Hi all. This is my first post. My wife are seriously considering a CGP Tech, and I'm "working the numbers".

When it comes to figuring dealer holdback, I've seen two different answers. Edmunds says Acura figures 3% of base MSRP. I saw another poster (maybe on another board) indicate that it's 3% of invoice. As you might imagine, the difference is significant. I want to have all my numbers accurate before I put my spreadsheet in front of the salesman.

Can someone please respond with the correct method?

I'm enjoying the board so far--lots of great information

David

 

I would imagine it would be invoice, but I don't know for sure....Pelase keep us posted, we love negotiation stories.

 

Holdback is 3% of base MSRP

 

Thanks for the help!

I've been following the news about sales numbers for this model, and I was hoping to take advantage of the poor sales results when making my deal. Now it seems they're selling better. I may not have as much negotiating advantage.

I really wish they had some rebates or something to make me feel better about the selling price.

My last purchase was a 2004.5 Dodge Ram deisel. I got it for $800 below invoice, $2000 cash back, $500 Farm Bureau rebate, AND 0% financing.

I'm spoiled!!!

David

 

I recently just quit the local honda dealership here, but i learned a few things, and this should apply to acura as well. There will be no manufacturer discount, only discount from the dealer which will not go below invoice unless they have some kind of dealer cash they arent telling you about (which happens all the time actually). On a new body style or line its unlikely to see much incentive, but if they are selling slow (CRV's were flying out of the showroom) you need to argue that. honda's usually get 8-10% in profit (about 2 percent of the MSRP in holdback) so calculate 10% of the msrp, subtract that and get a difference, subtract the difference in msrp with what the invoice is, and theres you holdback in cash. That is something most dealers wont dip into in terms of price because then it shows them selling a car at a loss regardless of what the factory pays them later for moving the unit. hope this helps

 

Good luck negotiating into holdback. Hold back is not profit, it covers operational costs of running a dealership. I have never heard of a salesperson who gets paid from holdback, they get paid off of profit over invoice.

If you want to deal in holdback, spend 10 million and open a dealership.

 

I may not get anywhere trying to dip in to their holdback, but it's not that outlandish to start there with an offer and see where it goes. They start at MSRP as their default first offer--I'm not offended, just amused. If they laugh at my first offering, all the better to break the ice. The dealership will make money any way the deal goes, whether it's unit bonuses or proceeds from the finance arm (we will be financing.)

The important thing about knowing all the costs involved is to start on an even playing field. They will know that I know what they know. Then it's just a matter of negotiating a selling price that we're both happy with. I have no problem with them making money off of me. I do have a problem with them crying about not making any money, when they know, in secret, that they would do just fine.

There are enough impetuous buyers out there who become emotionally involved with a car, and they don't take any time to learn the numbers. Because of folks like that, the dealership will pay the light bill each and every month, even if they don't make as much off of me.

 

I e-mailed a couple of local Acura dealers and got an offer for $500 below invoice for a RDX Tech. This is for a cash purchase. Is that $500 coming out of the holdback or are there some other corporate incentives going on right now?

 

I guess it depends on how you define "profit". It's based on the price of the car so I'm not sure why that would be the basis if it was operationally based - average inventory size, or number of cars ordered would be a better indication of operational costs.

Also, I'm not sure of this, but isn't holdback paid when the car is sold? Again, why tie it to an incentive-based event if it was for "helping run the dealership"?

All in all, it sounds like it is a reason for the dealer to want to sell a car and so that translates into negotiating leverage for the buyer whether you want to call it profit or not.

And, regardless of labels, RDX buyers have been negotiating below invoice on these cars. Call it "cutting into the holdback" or call it "helping them dump a capital liability", either way it's the same effect - the invoice is not the bottom line.

If they want to save face and you are trading in a car you may find that they are willing to give you a really nice price for your car in lieu of going below invoice - again, they are getting rid of something that is costing them money so they are willing to accept some compromises even below invoice.

