[lcbrownz]

Originally Posted by Potroast

When I bought my Tacoma, I paid $50 over so-called "invoice" price. This is a crock, because I know that the sales people at Toyota of Orange (where I bought it) get $75 commission for any vehicle sold. If I paid $50 over the dealer's cost, they lost money -- which they surely would not have done.

Through a reliable source within Toyota Corporate, I found that Toyota of Orange, along with any decent Toyota dealer is paying roughly $8000 below the supposed "invoice" price when all is said and done. So I got a great deal on an awsome truck, and Toyota of Orange made roughly $7925 on me. Worked out great for both of us.

The point of this is that the price that someone "pays" for something isn't neccessarily the monetary figure changing hands.

As another example, I worked at a company that sold computer components. We were owned by a wholesaler. The invoices and packing slips we got with each daily shipment had the normal "wholesale" price on them. Inventory was calculated with these. Margins were set with these. However, since we were owned by the parent wholesaler, we actually only paid the COST of the item -- not wholesale. I equate this similar to any large car dealer with good ties to corporate.

The size of the discount a dealer receives from the manufacturer is in direct proportionment to how many vehicles are sold by the dealer. Most vehicles are sold on consignment from the manufacturer for the first 90 days. If the vehicle is sold during that time, the dealership receives a 3% commission and does not have to pay taxes on the vehicle. The dealerships, also, receive a volume discount fr om the manufacturer, based on whether they make their monthly projections. The more volume the more discount. The longer the vehicle is on the lot, the less the dealership receives. Plus, over a certain period of time, the dealerships are taxed on the amount of inventory by the local governments.

This is why large dealerships can swing better deals.

p.s. Due to these discounts, the dealer invoice amount is a just a number what dealership would have to pay the manufacturer if the vehicle was never sold.