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Caveat to this post:

We live in a society where profit is what makes the world go round. I do not begrudge anyone from making a profit. I even encourage sellers to attempt to get the most profit as they can. Education and knowledge with a side dish of negotiating skills are whats needed to keep the profit down to a reasonable (for the buyer) number.

In days of old we had the MSRP and were told that is the "cost " of the vehicle. In some cases with vehicles that were in demand you paid above the MSRP if you wanted any chance of getting that particular vehicle.

The the consumers found out that MSRP was an artificial price which bore little relationship to the cost and was intended for maximum profit. Along came invoice price (or "tissue" price) which then became touted as the dealer "cost". Consumers were able to acquire the "invoice prices" from various services. Now all of these numbers are freely available on the internet. We are told to negotiate up from the invoice not down from MSRP. All dealers will swear that that nuumber is the bottom line and that they would be losing money if they go below that.

But alas, once again the general public has been sold a bill of goods. Even if dealers were to sell at invoice price, the profits would be sweet. There are several discounts the public may be unaware of. Holdbacks are a reserved profit number taken off to ensure x dollars of profit. Dealer incentives are not always published or available to consumers and provide an added savings. Then there are the management incentives that sales managers receive depending on how many pieces are sold monthly, quarterly and yearly. Then there are the factory incentives which probably only the owners are aware of. Many do not kick in until the end of the year when the final numbers are tallied

I have several friends who walk into dealerships point to a car and buy it for MSRP. Its those individuals who make it possible for me to negotiate a better deal.

So the simple answer is there are very few people who can really appreciate what the final profits will be.

Dave G
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