The Truth About Dealer Holdback
March 13th, 2023 4:00 PM Share
One of the greatest things about the internet is its ability to disseminate information that levels the playing field in relationships that have long been defined by asymmetrical information. Our buddies at TrueCar are tackling one such informational imbalance by posting its dealer holdback calculation for every brand on sale in the US. They note
Dealer Invoice is generally the amount the dealer pays the manufacturer for the vehicle. Because Dealer Holdback is paid to the dealer after the vehicle is sold, it represents an additional profit center for the dealers that is not immediately available to consumers. This is one reason why some dealers are able to sell some vehicles below Invoice and still make a profit.
The more you know!
Published June 28th, 2011 12:37 PM
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I'm a fleet manager at a nissan dealer(Canada). I work with a different spread than NulloModo. On my Nissans I've got the spread between MSRP and Invoice, plus holdback(say 335 on an altima) plus another chunk of cash called WISP(550ish on same altima). It should also be noted that once you hit your monthly totals target the dealer gets a per car amount of cash($400?). I don't really know that number other than a brief alluded to in conversation. I suspect quarterly, and yearly bonuses based on volume and CSI scores. On fleet deals, depending on whom I'm quoting for, I take out holdback, WISP and fleet rebate plus my markup. (50 on a sentra to 1200+ on an armada) Rental car company deals are like 75 bucks over which completely sucks ass. For my retail deals, I do $200 over invoice for most new vehicles (keeping holdback and wisp) with no extra fees(doc/nitro/undercoat/security etch). Used cars vary greatly on markup based on demand/condition of the car. I have charged a friend about $2400 over on a used QX56. Super low KM, super clean condition. AND I TOLD HIM ABOUT IT. He was fine with it. I don't deal with those who treat car salesman without respect, or those who don't think I have the right to earn a reasonable markup. I just say "I don't think I'm the right salesman for you" shake their hand and send them on their way. If winning at all costs matters, getting that 800 to 1000 bucks that I'm holding for youself.....then we can't do business. I'm a relationship seller, and it works perfectly for me. I don't know how many I turn away in a year, I recall only one this june. One more started down that road and I said basically the above to him and he settled down. I typically sell 40-60 retail deals a year through friends and referrals.. I take care of my customers and expect to be *reasonably* compensated for it. So that's my insiders take.
back when CarsDirect had great deals, it was a great tool for haggling with dealers.
I think it was 2003, my wife and I were looking at a Honda Accord. We were trading a fully loaded Nissan Pathfinder. We had made a deal verbally one night and had to leave for some reason I don't remember. The next day we got there near closing time since we both work, had to get the kids to grandma and then drive a hour to the dealer. It was Valentines Day, my salesman had gone. The only people left were the finance lady (HOT!!) the manager and a sales guy to swap the plates. The paperwork came - the sales guy had gave us 2K more on the trade, took 2k off the car, and completely left out about a 900 dollars worth of "extras". The wife gave me that look, that - if you say anything I'll kill you look. We sat down, signed, and shook hands. They were happy and we were about to crap our pants. Since it was Valentines Day, all the good eating establishments were full, we ended up at Bojangles, ate heart shape biscuits and read the sales agreement. In NC, there is NO cooling off period, you sign - a second later it's final, done, over. We got a call from the original sales guy later, he wanted us to come in and "talk" about the deal, I politely told him that we had signed their paperwork. He paused........then said well, you got a deal, enjoy the car. I kinda felt bad, I called and talked to the sales guy that was there the night we got it, he said,"don't worry, we make enough off other customers!" And that guy still has a job. Score one!
The isssue I have with car buying is caused by the problems with buying and selling in a more rural area where I live. Few dealers, especially for import brands, and very few possible buyers for low mileage used cars on the open market. Most of the advice to sell your car yourself or walk away from a bad dealer is just not very practical in my area. This isn't as bad when shopping for a new car, but with used cars the selection of more rare cars is terrible to non-existent and you have to take what you can get. To find most of the cars I have been interested in would involve driving 3 hours or more to find a decent example.