What Do Dealer Prices For New Cars Mean

dealer-prices-for-new-carsYou’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!