What does Dealer Invoice Price consist of?

[KenD245]

On Kelley blue book or Edmunds you can get MSRP and dealer invoice price. The dealer invoice price consists of the base vehicle plus any options you may select plus freight.

However when I purchased my car the dealer informed me that advertising cost that are charged directly by General Motors to the Cadillac dealer must be added. These charges are identified as Dealer IMR contribution and LMA Group contribution. For the CTS they totaled about $1000 for my car and the dealer told me that to arrive at dealer invoice price these charged had to be added.

Do all dealers get charged for Dealer IMR contribution and LMA Group contribution (ie advertising chages)?

What has your expereince been?

[Cadillac Tony]

LMA and LMG costs are real charges to the Dealer if they are part of a local Ad group- they fund the print and TV ads that say "Visit your local Dealer" and list all the area stores at the bottom. Not ALL Dealers are part of one, but most are.

It's a legitimate charge that adds to the Dealer's actual cost of the unit.

[Zymurgy]

[quote=KenD245;1552844]... Do all dealers get charged for Dealer IMR contribution and LMA Group contribution (ie advertising chages)? ...[quote]

No, not all dealers participate. Also, if you qualify for a GMS (Employee) or GMU (Supplier) certificate and use one to buy your car, advertising is not added.

[Funman]

Pays to shop around.

You can start with the Consumer Reports to get an idea of what you can get down to.

Then let the games begin

[MoFex]

Advertising cost is simply cost of doung business. I do not agree with dealer adding it to the invoice price.
It is just out there to make more profit. I do not care if a dealer advertises or not. It is up to him.

[Cadillac Tony]

This has been covered in many threads already, but apparently is still not understood.

LMG and LMA Advertising costs are charged to the Dealer by the Manufacturer- they are not a way for the Dealer to make more profit. In fact, it reduces our profit on the sale by roughly $1,000 per unit.

[didjital|]

[quote=Zymurgy;1552937][quote=KenD245;1552844]... Do all dealers get charged for Dealer IMR contribution and LMA Group contribution (ie advertising chages)? ...

No, not all dealers participate. Also, if you qualify for a GMS (Employee) or GMU (Supplier) certificate and use one to buy your car, advertising is not added.

Odd, I got GMS employee and the two are added to my invoice.. $487.95 each.

[jjsC6]

Originally Posted by MoFex

Advertising cost is simply cost of doung business. I do not agree with dealer adding it to the invoice price.
It is just out there to make more profit. I do not care if a dealer advertises or not. It is up to him.

I agree with Tony. I've bought a lot of cars, and have some good friends in the business. When a buyer negotiates a "invoice" based deal, you are accepting what is on the invoice. Advertising is there, just like destination charges are there. You are welcome to try to negotiate those charges, but they are on the invoice.

On the other hand, if you negotiate a price that is not based upon an invoice deal, then the dealer tries to spring the advertising fee on at the last minute, I agree that it should not be included.

Also, I agree with Zymurgy, I've bought a lot of vehicles at GMS (employee) and you do not get charged the advertising.

[The_Judge]

FWIW, here's what Consumer Reports has to say on the subject:

WHAT YOU DON’T SEE ON THE WINDOW STICKER

Dealer invoice price. This is the price printed on the dealer’s invoice from the manufacturer. However, this isn’t necessarily what the dealer actually paid for the vehicle. There are often behind-the-scenes bonuses, such as dealer incentives or a holdback, that give the dealer more profit margin. Looking beyond the dealer invoice price can sometimes save you hundreds of dollars.

Rebate. A rebate is a direct-to-buyer incentive from the manufacturer. Since it comes from the automaker, disregard it when negotiating with the dealership. You will get the same rebate no matter what price you pay for the vehicle.

Dealer incentives. This is money that the manufacturer pays the dealer for selling certain, usually slow-selling, models. This money can be passed on to the buyer in the form of a price reduction, or kept as added dealer profit. This is how a dealer can afford to sell a vehicle for “dealer cost” or below. These programs come and go quickly and aren’t announced to the public. Buyers can learn about dealer incentives on some autos-pricing Web sites or through Consumer Reports New Car Price Reports.

Holdback. Most manufacturers offer dealers a percentage of the MSRP, or a percentage of the invoice price, as a refund upon sale of the vehicle. The typical holdback is 2 to 3 percent, meaning a dealer can still make a profit on a vehicle sold for "invoice," even without dealer incentives. Holdback information can be hard to find, although it is listed in Consumer Reports New Car Price Reports.

The dealer’s true cost. This is the dealer invoice price, minus any incentives and the holdback. To get the lowest price, begin your negotiations with a starting price that is about 4 to 8 percent over the dealer’s true cost. You can get a close estimate of the dealer’s true cost with the CR Wholesale Price, which is included in our New Car Price Reports.

