Invoice Pricing is the Key to Saving
By Jakob Hansen, 6/14/2021
What is invoice price and why is it important?
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As you shop for your car, you continue to see the same terms over and over again. Things like residual value, depreciation, MSRP, and invoice price. The one term out of these you should become familiar with before shopping for your next car is the invoice price.
So what exactly is it and why is it important for you to be familiar with it?
What is Invoice Price?
Dealers serve as a middle man between the customer and the manufacturer. Sanctioned by the manufacturer, they are authorized to sell new OEM products at their stores. They are, however, a separate entity entirely. For example, a Ford dealer is not actually a part of Ford Motor Co., they are an independent dealer authorized by Ford to sell new or certified Ford products.
The manufactures “sell” their vehicles to the dealers, who then sell them to you, the customer. Dealers purchase the vehicles at wholesale prices, since they buy many vehicles at one time.
Dealers receive an “invoice” with each new vehicle, summarizing the charges for the car. The manufacturer; Ford, Chevrolet, Nissan, etc, actually “sells” each vehicle to the dealers. This is where the term invoice pricing actually comes from.
The invoice price is what the dealer pays for each new vehicle they receive from the manufacturer. The dealer then adjusts the cost to cover everything from shipping to the receptionist’s paycheck, adjusting to make an appropriate profit. The numbers are carefully calculated. Too high, and the dealer won’t be able to sell any cars. Too low, and they can’t keep the lights on.
Manufacturers have helped the dealers, giving a “suggested retail price”, also known as the MSRP, to help dealers price appropriately.
As a consumer, you are entitled to this information, thanks to laws that ensure fair dealer practices. Being privy to this information clearly can help when negotiating a fair price. Finding the invoice can sometimes be challenging, however, so knowing where to look can save you thousands.
How Do I Find Invoice Price?
Invoice price can seem like secret knowledge, almost like protected classified information. However, the price is easier to find than you may think. Dealers are required to share invoice price when it is requested properly. Therefor requesting invoice through helpful sites such as our own can make life easier.
By simply inputting your zip code and the type of car you are looking for, you can easily have access to the invoice pricing for the vehicles that you are looking for. Searching through thousands of dealers in minutes, you can find the best possible deal on the perfect car for you.
Once you find the right car for you, you can also request a copy of the invoice price as well. This will give you the opportunity to have, in writing, what the dealer paid for the car that you are looking for. Make sure the document is official and from the manufacturer, and not just an itemized list from the dealer.
These invoice prices are not always openly posted, as it makes it more difficult for the dealer to make a profit on the vehicles, so a little bit of research and time on your end can save you thousands. Let Rydeshopper do the work for you makes it even easier to find the right car at the right price.
Which Brands Sell Below Invoice?
Even the most insightful shopper will not be able to get every car below invoice price. Vehicles with a high demand will almost never sell below invoice. Therefore, most luxury brands will be difficult to purchase below invoice, unless you find an undesirable vehicle that the dealer has on their lot. Also, new to market vehicles will also be difficult to get below invoice. When the hype and excitement is high for a new vehicle, it will be much more difficult to get below invoice.
What to look for are the undesirable cars. Dealers are typically ready to make deals on cars that may have been sitting on the lot for several months, have a strange combination of options and features, or undesirable features such as a manual transmission.
It is also very dependant on the brand. Some brands may be much more likely to sell below invoice. Domestic brands such as Ford, Chevrolet, Dodge, Ram, Jeep, Chrysler, and even GMC or Buick often sell cars below invoice, especially during the slow season, such as winter or mid-summer.
Jakob is our writer with a love for all things automotive. He comes from a dealer background with experience on both sides of the fence. Knowing the system inside and out, he knows the best cars and the best deals. No matter what.