What Did the Dealer Pay for the Car I Want?

auto sales

Considering my coast-to-coast radio show, website, Facebook page etc., I may easily talk to more potential auto buyers than anyone in the country.

One of the most asked questions I get is; “so how much did the dealer pay for the car that I want to purchase?” For those who do not know, before the Car Pro Radio Show was created in 2001, I was in the retail automobile business for over 3 decades. I have to admit, when I get this question, it irritates me a little.

I consider myself a consumer advocate in every way. I do my best to help people make good car buying decisions. When it comes to dealer cost on a car, I frankly don’t think that is anybody’s business. Would you ask a clerk at Walmart what they paid for that 60” HD TV you want to purchase? Would you ask a home builder how much it cost to build that dream home you want to buy? I don’t think so.

The bottom line is that as a consumer, you should be more interested in the best price you can get, without regard to what a dealer paid for a car. Profit is not a dirty word and car dealers have a huge investment in their business, and like everyone else, they deserve a return on that investment.

The next problem for “dealer-cost chasers” is getting accurate information. I’ve seen some big name websites with the wrong numbers, wrong cost of transportation, and wrong incentive information. This is frustrating for the consumer and the dealership both. Dealers don’t open every day to NOT sell cars, but when you are armed with bad info, you leave a dealership in the car you drove in there, mad at the dealer, and not understanding why the dealer didn’t accept your offer.

Some people choose to go through “buying services” and brokers in those states where it is legal. TrueCar has done a ton of advertising and tout that they “changed car buying forever” and they’ll give you “upfront pricing estimates.” Not exactly sure how a pricing estimate is going to help you get the best deal, but consider this; according to car dealers I have spoken with, they pay TrueCar on average $300 for every person who buys a car through the TrueCar website. There is nothing illegal or immoral about it, but don’t you think the dealers consider that fee when calculating the lowest price they can sell a car for?

When I am shopping, whether it be a car, an electronic gadget, computer, or lawnmower, I just want to pay a fair price. I consider the value of my time in the calculations too. Can I afford to drive one hour to save $50 on a purchase? I want to be treated well, respected as a consumer, and get a fair deal. I don’t mind paying a profit to any business. I just want a fair deal.

The next problem for people wanting dealer cost is; you aren’t going to figure it out anyway. You can get close to what factory invoice is on a car, but that’s not the same as dealer cost. Even with my experience, I can’t know what incentives are being paid to the dealers direct from the factory. Often times, these are based on a dealers volume and the amounts change the more a dealer sells. Many of the factory-to-dealer bonuses are based on how well people are treated.

I am in favor of researching the car you want to buy and doing your homework, but obsessing over what a dealer paid for a car will make you crazy. Dealerships have tremendous overhead, and trust me, you want them to be there after you purchase a car in case you need them.

Just remember, the lowest price for which a dealer can sell a car, and the actual price for which you can buy it, often have nothing to do with each other.

Photo copyright: welcomia/Shutterstock
  1. Frank 5 years ago

    While I agree that it is not anyone’s business what the dealer paid for a car, it is NOT the same as your Walmart scenario you compared it to in asking what they paid for a television. Walmart prices are not negotiable! That changes everything. When car buying becomes more transparent or non-negotiable, that will all disappear.

    • Jerry 5 years ago

      Imagine running a business where the automaker sets the retail price of the product you sell (MSRP) and the same people set the price the dealer has to pay for the products, then consumers can go online and find out both numbers.

      Not sure it gets more transparent than that.

      Jerry Reynolds, President
      Car Pro Radio Network

  2. Tony Noland 5 years ago

    Well written article Jerry. If customers would only recognize and act on the facts you present, both the customer and dealer would be better served. Good job!

    • Sherman Katz 5 years ago

      Knowing the invoice price can help the consumer know how much he will be able to get the car for after the new model becomes more available in the future. There are many car models that have gone for sticker price or more when they came out, but could be bought for much less later. Fiero, Solstice, First year most recent Thunderbird, Cruze, 1985 Prelude automatic, 1986 Acura Legend, Renault Alliance, 2008 Malibu, 1973 Regal, just to name some.

  3. David Ruggles 5 years ago

    Good Stuff Jerry! It is no one’s business what a dealer’s bare cost might be on a car. Most dealership staff don’t even know. As it is, most consumers take delivery of a new car having paid less for it than the dealer has to pay off it his floor plan lender.

    • Sherman Katz 5 years ago

      Knowing the invoice price when I am negotiating a car purchase deal for someone enables me to make an offer, that is a very good deal, but is not so low that it is absurd or unreasonable to get.

      • Jerry 5 years ago

        You are correct, however it still doesn’t matter what the dealer pays, only what you can get a vehicle for. I appreciate your thoughts.

        Jerry Reynolds, President
        Car Pro Radio Network

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