Found this advertisement in todays Providence Journal:

ALL NEW '04 F-150 XLT (2 AT THESE DISCOUNTS)
XTRA CAB, 4X4,TOW PKG.

MSRP: ..........................$34,880
RIZZO FORD DISC.........$5,000
COMM. REBATE................$500
TOTAL..........................$29,380

 

I was looking at 4x2 w tow and fairly loaded for less...but that was without 4x4. Hmmm

 

Assuming that you pay MSRP, then you subtract the discounts of $5,500, I believe this will put you below Invoice..??

 

They're marked up 5 grand anyway. So this is just the same as you bargaining for invoice.

 

Everyone seems to have a goal to buy at this "invoice" price. does anybody want to explain why?

 

Negative negative, some folks are never satisfied.... I suppose $10,000 "might" get you to raise an eye brow...??? If they gave it to ya, would ya complain about the floor mats...???
I think your missing the point on this one.
The point is: "In general" these trucks may not be selling that well if we have the dealers advertising $5,500 off of MSRP. I'll say it again, this is probably "below" Invoice.

I would expect Manufacturer Rebates to follow in the near future..

 

dealers make about 3% of the invoice price, which is a reasonable profit for them (around $900 bucks on our trucks). that's fair, they have to make money. anything above invoice is straight profit for the dealer. i don't know about you, but i'm not into giving my money away. the more i can save, the better. that's why we talk invoice. some people get it below invoice, which is even better.

 

Brewmaster,
Funny nick first of all. Either you drink a lot or make your own beer or both.
Now on to the "invoice" issue. Dealers do not buy their new vehicles at this invoice price. If they did, they would not stay in business. The invoice price, same as the msrp, are numbers that very talented marketing teams (highly paid also) from major manufactures attach to their vehicle. These numbers have little or nothing to do with what the dealers cost is, or the cost of manufacturing the vehicle. When the msrp price and the easily found invoice price are considered by the buyer, this creates a range, a consumer accepted price range. Case in point:
In 2001 I bought a brand new 01 F150 supercab V8 auto yadda yadda yadda. The sticker was $26,200, the so called "invoice" was $23,400, and I bought the truck for an even $20,000. I put down most of the cost and financed the rest through Ford with 1.9% financing, so over the life of the loan interest paid was not very much, about $350-$375. This was early in the year and to my knowledge there were no rebates or cash back offers or any other marketing tool involved. Now, by your way of thinking (and far too many others), the dealer would have lost $3,400 dollars because he sold the truck well under invoice, minus the dealer hold back ($26,200 x .03%) which is $786 bucks. This makes the deal a $2,614 dollar loss to the dealership. So why on earth would a dealer sell a vehicle at such a huge loss? Why would a dealer sell any vehicle at a loss of even a single buck? The answer is THEY DON'T! They are crafy smart businesses. Dealers have big contracts with manufactures which brings down individual cost per unit very low. Lower than the "invoice" marketing tool. This is not a unique case. I have a 2003 Honda which I bought well under invoice and I know (as I'm sure many of you good people do also) dozens of individuals who have bought cars/trucks well under this bogus invoice price. These fictional invoice prices are easily found on countless websites for all makes and models of cars. So you think the manufactures happily distributes their EXACT dealer cost of every single car, truck and van they produce? Of course not, they aren't going to show their hand like that!
I'm not telling anyone what they should or shouldn't buy a truck for; each individual has their own needs and financial picture and can make up their own mind. And if you are happy with your purchase, that’s great. I congratulate you. Have a good evening all.

TheRealist

 

That newspaper ad doesn´t sound like a true "incentive" but rather another true "gimmick". Same advertising garbage as we see every sunday in the local papers. Unbelievable dollar amounts off and then you get there and that is just on ONE vehicle that just sold and the other 40 are not included in that price. But....the valuable point here is that might foreshadow the fact that these 04´s are not selling like the powers that be had hoped for. Kind of like the Chevy SS which I believe is now being advertised for about 8k cheaper than sticker in the papers. This might be good news for upcoming honest to god Ford announced rebates on our trucks.

 

I don't understand why you asked in the first place, therealist. You asked why people insist on buying for invoice, then when Brewmaster told you why, you explain something that has nothing to do with your original question. I hope I'm not the only one that's confused.

Now I don't know much about the way they come up with the pricing, but from the sounds of it, you are applying some OTHER knowledge you have to the pricing of cars. Can someone please set the record straight because I am EXTREMELY confused.

This post is not meant to offend, I'm just trying to figure out your reasoning behind the content of your posts.

 

Remember where these dealerships get their money. You sign a contract to to pay x amount by y many payments. These contracts are then sold to another entity (ex. Ford Credit) for the present value amount that the contract is worth. The key to all this is "time value of money". The sooner they get your money, the less risk they have to bear and the more money they make.

In therealist's example, he stated he put down "most" of the cost up front. Assuming that to mean 50% or greater of the purchase price, the dealership received most of their money immediately. Because of this, their burden of risk was greatly diminished and thus they were able to offer a substantially cheaper price to therealist.

 

The bottom line is, dealers don't pay this 'invoice' price for each vehicle they have on their lot. That number is a carefully selected marketing tool. Large dealers make huge amounts of money.
A buyer should factor all the information they can gather and go from there. Just don't be mislead. As far as what dealers actually pay for their F150's? The exact numbers would be known by the top few managers/owners of the dealer and the Ford consultants they deal with.

 

This is exactly why most folks go by Invoice. It is a hard # that nobody disputes. Maybe you can offer some insight on how to negotiate the price of a vehicle (lower than Invoice) with a dealer. The standard is most commonly "invoice" and dealers/managers/owners etc are not going to negotiate below the standards. what is the argument that we can present to them without knowing the real cost?

And yes, I understand your point that Invoice is just a marketing number, but given we have no other tools for negotiation, invoice is it.

 

Speaking of invoice pricing. I'm attempting to work with Red McCombs in San Antonio on a price for a Supercrew fx4 here through a salesman who is a friend of the family. I'm getting hints from his people that my 2-3% over invoice offer, (which is probably still too much) is not gonna happen due to the "supply and demand" issue the dealers have right now. Correct,........I don't see dozens of these trucks just sitting around on the lot, but, this is no rare Italian sports car either! Is this just their typical talk or should I try something else. This is a big-time dealer in the area and It doesn't sound like you other new '04 buyers out there were having a hard time finding an available truck for an invoice offer, right!?! Any ideas?

 

If your gonna talk Invoice, then use $$$, not % (percent)
Ex. I am willing to pay $200 over invoice for that truck. It becomes much clearer to everyone what the actual price you pay will be. You can go in with an Invoice from Edmunds.com and make your offer. I suggest going to a few dealers, your friend is no bargain. Also, these trucks are "not" flying off the lots either.

Good Luck!