Can you get a discount even on the dealer’s invoice price? Let’s understand this in detail and find out what is the possibility of buying a car at a better deal.
It is important to verify the vehicle-related documents when you are buying a car. Car invoice is one of those. Before you complete your transaction, you should verify the invoice to make sure that you are paying only for what you are getting. This article is about the possibility of buying a car for a price that is below the amount decided by the dealer and mentioned in the invoice.
The car invoice document has the details of the vehicle price breakup and the total amount to be paid by a customer before delivery of the car. The different components that make up the final price include various different components. The car invoice price is nothing but the final price or the on-road price of a vehicle. On-road price = Ex-showroom price + Registration charges + Insurance + Additional charges
Ex-showroom price is the price fixed by the car manufacturer. It includes manufacturing cost, logistics, dealer margin, and taxes.
Additional charges include the extended warranty, FASTag, roadside assistance, etc. that you opt for additionally from the dealer.
The dealer generates the invoice once the model you selected is available which you will receive after settling the final payment.
Dealer Invoice Price
For the dealer, rebates and discounts decrease the dealer’s cost down from the invoice price. Dealers are eligible for these discounts depending upon their sales numbers, thus decreasing the dealer’s final cost further. The dealer can give you quotations that mention the dealer prices before you book. You should also know that your dealer cannot generate an invoice before you book the car.
Invoice and quotation are different from each other and let’s look at the difference between them here in the table below.
|Quotation||Car invoice price|
|A quotation is available on request.||The invoice is available only after you book the vehicle.|
|It has the estimated final price of the car.||It is a financial document requesting the final payment.|
|The quotation price can change due to price fluctuations like the price of the car, accessories, services, etc.||This is the final price of the car.|
Now that we know enough about invoice price, we should also see if it is actually possible to get the dealership to sell a car below the price mentioned in the invoice. This can happen and there are a few reasons for it like the special promotion deals, holdback and the dealership’s income from financing.
Carmakers run special promotions for dealers, for them to sell a particular car model in a certain month. This happens when the company wants to clear out the previous year’s models to get ready for a new model that year. If that is the case, then the dealers can afford to sell a car below the invoice price if they are getting promotion deals in the form of a cash bonus.
Holdback is the reward for the dealer from the manufacturer for selling a car. This holdback is another reason for the dealer selling the car below the price of the invoice. It is different from the special promotion deal already discussed as this holdback will be for every unit sold. Selling a car below invoice can still be profitable for the dealer after they receive the manufacturer’s holdback.
Income From Finance
The dealer will also sell the car below invoice when they stand to earn more money through interest over the loan term. In that case, the reduction you receive on the final price will not be their loss exactly. This particularly applied when a buyer opts for high-profit dealer extras like an extended warranty or any other products.
These reasons may stand to explain why and if the dealer goes below the final invoice price. But in the current scenario is it practical to expect it?
Firstly, you can expect this only on outdated models and the models the dealerships and the automakers are trying to clear out for any number of reasons.
Secondly, the current market condition in the automobile industry is extremely fluctuating. Even the bigger brands are muddling through various crises trying to supply cars to the consumers who have already booked and paid for them. Manufacturing has been affected due to the COVID-19 pandemic, the semiconductor shortage that led to a worldwide lapse in production and finally the economy that is struggling to rise back. An increase in demand, sales, and vehicle prices all have contributed to continually rising transaction prices.
This has resulted in the new cars being available only in reduced supply. The only thing that came from this is the hike in prices and not the incentives. This means, that expecting to buy cars below the dealer’s final price might not be possible realistically.
On a final note, we should always negotiate what we could get for our car, whether it is below the invoice price or not. Choose the right car for you at the right price and get the best deal that is out there!