 

It doesn't necessarily have to "come out of" anywhere. If they have a large stock or RDX that aren't moving then that is costing them money - either because they are financing their stock or by taking up space on their lot that could be holding better selling cars.

There is no law against them selling you a car below the magic number on their invoice...

 

The holdback is not tied to any incentive program. There are also no volume bonuses paid by Acura to the dealers. The amount of cars you sell is tied to the amount of cars you get from Acura (allocation).

One of the parts people miss is that dealers finance their cars, they don't pay cash for them. Another part of holdback is to help pay the finance charges while the car is on the lot. This also goes hand in hand with "dealer cash" or Marketing support" incentives (currently there are none on the RDX). When the manufacturer puts out dealer cash, it is to help level off the losses dealers take when the manufacturer stuffs them with inventory.

In the end of 06, there was 3500 dealer cash on the MDX. Most dealers had 75 to 100 of them on their lot, maintaining that level of inventory was painful for the dealership financially, so Acura give them a little bonus to even things out.

I'm not saying don't try to negotiate into holdback, just don't walk away from a great vehicle because you couldn't buy it for less than invoice.

 

Do they get the holdback whether or not the sell the car? If they have to sell the car to get it then it is effectively "an incentive" (lowercase) whether or not it is tied to an official program that has the word "incentive" in its title.

Also, the comment from salespeople that the holdback goes to the owner and so they don't see any of it isn't really the end of the story. The owner is also the one feeling the pain of the inventory and so is the one who is in charge of setting strategy for the sales force, as in "get rid of those dang RDX's laying around here". Either way, it speaks to the overall willingness of the dealership to sell the car.

If that were true then shouldn't it be a periodic payment for as long as the car is on the lot? I guess it is one source to offset that cost and mostly helpful for models that sell within their first month or so on the lot, but it isn't going to eliminate that cost from the sales equation (which means that cost is still a negotiating point in your favor).

Definitely true, but put up a fight first. Don't assume that it's the end of the story because one dealership stopped at invoice and told you "We can't sell the car for less than that" and wants to start spinning a tale about their true cost and what they can or cannot do. Try another dealer and see if they will go below invoice. Walk out of the first dealer and let them think about their resolve to hold out for invoice on the car for a few days then go back and remind them that you will take it off of their hands for lower than invoice.

There is a lot of sales rhetoric in this industry to try to convince you that invoice is a magic number that cannot be crossed, but they are really just playing on your emotions to give in and stop negotiating. The true cost of a car on a dealer's lot is the probabilistic "expected value" of how much they might get for it factored against the probability that a buyer will show up to pay that much - minus the costs to keep it on their lot while waiting for that event. For cars that don't "sell themselves" there are a lot of probabilities in that equation so who really cares about "invoice"?

 

>I'm not saying don't try to negotiate into holdback, just don't walk away from a great vehicle because you couldn't buy it for less than invoice.

I think this is a good point. If I were you, I'd consider looking at the sales thread and picking what sounds like a fair price to pay for the vehicle...fair to both you and the dealer. You might make it easier on yourself if you email several INTERNET MANAGERS of dealers in your region, tell them you're shopping several stores, and simply ask for their "best bottom-line, out-the-door price" (mentioning that you know that T-T-L will not be included but being sure to make sure that BL price includes any "doc fees" on the EXACT config (ext/int/base/tech) you want. I did this when I bought mine and it worked out well. I was able to use these collected prices as a lever to move one of my local dealers to the price I wanted. Strangely, my other local dealer came nowhere even close to where I ended up. And they had a lot of stale stock on their lot.

Not ALL car dealers are crooks; a lot of them are just regular folks like you and me. I spoke (again, in a friendly manner) with a GM in Dallas who I called after a less-than-stellar email experience with one of his sales guys. The GM was totally cool and very concerned about my bad experience with his sales guy...and genuinely surprised to learn that the quotes I was getting were as low as they were. After we talked, he matched the lowest quote and I very likely would have bought from him were he not located so far away. But there's also a good chance I would have made the trip if he had come down more on his price to make it worthwhile for me; same thing with a Chicago dealer. (I did buy my '03 S2K in Chicago b/c I saved nearly $2k by doing so.)

