I qualify for a GM supplier discount. I was told by the salesman that if I opted to take a truck from their current stock that he could beat the supplier discount price. I am not up on my new vehicle purchases but how can they beat something that is 1% over invoice and still make much money? They didn't have what I wanted anyhow, just curious for opinions from those that understand the whole process better than I do.

Thanks,
Kevin

It's called "holdback". Its an amount GM "gives back" to the dealer, usually 2-3% of the vehicle price. Got this info from www.car-prices-costs.com (http://www.car-prices-costs.com/) ----
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How to determine dealer cost on a new car or truck.

By knowing how much profit dealers are making, you are in a position to determine how good a deal your are receiving. If you can land a price quote within $1000 of dealer cost you are getting a great deal. This can be achieved by using one of the pricing services mentioned in this guide without negotiating. In many cases you will see a price well below dealer invoice because of large rebates and hidden incentives called dealer holdback.

Q: What is dealer holdback?

A: Dealer holdback is a hidden profit manufacturers apply to the invoice prices and give to the dealers. Dealers are allowed to use this profit anyway they see fit. You can use it as leverage for a discount.


Steps to determine dealer Cost

Step 1: get the dealer invoice price for a car when you fill in an online price request form from the sources mentioned in this guide. (Autobytel, Stoneage, InvoiceDealers, and . ) Make sure you keep note of the MSRP, Dealer Invoice price, and any rebates or manufacturer discounts.

Step 2: Calculate the hidden profit or "hold Back" from the chart on the right. For example, Honda has a hidden hold back of 3% of the Base MSRP.

If the Base MSRP for a car is $20,000 for example, you then calculate 3% of $20,000. (3% X $20,000 = $600). $600 is the hold back. (MSRP depends on the model you choose - this is just a made up example)

Step 3: Now Calculate the dealer cost by subtracting the $600 hold back above from the entire invoice price you received from one of the pricing services. (Autobytel, Stoneage, InvoiceDealers, and . ) You will receive the invoice price for the car of your choice by filling in the price request form from one of the sources above.

In this example lets assume the total invoice price is $18,000. You then calculate the cost as follows: $18,000 - $600 = $17,400 dealer cost.

Your last step is to subtract any manufacture rebates for the dealer cost for the model your are interested in. If Honda is giving a $1500 rebate or additional discount you would subtract this from the $17,400 above.

$17,400 dealer cost - $1,500 rebate = $15,900 true dealer cost.

Note: You will get rebate and discount information when you fill in a quote form from one of the buying services above.

If you buy the car for $17,100 the dealer is making $1200 profit and you purchased the car for $900 below dealer invoice. (You both win!)

(When calculating holdback, use the formula at the right for the make of car you are interested in)

NOTE: Although figures change all the time, this formula provides a good estimate of what dealers can sell cars for without losing money! If you are with in $1000 to $1500 dollars of the dealer cost, the dealer is making money and you have a good deal. This is often much lower than the price you would get by negotiating with a salesperson. (Usually over $1000 above dealer invoice!)
Dealer Hold Back Amounts: Make Holdback
(Approximate)

Acura 3% of the Base MSRP
Audi No Holdback
BMW No Holdback
Buick 3% of the Total MSRP
Cadillac 3% of the Total MSRP
Chevrolet 3% of the Total MSRP
Chrysler 3% of the Total MSRP
Daewoo One-price sales. Customer pays MSRP.
Dodge 3% of the Total MSRP
Ford 3% of the Total MSRP
GMC 3% of the Total MSRP
Honda 3% of the Base MSRP (except Prelude)
Hyundai 2% of the Total Invoice
Infiniti 1% of the Base MSRP
Isuzu 3% of the Total MSRP
Jaguar No Holdback
Jeep 3% of the Total MSRP
Kia 3% of the Base Invoice
Land Rover No Holdback
Lexus 2% of the Base MSRP
Lincoln 2% of the Total MSRP
Mazda 2% of the Base MSRP
Mercedes-Benz 3% of the Total MSRP
Mercury 3% of the Total MSRP
Mitsubishi 2% of the Base MSRP
Nissan 2% of the Total Invoice
Oldsmobile 3% of the Total MSRP
Plymouth 3% of the Total MSRP
Pontiac 3% of the Total MSRP
Porsche No Holdback
Saab 2.2% of the Base MSRP
Saturn The customer pays MSRP.
Subaru 3% of the Total MSRP (Amount may differ in Northeastern US)
Suzuki 3% of the Base MSRP (holdback)
Toyota 2% of the Base MSRP
Volkswagen 2% of the Base MSRP
Volvo 1% of the Base MSRP

Calculations:

If a % of "Total" MSRP or Invoice make sure you add all the manufacturers options to the price when calculating holdback
If a % of "Base" MSRP or Invoice, calculate hold back on the Base price before you add the options

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So you see, even if they offer "1% below invoice", they still make money!!!

Tom :eek:

Thanks for the info, although I will have to re-read it a few times to feel comfortable when negotiating.:eek:

I guess I just assumed that by allowing discounts like GM suppliers that you were actually the "first in line" so to speak reguarding vehicle pricing. It seems that anyone who is up to date on the whole new car sales experience can bargain for a great deal once they have learned the "inside" of the sales industry, and find a location willing to make these deals.

