New Car Invoice

-Dealer Invoice is the price the car dealer pays the manufacturer for their new cars.

 

For example, “Mercedes Benz” is the manufacturer and “Mercedes of Chicago” is the Dealer. “Mercedes Benz” sells the new cars to “Mercedes of Chicago”, which they will then sell to their customers.

 

Obviously, “Mercedes of Chicago” must purchase their cars from "Mercedes Benz" for less than they intend to sell them to the public. 

 

Dealer invoice is a relative cost to the vehicles MSRP (Manufacturers Suggested Retail Price). The MSRP is the sticker price from the factory, it is known in the business as the “Monroney” Sticker.  By law, it must be displayed prominently on every new vehicle.

 

The “Monroney” sticker must include the following information:

The manufacturers suggested retail price

Engine and transmission specifications

Standard equipment and warranty details

Optional equipment and pricing

City and highway fuel economy ratings

 

The difference between the MSRP and the dealer invoice is the amount of "Front-End" profit allocated for each car. Of course, some cars sell for less than MSRP and some may even sell for more, never the less; the invoice will remain the same.

 

Dealer invoice is approximately 6% to 7% less than the MSRP.

Therefore if a car’s sticker price is $20000 the dealer’s estimated cost is about $18,600. (Keep in mind, this only an estimate.) Each car manufacturer has their on costing structure.

 

Also added to the dealer invoice can be some regional costs. The most common addition to the invoice is a regional advertising cost.  Keep in mind; this is not used to pay for only “Mercedes of Chicago’s” television ads.  A customer should not treat it as though it isn’t a hard cost, this will show the customer’s lack of knowledge about the industry. 

 

These regional advertising costs usually occur when there are several franchises in the same general area and they pay for the regional advertising campaigns that are produced by the manufacturer.

 

...the “Pack” it is not a hard cost from the manufacturer. Therefore, in can be excluded when the customer is calculated the invoice cost.

For instance, if you live in San Francisco and you see an advertisement for Bay Area Mercedes Dealers; the Mercedes Benz dealers that are located in the Bay Area were charged an extra amount to their invoices to pay for those ads. 

 

Another common addition to the dealers invoice is called “dealer pack”.  The “pack” is meant to pay for the basic functions of the company, like the electric bill and rent.  Although the sales department does not receive any commission from the “pack” it is not a hard cost from the manufacturer. Therefore, in can be excluded when the customer is calculated the invoice cost.