As an aside, my local salesman did not take kindly at_all to my mention of holdback. If I were doing it over, I'd simply not mention that at all (avoiding the possibility of mis/disinformation which is the subject of this thread) and just say, "This (x amount) is the price I'm willing to pay. Another dealer has given it to me; if you won't match it, that's okay — I will buy elsewhere, and thanks for considering it." If you are friendly and matter-of-fact (non-emotional) about it, you'd be surprised how much easier it is to buy a car.

Be sure to steer through the bs, b/c you will hear some of it as you are talking with so many dealers. Again, just stay professional and the losers will weed themselves out of your mix.

And then just see how it shakes out. Since I adapted this no-emotion but friendly stance, I have found auto shopping quite enjoyable.

 

If you're looking for the best deal possible, assk the dealer what there oldest unit is. That's the one that hurts them the most and they may be more willing to "cut there losses". You can also get a better deal if they mave the same car in the same color (twins, triplets, or quadruplets), if they have 4 carbon gray taupe RDX tech's in the inventory, they should be a little more motivated for a slim deal.

From my previous post's, some of you may have figured out that I work at a dealership (gearhead first, saleman second), believe me we're not all scumbags. I think one of the reasons people buy there cars from me is they always get honest answers and a great presentation of the car they are interested in with no BS. If you really want to get the best price on a car here's the best advice I can give....

Treat your sales person with a little respect (unless he treats you like an asshole, then walk). Your salesman is your friend, he is the guy negotiating the deal with the manager FOR YOU. If you treat the sales person well, they will be more likely to work for you to fight with the manager to get YOU the price that YOU are willing to pay. Remember, the sale person gets nothing if you don't buy the car, so believe me, he wants to negotiate to a price that you will pay.

 

Heh heh. I knew it. I can't blame you for helping us to understand the truth behind the numbers. The way I see it, the dealership will either sell me the car for a certain price, or they won't. We'll wind up with a deal, I'm sure. I doubt I'm going to miss out on this car over a few hundred dollars.

 

My advice is to not obsess on the holdback and invoice prices. Instead, focus on what the car is actually selling for. Troll the various internet forums where people discuss their buying prices. That will give you something to shoot for. Then, call or e-mail every dealer in your area and ask for their best price. Some won't give you quotes over the phone, but most will. I have a half dozen Acura dealers within 20 miles of my home. The closest dealer didn't give me the best quote, but I just took the best quote to them and asked them to beat it, which they did. I bought my RDX for about $600 under invoice with very little effort (a couple of phone calls and 15 minutes in the dealer's office).

 

I think that holdback is nice to know about but not really a negotiating tool. Like someone else posted if they start whining about "were losing money on the deal" then maybe say something but in the long run they are going to sell the car for what they want to. I have been working on my deal the last 2 weeks. Knowing what invoice was from this forum I had my negotiating point.

I had a trade in of a 2001 Nissan Frontier. Black book the thing is worth $5500 or so. I owed 6k. So I figured if I could get invoice plus break even on my truck I would be happy. That works out to be about $31750 OTD on a base here in FL.

Went to Dealer A. Tell them I know what invoice is. Tell them my payoff. Tell them I dont care how the do it I want $500 below invoice. They start with MSRP (high ball) I start at $500 below invoice (low ball). They appraise my trade and hand me a number of 33k OTD. I say let me think about it and walk out. Come back with check in hand and say $31750 OTD. They reappraise trade now at 7k I ask for deal in writing so I can present to my wife. Sales Manger says we have a deal. Here is the kicker...Come back next day No Nblk Pearl / Ebony base without roof racks. SM offers me diffent car...tell SM no thanks and walk. (they never offered to bring one in or work with me on the RR).

Take written offer to other local Acura dealer. Matched on the spot. Picked her up tonight for $31791 (variation in my p/o).

