Difference between Invoice and Reatil Price?
03-20-2003, 04:30 PM
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Difference between Invoice and Reatil Price?
Ok i am planning on buying a E500 soon so i checked the price with options on www.kkb.com (kelly blue book) and i added all the options i was looking for. When i looked at the price there were to categories one was Invoice Price and other was Retail Price. Invoice came out to be 61,336 and Reatil came out to be 65,735. So can someone explain whats the difference between them? And when you go to a dealer when he gives discount.. Which price does he give the discount off the Inovice or Reatil price? Plz help me out ....
03-20-2003, 05:01 PM
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The retail price on KBB is the MSRP - the manufacturer's suggested retail price... this builds in a profit for the dealership... in the case of MB it is usually about 6.75% over what it costs the dealership on paper...
The invoice price is the price on paper that the dealership (supposedly) pays the manufacturer for the car... Realize that there are lots of costs for the dealer... the location and rent on that... all the salaries and commissions they need to pay out... all the maintenance, office supplies, electricity, etc... Advertising for the car... also... dealerships are usually paying interest on any cars sitting on the lot. The longer it sits on the lot, the more it costs them. Plus lots of other factors (you can read up on all this at various places on the web... just do a search...)
So most likely, the dealer will give you a break on the MSRP. If the car is very popular and hard to get, he can even charge OVER MSRP and get it from someone... if not you, then the next guy who comes in the door. This creates a bad attitude from the dealer.
It is also possible for a dealer to SOMETIMES sell you a car, below their own invoice... Remember, Invoice is what a dealership pays for a car on paper... There are various manufacturers which at various times, will give dealers incentive. There are all kinds of incentives from monetary to "Bonus cars" A manufacturer (don't know if MB does this, but others do... will give a dealership a "free car" for selling a certain amount. A dealership owner can just keep this car... give it to a salesman as an incentive prize... burn it, whatever he wants... OR, he can sell it. So in reality, you never really know what a dealer REALLY pays for a car. The best you can do, is go into a dealer and strive for/bargain/haggle for some price which is dealer invoice PLUS some dollar amount or percentage.
Keep in mind that in the long run, you want your dealer to be able to make money... you don't want him to go out of business... you want to make a deal which is fair for both parties.
-NavNut
The invoice price is the price on paper that the dealership (supposedly) pays the manufacturer for the car... Realize that there are lots of costs for the dealer... the location and rent on that... all the salaries and commissions they need to pay out... all the maintenance, office supplies, electricity, etc... Advertising for the car... also... dealerships are usually paying interest on any cars sitting on the lot. The longer it sits on the lot, the more it costs them. Plus lots of other factors (you can read up on all this at various places on the web... just do a search...)
So most likely, the dealer will give you a break on the MSRP. If the car is very popular and hard to get, he can even charge OVER MSRP and get it from someone... if not you, then the next guy who comes in the door. This creates a bad attitude from the dealer.
It is also possible for a dealer to SOMETIMES sell you a car, below their own invoice... Remember, Invoice is what a dealership pays for a car on paper... There are various manufacturers which at various times, will give dealers incentive. There are all kinds of incentives from monetary to "Bonus cars" A manufacturer (don't know if MB does this, but others do... will give a dealership a "free car" for selling a certain amount. A dealership owner can just keep this car... give it to a salesman as an incentive prize... burn it, whatever he wants... OR, he can sell it. So in reality, you never really know what a dealer REALLY pays for a car. The best you can do, is go into a dealer and strive for/bargain/haggle for some price which is dealer invoice PLUS some dollar amount or percentage.
Keep in mind that in the long run, you want your dealer to be able to make money... you don't want him to go out of business... you want to make a deal which is fair for both parties.
-NavNut
03-20-2003, 05:17 PM
#3
invoice is what the dealer pays mercedes for the car, MSRP is what mercedes recommends that he sell the car for, but the dealer can sell it for anything he wants to sell it for. Keep in mind that these dealers actually have to buy the cars from Mercedes and keep them on their lots.
So you may ask, why would a dealer ever sell for invoice price, he would not make any money? Bunch of factors:
(1) dealers don't want to keep a lot of inventory on hand, and the amount of cars they are allowed to buy the next year depends in part on how many they sell this year. So many dealers will discount from MSRP to invoice price or less to "get rid" of cars that have been sitting around for a while. That is why you see a lot of "invoice price" or "under invoice" type advertisements towards the end of the model year when dealers need to get rid of the existing inventory.
(2) Dealers get "kickbacks" from mercedes, so even if they sell a car at invoice, they get 5% (I believe) as a kickback from mercedes. So even at the invoice price they make 5%, but remember they had to pay for the car when they bought it, so they have lost a lot of interest. The longer the car stays on the lot, the more eagerly they want to sell it.
So you may ask, why would a dealer ever sell for invoice price, he would not make any money? Bunch of factors:
(1) dealers don't want to keep a lot of inventory on hand, and the amount of cars they are allowed to buy the next year depends in part on how many they sell this year. So many dealers will discount from MSRP to invoice price or less to "get rid" of cars that have been sitting around for a while. That is why you see a lot of "invoice price" or "under invoice" type advertisements towards the end of the model year when dealers need to get rid of the existing inventory.
(2) Dealers get "kickbacks" from mercedes, so even if they sell a car at invoice, they get 5% (I believe) as a kickback from mercedes. So even at the invoice price they make 5%, but remember they had to pay for the car when they bought it, so they have lost a lot of interest. The longer the car stays on the lot, the more eagerly they want to sell it.