I thought it was a great deal to be able to not have to do any hassling reguarding the price paid. Just look at the dealer invoice, add the percentage to the price and get a loan! I knew that it sounded too good to be true. :confused:

Wonder why these programs are offerred IF there are other ways and means to go about getting a better deal?

Thanks for your input,
Kevin

Mainly because they hope you don't do research, and finding a dealer willing to negotiate from invoice instead of msrp is not easy. A lot of people don't take the time.

Thank god for the internet.....theres a ton of sites out there, you just have to take the time and search and read........

Tom

Bowtie,

The GM Supplier's discount will apply to all new GM vehicles, even ones setting on the lot. The price you pay for the vehicle is not known to the dealer until he puts in the order or punches in the VIN if it's on the lot. Unless they have looked it up already. That price is non-negotiable.

Now if he wants to sell it to you for less, than he can but usually they won't because the profit ends up being just the holdback price. That price is also figured on the MSRP of the vehicle. The more toys you have on the truck, the more the dealer makes.

I bought mine on supplier's discount and the experience was very pleasant. The dealer was going to make a little bit of money and I didn't have to hassle for the price. Since I ordered mine they did not have to have it set on their lot taking up space so they also gave me cost price for the aftermarket goodies I had put on. They did the bedliner, step bars and bed cover for $1000.00 complete. That was all done before I took delivery of the truck.

Dave's right....thats why I say it would be hard to find a dealer willing to negotiate from invoice.

Tom

I get GM employee pricing, and I've found a couple of dealers in the Tempe/Phoenix area that flat refuse to give me GMS pricing on a Duramax truck! Apparently they don't need my business. I asked the manager what difference it makes if he sells me one at GMS option 1, or option 2, you still get the holdback and if you sell me one option one it won't take away from your allocation, so whats the problem? He tells me "I don't want to wait for another to come in to replace it, and besides if you order it you get exactly what you want, and we still get the holdback and prep charge", so I told him no you won't! If I have to drive an extra 300 miles to pick up my new truck, I still wouldn't buy one from you!

When I used mine, the experience was pleasant. I got a new 05 for a great price without haggling. To check pricing on the lot, just write down the VIN and consult a salesperson. They should be able to print out the invoice and you can see the GM Supplier discount pricing. Also remember that with the Sup. Discount, you get the rebates back on top of that. Pretty easy and sweet deal. Alsmost like everyone wins.

Ok folks, I am new here and full of questions. I have been lurking and reading as I hope to purchase a DMax within the next few months.

I dont understand the employee pricing deal, is this price lower than if I did all the research and tried to negotiate? Also what are you all paying total? I know it differs truck to truck so just give me ball park.

I am wanting a LS Crew cab, Sb, Dmax/allison combo. the only reeal option I care to get is a sunroof.

The problem I had when I got my truck was that the dealers were scrambling to get the DMAX's. The ones who had them would not negoiate and the ones who didn't couldn't get them through swaps. An if you ordered, who knows what the rebates would do...I went out as far as Jersey buying one over the phone without seeing it, and the dealer still would not budge...

Speedbump, F.Y.I. the G.M. employee cost is on the invoice- clearly stated. I have heard where someone was able to ACTUALLY get a truck for less than my cost.It is a very rare occurance. The system that "the BAC" is the way I would do mine IF I didn't get G.M. EMPLOYEE pricing. As far as what the figures look like = 2001 3500LS CREW CAB D/A M.S.R.P. = $43,678. I got it for $36k + taxes. I could have bought a 2005 2500 CREW CAB D/A for LESS than I paid for my 2001 because of rebates & a retireee certificate!! Sent you a p.m. with # Any questions, call me. Howard

HI Speedbump
I ordered my 05 Sierra SLT XM Onstar D/A ext cab LB with sunroof on Holloween and picked up at the dealer on Christmas eve. I used a GMS cert after I had ordered and the dealer had no problem accepting it! On top of rebates I received a $1000 coupon in the mail but was not "valid" with the GMS discount but my dealer took it also!
The dealer is not losing a dime. There was some talk when I ordered my baby that the Duramax was in short supply but by the time my truck arrived there seems to be a supply of Duramax's at least in So Ca. but some sales people still use the short supply as a pressure point to make a sale.
By the way, if you can find a sunroof check it out before you order one. I am a little disappointed with the design. Notably there is not a solid cover over the sunroof only a sun shade that does not block direct sunlight! There were a couple of after market sunroofs shown here that look much nicer.
If I were to order again I'm not sure I would order the sunroof:confused:
Otherwise I love this truck! Just now have 500 miles so have not yet stomped the pedal ..... but still it is very impressive.
Good luck and remeber the longer you wait to place your order the longer the wait!!!!!!!!!!!!!!!!!!
The Onstar hands free phone is awsome works very well.

SPEEDBUMP, you have a P.M. If you don't get it, e-mail me at = howard_m18@yahoo.com That is howard_m18 at yahoo.com Howard

Not to get off of the subject, but where do you live in Clarkston, Howard? I went to Clarkston High for a year way back when. My first "real job" was at Randy Hosler Pontiac.

HI AUTOPAT & I live 3 miles North of Pine Knob. ):h ):h ):h

LOL @ Pine Knob, isnt that just over the hill from Oppussom Ridge?? joke
Sorry , had to , it just sounded like something off of Duke Boys..... : )

Based on the formula that "the Bac" listed the dealer I bought from made less than $35.00 on the truck. I was able to get employee pricing as my brother works for the dealer and they opened their employee pricing up to include family members. Brad