Auto Dealers Compete

Or you can get ripped off by the dealership. I found this very interesting blog post from a used car salesman, outlining how they use the Four Square method to rip off consumers.

It is very in depth blog post. Really gives you the blow by blow method for scamming customers. You should really read the article if you are about to buy a car. The car dealership uses human psychology to sell and get the upper hand. Very interesting.

http://consumerist.com/consumer/four-square/dealerships-rip-you-off-with-the-four+square-heres-how-to-beat-it-248445.php

Technorati Tags: ripped off, dealership, used car salesman, , Four Square method, scamming customers, human psychology

A 62 year old gentleman who has been in car sales for over 30 years writes in to Edmunds.com about how it’s almost impossible to make good money in car sales. Back when he started in the business he could make good money but now in the internet age people can find out invoice and are asking for invoice or less.

This is a really interesting Q/A about his question so check out the link below.

We have a FREE video on how to buy below invoice with out talking to a sales man. After you read the article go download the free video and see exactly how to do this.

“People are actually instructed how NOT TO PAY ANY PROFIT AT ALL. We get 25% of the profit and put in long hours… It was not like that when i started and you could earn a decent living.But today things are getting worse. Yet the best service is expectedeven though a customer will actually offer you invoice or below.”

Strategies for Smart Car Buyers – Question of the Day: How can a carsalesman survive?

technorati tags:Buy Below Invoice, MSRP, new car, new car financing, car sales, invoice, download the free video, FREE video

I found a really good description of a holdback on cars.com



For most vehicle makes, the published invoice price is not the true dealer cost because of dealer holdback. The manufacturer holds a fraction of the invoice total of all cars a dealership sells (typically 2 percent to 3 percent of either invoice price or the manufacturer’s suggested retail price) that it then returns to the dealer, usually on a quarterly basis. Dealer holdback began its life as a safety net that ensured the manufacturers would have a security deposit of sorts if a dealership missed payments, and the dealerships would have money on hand to cover overhead costs when the holdback was returned. But if you look at the bottom line the way the dealership does — with profit being profit, whether it comes from the car sale, the trade-in or a financing deal — then the holdback is arguably a profit shelter.

The author also goes on to say “Most dealers see holdback as their entitlement…”

Well times are changing and we a consumers are using the internet to cut into this holdback prices. Also lets not forget the other incentives dealers get  “Lesser known are the factory-to-dealer incentives that reduce the dealer’s true cost to buy the vehicle from the factory.”

So before you start feeling sorry for the dealership here is a list of how they make money on the sale of the car and it’s not all profit from what you give them. (This is a partial list):

• the invoice price;
• dealer holdback;
• customer incentives;
• factory-to-dealer incentives;
• supply and demand; and
• your car’s trade-in value (in some states).

cars.com: Buying Advice | Negotiating With Car Dealers

technorati tags:holdbacks

I really like both of these sites to help me find invoice pricing:
http://www.kbb.com/
Yahoo Auto

I have receive several emails about how dealerships price their cars. I found this great site that gives really good information.

Tony Lorio has this to say about so called “Secret Pricing”…

“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.”

InsiderCarSecrets.com Blog: Secret Prices For Car Dealers

So what is the pricing dealers use?

The Dealer will pay invoice for the car. You can find this on the Internet any site like yahoo autos, Kelly Blue Book, etc.

So how do they make money outside of you financing th car? Well dealers will get something called a hold back. A hold back usually is 3% of the retail price of the vehicle, and paid to them quarterly. The holdback is used to off set the cost of financing each car the dealer will keep on the lot.

So even if you can buy the car at invoice the dealer will still make 3% of the retail price. Sometimes you can get a dealer to eat into their holdback money and you can get cars below invoice. depending on how fast the Dealership can sell the car they can still make money on each car they sell under invoice.

One final way to reduce the cost of a car is look for special rebates offered on cars. The factory to dealer incentive is used to push the sales of slow selling models. If you keep your eyes out for the rebates you can really get yourself a good deal.

technorati tags:dealer pricing, below invoice, dealer hold back, new car pricing