[Cadillac Tony]

FWIW, Here's what someone who actually works in the business has to say about it:

WHY DEALERS CAN'T GIVE CARS AWAY FOR NOTHING

Salesman's Commission. Believe it or not, most Salespeople are fine, upstanding people who are trying to make a living and feed a family- just like you. Contrary to popular belief we have skin under our shirts, not green reptilian scales. Part of the money the Dealership makes gets paid to the Salesman in the form of a commission, and therefore is not Dealer Profit. No profit means no Commission, which means no food. Dealers can't keep employees if this happens.

Cost of doing business. You know that great coffee in the customer lounge? How about the nice car wash service when you come in for service work? The guy who preps your car before taking delivery? How about that air conditioning in the showroom? These often overlooked luxuries are referred to as "Operating Costs", and require an expenditure on the Dealer's part in order to provide these services to our customers, and therefore is also deducted from whatever profit is made on each sale.

Advertising Costs. As I explained earlier in this thread, Cadillac charges almost $1,000 per car to the Dealer for our name to be included in the ads you see on TV and in the Newspaper. Edmunds and other such web sites don't mention this (except in the teeny tiny print at the bottom that no one reads anyway). 90% of Cadillac Dealers in the US participate in this program, so in most cases the "Invoice" price you find on the Internet is $1,000 wrong.

Profit. The dirty word no one wants to hear. Believe it or not, you paid it on every piece of merchandise you own. I know it might pain some people to realize that they didn't get the store to give up the holdback on that new watch they're wearing or the shoes on their feet, but making a profit is why we all go to work or run a business- both to cover the aforementioned items (commissons and operating costs) but also for material gain. I'm sure each and every one of you would not work for minimum wage, nor should a Dealership be expected to give a car away and not make holdback, incentives or profit.

I'm not suggesting people should pay MSRP, but all this talk of "gimme gimme gimme- the profit, the holdback, the incentives- EVERYTHING!" is ridiculous. Find a car you like, decide what you think is a fair price for it, and if the Dealer will accept your offer- you bought a car. It's so much easier than people make it, and there's no need to lose sleep over the fact that the people you bought it from might have actually made a few bucks for helping you.

I realize that posting this on an Internet forum is like asking to be set on fire, but that's how we Professionals feel about it. We're the only people in the world that public expects to work for free, and it's honestly both insulting and aggravating.

[thebigjimsho]

If the salesman doesn't let you get down to a price the buyer thinks is fair, he's just a slimeball. If that is accurate, then the buyer who demands that the price be something the salesman doesn't think is fair is just as much a slimeball.

Investigate prices online. Call dealerships before going in and get ballpark prices. Then go shopping in person and try to get a price you like. If you don't, readjust your thinking and try again.

A friend of mine was shopping for a Chrysler Town and Country. She only talked to dealers on the phone. She let them whittle the price down amongst themselves. When she got a price she liked, she sent her husband to sign the papers.

There are pricks on both sides. Too bad it seems to sour the process for the rest of us...

[Cadillac Tony]

A buyer is entitled to a reasonable price, and a seller is entitled to a reasonable profit. That's all I'm trying to say.

[jjsC6]

Originally Posted by Cadillac Tony

A buyer is entitled to a reasonable price, and a seller is entitled to a reasonable profit. That's all I'm trying to say.

Tony, you and I have had some dissagreements, but you'll be happy to know that I am all for what you are saying. I've bought 54 new vehicles now, and am extremely loyal to the dealers who take car of me. One thing I have done more than once is pay a premium to a dealer who tells me the truth and does not play games. I refuse to reward dealers who try to deceive me.

But that does not mean that there is anything wrong with straight up negotiating. I'm in a "sales" job where I'm responsible for our overall sales and service to very large fortune 500 companies (as is the company I work for). I know what it's like even at that level to be jerked around. I've believe in honesty and integrity - and if the customer can't handle it, it was not meant to be.

And I agree with the post above who said that there are slimeball customers also - I've known a few.

[TaVern]

This is an interesting thread, as it gives everyone an 'insight' to dealer workings and practices. It's nice to know that not ALL dealerships are out to screw people.

Thanks to Cadillac Tony.

[Frank Rizzo]

Right on Tony!

I was a salesperson many years ago.

Sooooo many people get really worked up about what they paid for a car, fearing that they might have left a little cash on the table but will freely walk into Best Buy and pay full list retail for a dishwasher and dont give it a second thought.

But if you ask me, we (car sales people) did this to ourselves. I can remember
"burying" people in cars over the years - all I cared about was "rolling a unit" so I could get my spiff. Those days are long gone with the advent of this internet thingy, anybody can research the pricing info and get multiple quotes on vehicles...but the stigma of the oily car sales guy lives on.

FWIW, my pal is the Director of Fleet Sales at a huge GM dealer here in Los Angeles and he tells me that he has to charge the fees on GMS and GME sales otherwise he eats them. My boss bought a new Escalade last week and got GME and paid advertising fees of about $749.
.