MSRP vs Invoice
If you have ever been to a car dealer enquiring about the prices of a new car, you must have seen the MSRP of the car, also known as sticker price, hanging inside the car. This is also known as Manufacturer suggested retail price, that car dealers freely display in the form of a sticker. But are you aware of another price that is lower than MSRP, and known as invoice? Not many people come to know of invoice, and the maximum they do is to bargain on MSRP. But they still end up paying more than they should. Read on to know the shocking truth in the next paragraph.
While MSRP in the form of a sticker is freely displayed by the dealers, they never tell you about invoice. It is the price of the car that dealer pays to the auto manufacturer. As you would expect, MSRP is considerably higher than invoice price and there are car dealers who are able to sell cars for even more than MSRP. Reason is the popularity of the brand of car they are selling and also because of ignorance of car buyers. However, these days customers have become more aware about car prices than ever before and a vast majority now know about invoice. If the dealer in your vicinity does not show you invoice, you can easily access it these days with the help of websites that are giving you this information for free. Once you know the actual price being paid by the dealer to the car manufacturer, you can always try to bring the asking price down as close as possible to invoice.
Here is another shocking truth. Apart from the lower invoice, there is another benefit that car manufacturers pass on to car dealers known as holdback. This is anywhere between 2 to 3% of the value of the car and returned as incentive by the manufacturer to the dealer to let the dealer keep floating. After all there are overheads and sundry expenses that need to be covered. So even if you bring the dealer down to invoice, do not think that he selling you the car at par. He is still making a decent amount of money depending upon the cost of your car. Though no car dealer ever comes down below or even equal to invoice, your target should be to make him climb down as close as possible to invoice.
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In brief: MSRP vs Invoice • MSRP is the manufacturer suggested retail price and is displayed by car dealers inside the car through stickers. But it is only a retail price suggested by auto manufacturers and the dealer can sell the car for higher or lower than this. • Invoice is the actual price paid by auto dealer to the car manufacturer and is lower than MSRP • There is another benefit in the form of holdback (2-3% of car value) that accrues to the dealer as this amount is returned by the manufacturer to the dealer in the form of incentive. • Your target should be to bring the dealer down to as close as possible to invoice price.
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