks from FCA for volume and kickbacks from the bank for financing. Of course there are the numerous versions of warranties as well.

Can anyone chime in on this who may know?

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[ThirtyOne]

My HB was $1595 with an MSRP of $54,365 and invoice of $51040. So HB ended up being 2.9% of MSRP and 3.1% below invoice...not much difference there, however could vary depending on model and overall pricing.

Then the affiliate deal gave me an extra 1% discount based on the invoice pricing which was $510. So now we’re at 4.1% below invoice. So if they really get back 2% from FCA if a customer uses the program and pass on half the savings to the customer the dealer makes back $504.
Can you verify this somehow. I would think if this were the case every dealer/salesman would want prospective owners to become affiliate members as it’s a win/win for them. Customer is happy by saving and extra 1% and the dealer gets back 1%. I only knew about the program based on this forum...dealer didn’t volunteer info on this program.

So, let’s just say the dealer doesn’t get anything back from FCA when selling this Jeep. That would mean 4.1% below invoice would be their cost and making this deal would net them $0.

So how does a dealer make money especially on a deal like Chicago had where it was 6% below invoice.
- add back in mandatory doc and protection packages

Now there are probably other ways dealers make money like kickbacks from FCA for volume and kickbacks from the bank for financing. Of course there are the numerous versions of warranties as well.

Can anyone chime in on this who may know?

You don't believe me? This is a known thing.

This is the first thread i could find quickly on it:
http://www.wranglerforum.com/f274/d...-1-under-invoice-1976914.html#/topics/1976914

 

[Saejin]

Ok, it’s not that I don’t believe you, I’ve just never seen it posted anywhere. Everyone says it’s 1% off of invoice which is true except for Koons Jeep (they give you $250 and keep the rest), but the 2% kickback back to the dealer has never been mentioned.

Also, the post you linked to doesn’t add up.
User moresmoke states the below:
Invoice: $34296
Affiliate: $34028

If affiliate pricing is 1% below invoice shouldn’t his affiliate price be $33,953?

I was just saying if dealers get a 2% kickback wouldn’t they want to push the buyer into joining an affiliate or even mention it to them to see if they are eligible especially on the deals where they are at prices below invoice to begin with.
I’m sure in deals were they are above invoice it didn’t matter as they are making more than enough profit on the deal to not worry about affiliate pricing. It may even lower their profit if the affiliate option were exercised.
Again this is from my experience so maybe everyone else was told by their dealer about the affiliate program.

 

[ThirtyOne]

Ok, it’s not that I don’t believe you, I’ve just never seen it posted anywhere. Everyone says it’s 1% off of invoice which is true except for Koons Jeep (they give you $250 and keep the rest), but the 2% kickback back to the dealer has never been mentioned.

Also, the post you linked to doesn’t add up.
User moresmoke states the below:
Invoice: $34296
Affiliate: $34028

If affiliate pricing is 1% below invoice shouldn’t his affiliate price be $33,953?

I was just saying if dealers get a 2% kickback wouldn’t they want to push the buyer into joining an affiliate or even mention it to them to see if they are eligible especially on the deals where they are at prices below invoice to begin with.
I’m sure in deals were they are above invoice it didn’t matter as they are making more than enough profit on the deal to not worry about affiliate pricing. It may even lower their profit if the affiliate option were exercised.
Again this is from my experience so maybe everyone else was told by their dealer about the affiliate program.

There is $75 added to the affiliate price for some kind of affiliate fee. Look at the FFP price on any POC and it will be the same.

Go to the affiliate site and search for dealers. It will tell you how many affiliate deals they have done. For most dealers it is very small. They are still telling customers there is no way they can sell below invoice.

Besides to do an affiliate deal you have to have it through your employer. The arrears Lightly thing is a loophole most dealers and certainly most customers don't know about. And it requires a 30 day wait. Most dealers don't want to tell the customer to wait 30 days to buy. And for the volume dealers some of them do advertise the affiliate deal. Others won't accept it. For example they may not be able to stack the fleet program hey are using to get the low price with an affiliate code.

Why does all this matter to you? What matters is the market is 4-6% below invoice + TTL and fees. Who cares how the dealer makes their money?

 

[Saejin]

Thanks for the insight and great discussion. I think many prospective buyers care how dealers make their money and how much they make because an informed buyer is better prepared. Imagine a buyer goes in and negotiates from MSRP or invoice. They hopefully know what the invoice is and agrees to a price that’s halfway between both. Seems like a good deal. Then the dealer still adds on doc, processing, and protection pkg fees. With this deal and what we now know about holdback, manufacture kickback, etc the dealer is making about $4,000 on the deal. Wow, that’s a huge profit for just acting as the middle man between FCA and the customer especially on a custom order since the vehicle will not sit on the lot for more than a few days.

I understand the dealer is a for profit business and has to pay for costs like salaries, facilities, bills, etc. So they need to make money. But since most are not honest during the negotiation process it taints the price people pay. For example, I’ve been personally told that a certain price is $500 above invoice and that’s all the money the dealer will make off this deal. Honda does this a lot and I’m sure many others do as well. It’s the lowest we can go. This is pretty much a lie and why I despise negotiating car deals. I hate being lied to. I’d rather they say, $500 above invoice is the lowest I can sell this vehicle for and leave it at that. Sales managers add in that other false info in order to force the hand of the buyer into having them think “wow, I’m only paying the dealer $500 above their cost, so this is a good deal”.