So hold back or not I got the deal I wanted. Price on paper before TTT was $30500 like I told both dealers I dont care what the numbers are on paper I have a check for $31750 deal or no deal!

Did I get a great deal on paper? Maybe, maybe not. But dumped a 6 year old truck with 126k miles with a bum a/c and in need of new brakes for 7k I think I did...

Just do your research, pick your price, dont get emotional, get your deals in writing, and be prepared to walk.

 

I think it's good to know what the holdback is, and be aware of any manufacturer-to-dealer incentives (uncommon for Acura, but they have been offered on the RL and the old MDX at the end of it's model run). That gives you an idea of the real bottom line that the dealer will want to make some profit on top of. But when negotiating, don't mention this info at all. A lot of dealers consider this to be somewhat sacred (even though we all know how business works and the info is freely available). In addition, you may not want to mention certain $$ amounts relative to MSRP, invoice, etc. Just gives them more ammo to negotiate against you. Instead, I recommend having a hard number in mind (whatever you feel comfortable with) and stick to it. I basically wanted to pay $30300 for my base RDX, and stuck to that plan until I found the right deal. This happened to be $475 under invoice. And I got it on a brand new RDX right off the truck; no need to even look for stale inventory.

I have not paid attention to RDX supply/demand much since I bought in January, but it still appears to be a buyer's market from what I can tell. Dropping below invoice and dipping into holdback a bit should not be too hard.

 

A couple of things from the recent posts to underscore...

Dealer holdback is a reason that they might be more willing to go below wholesale, but it doesn't have to be explicitly mentioned or factored in exactly - just let it do its trick and negotiate your own amounts.

If you have a trade-in and you know how much you want for it, then the dealer may give you more than that amount for your trade-in as opposed to "less than invoice" on the RDX as a way to save face. It happened with me too, except in my case 7 different sources told me that my 140K mile car had a fixed wholesale value that was not subject to negotiation, including my old dealer who sold it to me who researched its value as a favor to me, and Carmax who again said that if they couldn't sell it myself they would give me a fair wholesale appraisal as a service. I ended up getting the RDX at invoice and $1250 above the fixed value for my car - essentially the dealer ate into their profit one way or the other and the holdback was one thing that helped them do that.

Financing gives them another way to make money on the deal if you finance directly through them. The great rates they have on RDX now make that relatively painless and give another reason they might want to go below this nebulous "cost".

Also, even though the stale inventory is the one that they have already been paying finance charges on, and while that may be a psychological aid in negotiating, there is really no difference to them in getting rid of a new one vs. an old one. They are really trying to save future finance and storage costs and a brand new RDX will have the same potential to cost them future money as one that they've had for 6 months. They may still value the fact that the car off the truck has no miles on it whereas old stock might have a few test ride miles on them so you may encounter some attempt to steer you towards the older stock, but the "future cost" equation is the same on both vehicles.

 

Hmmm....what does that tell you about Dodge when they practically have to give their vehicles away to get folks to buy them.

 

The 0% $2000 cash back was the only incentive I was entitled to from Chrysler. The $500 Farm Bureau and $800 below invoice was due to MY research and ability to negotiate. I found a dealership in St. Louis that was willing to go $1200 below invoice. I simply told my local dealer that I priced a one-way ticket to St. Louis and that I was willing to fly up to buy my truck. So, my dealer went $800 below. The $400 difference more than covered my trouble and costs to drive the brand new truck back. I found out about the Farm Bureau rebate through the Turbo Diesel Registry forum. I joined for $35, waited 30 days, and got a $500 rebate certificate.

I ordered the Ram, and during the 8 weeks it took to deliver it, the 0% $2000 cash back deal expired and they tried to go back on it when we went to pick the truck up. I had them call Chrysler Cust. Svc, who told them that I was still eligible for the deal. So, I got a sweet deal in the end.

I own a Durango and a Ram. They are both excellent vehicles, despite what customer incentives may imply.

 

http://www.edmunds.com/advice/incent...ack/index.html