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!
At Lewisville VW, we’re proud to give our customers an edge. When you shop with us, the largest-volume VW dealer in Texas, you’ll know you’re getting the best VW has to offer. From products to service, we’re here for you. To prove it, we’re letting you in on a few tricks of the trade for buying a new car in today’s market:
- Know what’s up-and-coming. The vehicle industry is making major changes. For example, VW recently introduced a diminutive new fireball called the Up! for European markets at this year’s Frankfurt Auto Show in Germany. If you want stunning gas mileage and unprecedented style, and have the luxury of waiting a bit for your next purchase, lay low and keep your ears open for news of a U.S. launch.
- Know which models most interest you and why. Ready for that new car smell now? Take the time to do research. Understand the pros and cons of each vehicle, and which ones have the features that best fit your lifestyle and budget. VW has a car, truck, or van for everyone. Come in and talk to a sales representative if you need some help getting started, or do some online research on your own.
- Know the Kelley Blue Book value for your chosen model(s). This is your baseline invoice price for a vehicle. You can always expect to pay over Blue Book value for add-ons, especially with financing options. Factor in convenience, padding, and exactly how much you want that car when deciding to haggle out the difference between the invoice value and the dealer’s “suggested retail.” Knowing the Blue Book value gives you a good starting point and keeps you from being taken for an unreasonable ride by an unscrupulous dealership. Here at Lewisville VW, you can trust us to steer you right every time.
- Take your time. Don’t make snap decisions. Time frames are different for everyone – some buyers have all the options laid out before they enter our showroom for the first time and leave their first meeting with keys in hand, feeling like they’ve made a reasoned purchase. Others come back several times to make sure they’ve found the perfect fit. Do your homework – a car is a major purchase that will stick with you for a long time. Make sure you’re financing at the best possible rate for your qualifications and don’t jump in without thinking things through. Consider taking a trusted friend along to help you make a decision you’re as happy with when the car is paid off as you are when you drive it off the lot.
Nobody can help you through the car buying process like Lewisville VW. We pride ourselves on selling the right car to the right person at the right price, day in and day out. Keep up to date with our current offerings by following our blog, or join one of our social networks on Twitter or Facebook.