You’ve probably heard the phrase “dealer prices for new cars” plenty of times, and quite possibly thought it was just another marketing come-on. It’s not exactly misleading, but there are lots of factors that go into a dealer’s cost for new cars. Let’s talk about some terminology:
- Factory Invoice – This refers to the actual amount billed for the car, from the factory, to the dealer, less “holdback.” What’s holdback? That’s the co-op compensation from the factory to the dealer, for his advertising and marketing efforts; it helps cover the dealer’s overhead costs. Usually factory invoice prices are available from the library, the Internet, consumer guides, and sometimes even from the dealer.
- Factory–to-Dealer Incentives – Sometimes referred to as “backdoor money,” these incentives can be a little trickier to track down. They’re not well-publicized, and can range from hundreds to a few thousand dollars. Factory-to-dealer incentives also change frequently, sometimes even from week to week. In the negotiation process for a new car, don’t be afraid to ask the dealer or sales associate about their dealer incentive or rebate.
- Customer Rebates – These have been in place for years and are well-publicized by dealers and manufacturers as a way to attract customers to their new car dealerships. In fact, sales associates will usually be very direct about mentioning customer rebates as a sales tool.
- Dead cost – This is the absolute bottom-line cost, after factory invoice, holdback, factory-to-dealer incentives, and customer rebates are all figured into the price structure.
So let’s sum it up. Invoice price/minus holdback/ minus dealer cash/minus customer cash = dead cost. You may hear come-ons that proclaim “$100 over invoice!” but that doesn’t take into account the hundreds or even thousands of dollars of hidden profit involved.
One thing you can be sure of, though – when you come to Lewisville VW, you can be assured of straight talk and a good deal on a new car. No shell game, no mumbo-jumbo, and no jumping through hoops. So connect with us via YouTube, Twitter, and Facebook to keep pace with all things Volkswagen!
For years, “used cars” implied worn-out vehicles sold by guys wearing cheap suits and bad toupees…but certified used cars are an entirely different matter.
There are plenty of reasons to buy a certified used car. A new car loses thousands of dollars in depreciation the moment it leaves the lot…not such a good deal for the owner, but it definitely works in the favor of the used-car buyer. And there are plenty of places to go to buy a used car (including the lots with the guys in cheap suits and bad toupees), but there are also plenty of options for researching the purchase beforehand.
So what exactly does it mean to buy a certified used car?
A certified used car undergoes a rigorous inspection before it ever makes it out to a dealer’s lot. That means, in many cases, adhering to the manufacturer’s set of guidelines for inspection and certification, which are usually more stringent than the dealer’s. Manufacturer’s certification provides protection for the buyer in case the dealership closes its doors, and certification also means that the vehicle comes with a used-car warranty. Often, the new owner will also be covered by things like roadside assistance and loaner vehicles, as is the case with a new-car purchase. If the used vehicle needed replacement parts, the owner can rest assured they were replaced with factory parts instead of aftermarket parts-store components.
When you’re doing your pre-purchase homework, be sure to review the various manufacturers’ certification programs and find out exactly what certification means for the make of car you are considering and with the dealership. Ask the sales rep for a copy of the certification report and, of course, check with Carfax to see that specific vehicle’s history as far as collision repair, factory recalls, and warranty work. Check the actual resale value of the car with the Kelley Blue Book or Edmunds…and then the negotiation can begin in earnest.
Before committing to anything, you should know that Lewisville Volkswagen has an extensive inventory of certified used cars. It’s easy to check out what they have at any given time through their website (or a visit to the dealership). While you’re at it, connect with Lewisville Volkswagen online through Twitter, Facebook, LinkedIn and YouTube!