Dealer New Car "Hold-back"

  If you have done any researching of new cars what so ever. You may have heard this term "hold-back" thrown around in regards to dealer invoices.

  What hold-back simply refers to is basically an overhead buffer below the dealers net cost on the invoice. It is a figure assumed by the dealership that covers any overhead cost that vehicles may incur during it's wait at the store before it finally makes it to it's final destination. Your garage. The fact is most dealerships may spend in a month what you make in a year just on advertising alone. Some may have advertising agreements where a bunch of dealers "chip in" to regionally promote a brand. That Ford commercial you saw on tv last night may have listed a half a dozen dealers at the end of it. This is a perfect example of what I am saying.

  In all fairness to a dealership the hold-back in the invoice is a legitimate cost. However, to the consumer that knows it is there it is often viewed as just another way that dealers try to hose you. If every dealer owned every car on the lot and didn't pay interest on them, they didn't have to advertise, or if the store ran solely on solar energy. The hold-back could go away. That just simply isn't the case and it will always remain a necessary evil in the car industry. Very rarely did I ever see anyone get too far into a dealer hold-back on a car deal and if they did it was minimal.
 
  How much hold-back is there on a new car. It's going to vary from car to car but initial cost of the vehicle plays a substantial role. I have seen as low as $500 on a car starting around $13k or so and as high as $1100 in a vehicle priced around $60k. Whether or not you can get your hands on some of this extra cash is up to you.

  I will say that whenever we did get into hold-back money on a car deal it was typically when I was an Internet manager and I was giving quotes to people shopping me against other stores on a particular vehicle. It just turned into a competition between me and the other stores of who was just going to even get the deal, not so much the profit at all. One thing is for certain, dealers are there to make profit. However, if the profit is not there to be made. There is always the "free" advertising. Now you are probably thinking, what is this guy talking about?

  What I am saying is that if a dealer cannot make any money on you and he knows you are shopping them. Depending on how competitive that store is with the others of the same brand in their region. They want the deal out of pure spite. They want you driving your new car around that you bought from them with THEIR LOGO on the back and around your license plate. They are willing to solely ride on the fact that if they "give away" a car to you maybe there is some chance that they may at least sell a few more cars that they actually will profit from because other drivers saw their logo on the back. It's a strength in numbers game.

  While I cannot tell you how to get into this money on a car deal and even if you do don't expect too much. There isn't a dealer in the world who would be willing to openly discuss what it is with a possible patron. I just wanted to explain it's purpose and why it even exists. With that said in my experience as an Internet manager I probably quoted more prices below invoice than I ever did in my whole time of selling cars. My advice, submit inquiries online via email and kindly let them know you are doing your research and shopping them. you may not want to bring that up when you first engage communication though. See what they can do first. There will ALWAYS be one store out there who is willing to accommodate and earn your business. Let them decide which one of them it is going to be.

Posted in: buying a new car,Car buying tips