It matters to me as now I’m a better informed buyer and when I buy my next vehicle I’ll be better prepared as I hope others will be after reading this. Isn’t this why we all participate in these types of forums.

Again, thanks for your insight. I appreciate it.

 

[Saejin]

To the OP. Sorry to hijack your post, but to answer your question ThirtyOne sums it up pretty good...market is 4-6% below invoice plus TTL and fees. Based on the discussion it doesn’t get any better unless FCA adds additional incentives/rebates or you can score a deal like Chicago did at 6% with a small doc fee.

 

[Stratplexi]

I am trying to figure out how they can sell below invoice to folks who are not employees. Dave Dennis gave me 5% below invoice but how? I know they get 3% HB but how can they sell it below invoice to non FCA employees and make money? Are volume dealers allowed to give employee pricing to nonemployees?

 

[Saejin]

I am trying to figure out how they can sell below invoice to folks who are not employees. Dave Dennis gave me 5% below invoice but how? I know they get 3% HB but how can they sell it below invoice to non FCA employees and make money? Are volume dealers allowed to give employee pricing to nonemployees?

Did you manually calculate the percentage based off your numbers on the contract? Did you pay any doc or processing fees?
Dealer may say 5% off of invoice, but that may not be the case.
Post your numbers and we’ll see.

 

[Stratplexi]

Yes, its 5% off invoice but I will have to pay $250 doc/title fees.

 

[ThirtyOne]

I am trying to figure out how they can sell below invoice to folks who are not employees. Dave Dennis gave me 5% below invoice but how? I know they get 3% HB but how can they sell it below invoice to non FCA employees and make money? Are volume dealers allowed to give employee pricing to nonemployees?

I feel like this has been explained a million times and even in this thread! There are lots of ways they can do it. People keep looking for the catch. There is no catch. For the informed buyer this is where the market is. These dealers wouldn't do it if they couldn't make money off of it. How do they make money? all the ways we have already documented - incentive programs, fleet programs, affiliate programs, doc fees, protection packages, holdback, financing, getting additional allocations, etc. They can sell as low as they want if they can figure out a way to make money off of it.

 

[Stratplexi]

I feel like this has been explained a million times and even in this thread! There are lots of ways they can do it. People keep looking for the catch. There is no catch. For the informed buyer this is where the market is. These dealers wouldn't do it if they couldn't make money off of it. How do they make money? all the ways we have already documented - incentive programs, fleet programs, affiliate programs, doc fees, protection packages, holdback, financing, getting additional allocations, etc. They can sell as low as they want if they can figure out a way to make money off of it.

I get they are making money but 5% below invoice is more off than the 3% HB and $250 doc fee. They are a volume dealer so perhaps there are incentives for them that are based on volume. I am cash buyer so no kickback on financing. I am not an employee or affiliate hence my interest. I am just trying to understand it...out of curiosity more than anything. I am completely satisfied with the price...the dealer did the same thing for me back in 2014 on a new RAM pickup.

 

[ThirtyOne]

I get they are making money but 5% below invoice is more off than the 3% HB and $250 doc fee. They are a volume dealer so perhaps there are incentives for them that are based on volume. I am cash buyer so no kickback on financing. I am not an employee or affiliate hence my interest. I am just trying to understand it...out of curiosity more than anything. I am completely satisfied with the price...the dealer did the same thing for me back in 2014 on a new RAM pickup.

I think I explained it already. But I will give a more specific example. There are some sales incentives where the dealer gets an additional cash bonus that applies to every vehicle of that model they sell in that period. So even if they sell the group buy vehicles at a loss they can make it up with the bonus.

I think they sometimes leverage the fleet program as well. Fleet price is the same as employee price. But I'm not 100% on that. Obviously the dealers don't sit down and explain how they make money and it is a little different for each one.

When your local dealer tells you they can't make money at 5% below invoice they aren't necessarily BSing you. If you went to your local convenience store and told them they should sell everything at Walmart prices they would tell you they would go out of business and they would be telling you the truth. But Walmart can do it.

 

[Saejin]

Volume and I bet there’s some additional incentives from FCA the dealer to move as many Wranglers as possible. FCA wants these on the road to get the word out. It’s a foundational vehicle for them and one of their largest cash cows. My bet is these deals won’t last past the 2018 MY.

But agree with ThirtyOne here. This thread has gone into plenty of detail about how money is made on these. Unless an actual sales manager from a dealership chimes in I don’t think we’ll ever know the full story.

 

[Saejin]

One more thing to add. May not apply directly to the Wrangler but my dealer had a Dodge Demon in the showroom. One of a handful in the state. The only reason the had it was due to volume of sales they’ve done on Hellcats and such. I’m pretty sure that didn’t sell for 5% below invoice. So I would say in some form or fashion a dealer can sell at a loss in order to put them in a position to make a profit later.

Tesla is doing this and I’m sure others are as well.

 

[Stratplexi]

Thanks gents...dont mean to beat a dead horse...just curious. I know this dealer gets quotas from FC for each month to hit. My salesman did share that info. He has also stated they are the number one volume dealer in the area. He has never stated they are losing money. One thing too is they have a huge inventory...probably 40-50 Wranglers in stock. I also feel like he offered better pricing to me when I went to an order instead of buying off the lot. He was about 1% below invoice on a stock unit. I decided to order because of specific options and then found out the pricing was better.

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