Iowa Jeep Car Dealers

5% Invoice Price Cut on Leftover '05's? by anduril on Sun Nov 13 23:37:38 PST 2005

...into the parts department of a Jeep dealership in the Sacramento area, where I live, on Sat. to inquire about trailer hitch accessories for the new Laredo I bought in IA two weeks ago (see my post #282). Nice sunny and warm weekend afternoon - the kind that usually brings out buyers. The showroom was empty and there was only one "up" on the lot, so I engaged a salesman killing time and asked about incentives currently available on '05's still in inventory. I asked, "In addition to the direct customer rebates that DC is currently offering customers on '05 models, is the manufacturer providing any incentive to dealers?" He said, "Yes." I then asked if the incentive is a 5% reduction in the invoice cost and he replied that he didn't know, but reiterated that an incentive exists in some form. It's my understanding that most auto manufacturers grant Edmunds access to internal company Web sites where manufacturer-to-dealer incentives are listed. Edmunds then consolidates this information and posts it. However, Edmunds does not list any such incentive (i.e., marketing support) on �05 JGC's at the present time. But other incentives that not even Edmunds has access to can exist. In fact, before the days of direct customer rebates a 5% (of MSRP) discount by U.S. and most foreign auto makers was common practice at the end of the model year. Dunno for certain, but based on my buying experience and that of a few others on this board since the end of Employee Pricing, I suspect that that is the case today, even with the juicy customer rebates. (That should tell you how slow business really is!) So, when determining the current invoice price of an '05 left in dealer inventory, as well as a reasonable purchase price, I suggest you make the following calculations: adjusted invoice price = Edmunds invoice - 5% of MSRP (with the destination charge included) purchase price = adjusted invoice price x 1.03 � direct manufacturer-to-customer rebates For argument�s sake I assume that a 3% (of invoice) profit, before rebates are applied, is fair and reasonable. Offer 4% if you feel generous, but with a 3% profit your salesman shouldn�t try to work you to death over incidental dealer costs and regional charges, like advertising. (And note that the dealer still gets the usual holdbacks.) Of course, you can try to work deals even closer to invoice. That�s your decision. After all, bus is competitive and slow, and you won�t embarrass yourself in the store if you try. So...what evidence do I have for a 5% end-of-model-year discount on leftover �05�s? Only circumstantial and, yes, the discount could - repeat, could - be greater than 5%. A message posted last week on the Lease Questions discussion board in this forum described a deal with a 2.5% profit by my calculations. (See my posts #8 and #10 on that board.) Furthermore, when I bought my Laredo two weeks ago my dealer offered a purchase price, before rebates, nearly $680 below Edmunds' invoice. That left the store with about 3.7% profit, not including holdbacks. I didn't even ask for the discount and, yes, I might have been able to negotiate a slightly better price (by $100-$200, say), rather than accept the offer. (Sigh.) I did insist that the store waive its usual doc fee and it did - reluctantly. Bottom line: just about anyone who can fog a mirror should be able to get a great deal on a leftover �05 if he or she assumes that, in addition to the direct customer rebates, a manufacturer-to-dealer incentive in the form of an invoice price cut, say 5% of MSRP, also exists.

'05 Laredo Purchase $7,500 below MSRP by anduril on Sat Oct 29 17:18:09 PDT 2005

...purchased a 2005 JGC Laredo 4x4, 3.7L today in Council Bluffs, IA (Omaha metro area): MSRP: $28,325 base price 0 pkg 26E 180 AHT (trailer hitch) 695 destination ------------ $29,200 total Edmund's invoice: $26,024 base price 0 26E 158 AHT 695 destination ------------ $26,877 total Purchase price: $26,877 Edmund's invoice -3,500 Jeep cash allowance -1,677 other discounts (see below) ----------- $21,700 purchase price plus title and license fees ($10), sales tax, and state reg fee. No other doc fee. No trade in transaction. The $1,677 (other discounts) included a $500 military rebate (I am a vet) and a $500 Jeep loyalty discount (I am an owner of another Jeep). My salesman told me about these incentives. I was not aware of them and neither Edmund's nor Jeep (www.jeep.com) currently lists them. Hence, I suspect they may be dealer incentives, only. (Please correct me if I'm wrong!!!) Edmund's TMV for this vehicle in my Zip code: $27,057 - $3,500 (Jeep cash allowance) = $23,557. Thus, TMV ~$1,850 above purchase price. This purchase is the second I have made in the last two years at a price substantially below TMV. (The last - a 2004 Toyota Sienna in Nov. 03).