MSRP vs. Invoice

Thinking about buying a CX-7.

By the way, I have a question about MSRP and Invoice. Usually they are about $2000 difference, in US. What exactly MSRP and Invoice are? Also, I see many people saying they bought the car (car in general) couple thousand dollars under Invoice. Is this possible? (Maybe it was MSRP, not sure) (boom07)

Any way, can some one educate the difference between Invoice and MSRP?

Thankx

MSRP is what the dealer wants to charge for the car and the Invoice is what they paid for it. What you want to get is Invoice with very little profit to them. And yes, the MSRP is usually 2-3 thousand more than the Invoice. I got my P5 for invoice + a $250 profit to the dealer with 5 year 0% with $2500 down.

Black_Protege_5 said:

MSRP is what the dealer wants to charge for the car and the Invoice is what they paid for it.

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I wish it was that simple, but the 'invoice' isn't actually what the dealership pays for the car. The car manufacturer often has 'kickbacks' or bonuses that reduces what the dealership pays to something under the invoice price. Meaning a lot of times, a dealer can make a profit selling a car at the invoice price.

Thankx for the replies. Then that means, there are some possibilities that I can pull the price near at the Invoice level or even farther a bit. I'm not sure how this car will look like, but my expectation is very high. Yes, it looks great, but you never know uuntil you see and drive it. Also, it seems like that there are no competitors of CX-7 at this point. The New Santafe might be a competitor, but the New Santafe is a littler larger I think. However, CX-7 seems got more features.

jersey_emt said:

I wish it was that simple, but the 'invoice' isn't actually what the dealership pays for the car. The car manufacturer often has 'kickbacks' or bonuses that reduces what the dealership pays to something under the invoice price. Meaning a lot of times, a dealer can make a profit selling a car at the invoice price.

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It's a rebate to the dealer. Like the advertised rebates to customers. Selling a car at invoice is kinda like buying a box of cereal for just the toy inside. Sure, the toy's great, but the food will get you much farther. Selling cars for a year now has opened my eyes to a few things, and I understand wanting a discount, etc... because I buy cars, too. It amazes me, though when people cry over us trying to make as little as a 1% profit, when they're wearing clothes that they paid a minimum of a %50 mark-up on and a watch that they paid a 200% profit on while eating lunch that probably cost the restaurant a third of what they paid for it.

Puckpimp71 said:

It's a rebate to the dealer. Like the advertised rebates to customers. Selling a car at invoice is kinda like buying a box of cereal for just the toy inside. Sure, the toy's great, but the food will get you much farther. Selling cars for a year now has opened my eyes to a few things, and I understand wanting a discount, etc... because I buy cars, too. It amazes me, though when people cry over us trying to make as little as a 1% profit, when they're wearing clothes that they paid a minimum of a %50 mark-up on and a watch that they paid a 200% profit on while eating lunch that probably cost the restaurant a third of what they paid for it.

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How much is this "rebate to the dealer?" Is it a percentage or a fixed amount?

This is what I found at Edmunds.com

Dealer holdback for Mazda is 2% of the Base MSRP

Vision67 said:

How much is this "rebate to the dealer?" Is it a percentage or a fixed amount?

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It depends on the car a little bit, too, what the holdback is. Also, on the car company. Kia, for example bases thier holdback on cars delivered.

How dealers ACTUALLY make money is rather complex....A dealer can still make money selling cars at invoice all day long....OBVIOUSLY they make more if the can sell it for more

Dealers profit in several areas

1. Used Cars....this is normally a car the dealer owns outright and a dealer usually make WAY more on a used car than a new one..This is why you get NOTHING on trade in's...if it's a car worth selling on their used lot, the less they pay for it, the more they profit

2. Additional interest on the loan...that's right !!! The dealer will sometimes "tack on" a few points to a loan OVER waht the bank actually approved the deal at...Each time a pmt is made that extra money is actually paid out to the dealer...the downfall is if the car is reposessed, all the money they made on this process must be repaid back to the bank

3. Extended Warranties, Life Insurance, Disability Insurance.....Dealers make HUGE profits on these,and they cost the dealer almost nothing....The insurance company pays the dealer a commission on the policy and the bank provides the money to buy it...WIN no matter what for the dealer

4. Automobile Repairs...The dealer makes TONS of money of repairing cars....They usually charge the highest labor rates possible, and have sometimes the least qualified mechanics....They get money on warrantee repairs and obviously on non-warrantee repairs

5. Floor Planning....this is a complex process, but lets try and simplify it as much as possible...think the dealer has the CASH to purchase each new vehicle on it's lot ??? NO WAY...the borrow the money from the bank.....usually the bank of whichever brand they represent...their credit line allows them a certain number of vehicles on their "floor plan"..they are charged interest on this, so the faster they sell the car, the less interest they pay, and the more money they make..That is why dealers are HIGHLY motivated to sell the cars as quickly as possible, and will attempt to PUSH a car on you if it has been on the lot for quite some time....


DON'T EVER believe a dealer if they are trying to tell you they aren't making any money on a deal...it simply isn't true. EVER.