Howdy, Driver? Before you arrive at the dealership, know how to find the invoice price of a new car you want to buy.
The invoice price is one of the vehicle prices to look out for at the dealership. Typically, the dealer will keep it from you to get you to pay more money for the car.
What is Invoice Price?
The invoice price is the amount of money an automaker charges a dealer for a vehicle. It may include additional charges such as destination charge and optional equipment cost.
Typically, the auto dealer pays less than the invoice price of a car because of added incentive bonuses, cash back or vehicle rebates, allowances, and discounts.
Dealers also enjoy a holdback amount that the manufacturer repays them for selling a vehicle, but it inflates the price they pay for the vehicle, and they are reimbursed later. The dealer holdback percentage is typically 2-3 percent and it is not offered by all auto manufacturers.
Is Invoice Price Different from MSRP?
Yes. While invoice price is the amount the manufacturer charges a dealer on the invoice, the MSRP (manufacturer suggested retail price) is the selling price suggested by the manufacturer. It is also called the sticker price and it is found on the MSRP of a new vehicle.
Note that a dealer can sell a vehicle costlier than the MSRP because it is a suggested price and not a fixed price. Typically, the cost of the car increases from added dealer charges such as the dealer prep fee, delivery charges, and dealer doc fee.
One of the strategies to beat a salesman is to avoid paying the delivery charge.
How to Find Invoice Price of a New Car
Is it possible to find a vehicle invoice price?
Below are the ways to find vehicle invoice price on a new car:
Request Invoice Price from the Salesman
The best way to find the invoice price of a vehicle is to ask the salesman. If the salesman proves abortive, then you want to ask the sales manager while emphasizing your willingness to buy from their dealership.
You have nothing to hide because it is business. If you are at the dealership, say to the salesperson, “the black Ford over there, kindly provide the invoice. I want to negotiate using the bottom line price.”
Typically, the dealership will not disclose the invoice of the vehicle. So, you have to walk away but leave your phone number behind.
If the salesman sees the need to disclose the invoice price and sell you the vehicle for their commission, they will call to inform you.
Negotiate with Invoice Price
Assume that you the dealer the disclosed the invoice price of the vehicle.
Now, attempt to negotiate using the out-the-door price, which should include the unknown invoice price and other bonuses. Note that you must not include the rebate while negotiating.
Consumer Reports True Car Value
Navigate to https://www.consumerreports.org/cars/car-value-estimator/ to research the possible invoice price of a car.
You will also discover the hidden dealer charges, dealer holdback, and the bottom line price of the vehicle you want to buy.
Buy a Low-Demand Vehicle
Some vehicles do not sell fast and the dealer is willing to employ any strategy to get rid of the vehicle from the lot.
It is for this reason that some cars carry lots of incentives to encourage consumers to buy them.
When you arrive at the dealership, ask the salesman for the vehicles with the most incentive offers to select from. You can request the invoice of the vehicle and the dealership would not think twice before disclosing the invoice price, hidden charges, and even the incentives/bonuses the dealer gets from the car.
The idea is to sell it out and make way for newer vehicles.
Edmunds True Car Value
Navigate to https://www.edmunds.com/tmv.html and provide the details of the vehicle you want to buy for its true value on Edmunds.
Is Car Invoice Price Accurate on Websites?
Not really. Sites like Edmunds that provide the estimated true car value do so with available but limited data.
The invoice a dealer gets from the manufacturer contains additional charges that may not be mentioned by the true car value research website. Thus, the information is not accurate.
True car value research websites may not account for the following information:
Online Marketing Fees
If an automaker offers web design services to a dealership, the dealership is charged in the vehicle invoice. Since online marketing is optional, not every dealership signs up and so they are not charged on their invoice.
You cannot tell whether an auto dealer is charged this fee, except they reveal it.
Regional Advertising Fees
If a dealership participates in a regional advertising group offered by a manufacturer, they will be charged to the new vehicle invoice.
Note that the regional advertisement fee the dealer pays to the manufacturer is used for running ads in the region.
Of course, the cost of an advertisement is not the same in all the states, so it is difficult to know what the dealer pays out whether they participate in the program.
Market Value Adjustment
Manufacturers often adjust the prices of vehicles, especially during the mid-year to boost sales. They also disclose the updates on their websites, but websites that estimate true car value may not update the data to reflect the changes in the invoice price.
The Difference Between Dealer Cost and Invoice Cost
The dealer cost and the invoice cost differ somehow.
The dealer cost is the actual price that a manufacturer charges a dealer and that the dealer pays to get the car. Moreover, dealer cost represents the minimum value of a vehicle and it is as low as the dealer can sell the vehicle without losing money. Other than the dealer, it is difficult to know the actual dealer cost because it changes based on the number of variables, which differ depending on the dealer.
Invoice cost, on the other hand, is the estimated amount of money that a dealer pays a manufacturer for a car. Unlike the dealer cost, invoice cost is an estimated quote by the dealer regarding what they will be charged for the car. The amount often increases higher than the vehicle value and it includes vehicle options and add-ons.
Can You Determine the Invoice Price personally?
Yes. However, you must collect the correct information from the manufacturer’s website, dealer websites, and true car value websites such as Edmunds to determine the invoice price.
To discover the dealer cost, which is the actual value of a car, you have to determine the invoice cost of the vehicle.
You should focus your research on the possible dealer incentive amount and the percentage of the dealer holdback, typically 2-3 percent. You must also know the vehicle options and additional charges from subscriptions by the dealership such as online marketing and district advertising.
You can calculate the holdback in 4 ways, including the following:
- Total MSRP
- Base MSRP
- Total Invoice
- Base Invoice
You may refer to my article link I embedded above that describes the dealer holdback to know how to calculate the holdback amount.
Bernard is the lead driver and force behind his Big Dog Garage Race Team. He is the General Manager and Chief Mechanic of Jay Leno’s Garage. Bernard and his crew of seven are responsible for all repairs, restoration and fabrication of Jay’s incredible automobile and motorcycle collection.
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