What’s the Dealer Cost for New Cars?

April 20, 2017

Research is key in getting the best possible deal on your new car. Arrive at the dealership armed with the dealer’s actual cost of the car you want. You can tell the dealer how much he will profit with your offer, rather than letting him tell you how much you will save with his offer. Don’t confuse the dealer’s invoice with the factory invoice or manufacturer’s suggested retail price sticker. Those numbers are inflated to convince you to spend more money. Use free websites to find the true dealer’s cost.

Choose the car you are most interested in purchasing. Instead of trying to research every car in your price range, pick your top one or two.

Visit a free auto information website, such as Edmunds or Yahoo Autos. Click on “New Cars.” Enter the year, make and model of the car you are considering. Click the “Go” or “Research” or “Get a Price” tabs.

Find and make a note of the “Invoice” price, which should be listed close to the “MSRP” price.
Click on the link to “View Available Incentives” or similar wording. Take special note of any factory-to-dealer incentives or factory holdbacks. Unlike rebates, which are given to the consumer, factory-to-dealer incentives are given to the dealer after the car is sold. Dealers have the option of passing those incentives on to the consumer, but many choose to advertise they are selling “at dealer invoice” and keep the incentives, often up to $3,000.


Manufacturers “hold back” money for each car they sell to a dealer, to be returned to the dealer once he sells the car to a consumer. This helps artificially inflate the dealer’s invoice cost. Typically, this is a percentage of the cost; the exact amount varies by manufacturer. Dealers rarely share holdback funds with car buyers.

Subtract factory-to-dealer incentives and factory/dealer holdbacks from the listed invoice price. This is the true dealer cost for the car.

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