Posted elsewhere on FTE but well worth the read.
The eye-opening truth about dealer invoice price | Clark Howard

 

That's not a good read at all. It's based entirely on speculation and rubbish. It's asinine to believe such things too as I've shown time and time again though resources publicly available from financial statements from publicly traded companies. You can go through the papers all you want, we make it work. If you're lemonade economics degree can't help you run a dealership, that's not my problem.

 

Those numbers you posted was a reveal of profits per unit and not a detailed equation of how they came to those figures. So no truecost numbers, like I have said in the past if true cost numbers were available from those reports they would be plastered all over the Internet . But there not .

 

Ouch, struck a nerve.

 

Still waiting

 

I am eligible for A plan, but only because my son works for Ford.
They are very strict about giving out the A plan PIN number.
My son has been challenged by Ford corporate to prove the direct blood relationship in getting the much coveted PIN for me, and his brother. A Ford employee can lose their job for attempting to get a PIN for someone not eligible.

Dealers can also be very strict about accepting the PIN.
I have had dealers check the PIN validity before writing the deal.

In the end its all good. The A plan gets you about the best deal possible without any negotiations.
Dealers like A Plan customers because it removes all the drama as all pricing is set by Ford Corporate and non negotiable.

I feel that I am Lucy to have access to this, and I will not buy anything but a Ford as a result.

While on the topic, I must say that I think it is most beneficial to spend some time developing a professional personal relationship with a good salesman. I try never to have an adversarial relationship when buying a vehicle. My experience has always been that having a good salesman in your corner can be most helpfull. I will be purchasing a third vehicle soon from my current salesman. The only reason the relationship is not longer is that I moved 5 years ago, and could no longer deal with my old one. I know he appreciates the repeat business, and I appreciate knowing who I am dealing with. In my case this does not help with pricing because of the A Plan but not everything about the deal is price as far as I am concerned. My salesman he helped me avoid mistakes I would not have known about, and has helped greatly with ordering strategies.

I am off my soap box now.

Happy Trails

 

Surely, support local businesses...unless they gouge you.
If a framing square costs 7.99 at Ace Hardware and $1.99 at Lowes guess where I'm buying.

I'll send my good friends at the local Ace Hardware and Ford dealership a Christmas card. I'll be buying the card with the $3k I saved off of "invoice"

But here's a test anyone can do, search here for the screenshot of a dealer order sheet, at the bottom you'll see X plan, A Plan, Invoice Price, Holdback, etc. See if you get the same "invoice" price on Truecar.

We'd all like to think well of our fellow members who happen to be car dealers but if he's telling you go to Truecar for invoice price, he's not your buddy, neither is your local dealer.

 

You guys are missing it, Frantz is spot on IMO. What Ford is doing is no different the a lot of large manufacturing corporations do when selling thru a dealer network. I'll give you an example of someone I may know that had to sign a confidentiality agreement so I'm not going to tell you his name....lol. Anyways this "guy" was able to purchase a certain kind of recreational vehicle for well below dealer cost and I mean waay waaay below like a third lower thru a large rebate structure that is available to employees and spouses, this guys wife works for the corporation, dealers aren't employees. My point is those "A" plans deals are probably below the dealers normal invoice price and Ford is probably selling them that particular vehicle at a low than normal price thru some sort of back-end reimbursement. My point is they can sell to certain customers at lower than invoice because they, meaning Ford corporate, have a decent amount of profit built in to the vehicle. This is not the dealers profit, which is actually low on a per unit basis IMO.

 

Would you be likely to get a better deal if you waited to mention xplan? I know on the ford xplan agreement thing it says you have to mention it right upon driving into the lot

 

correct me if I'm wrong, but with a-plan, don't you get all the holdbacks and advertisement fees discounted from the vehicle also???? Should be a lot less than the x-plan price when considering 60-80k trucks.

 

So many layers, so many opinions. Here are the facts as I see them:

There's a price pyramid and at the top is MSRP. There's actually a layer above that as dealers frequently charge a premium, over MSRP.

Below that is invoice then all the plans - the alphabet plans.

So many layers. And yet, somehow, automobile dealerships (1) make a profit on vehicle sales and (2) they keep the lights on and people employed in well lit showrooms showcasing new vehicles.

Even at the bottom. At the lowest sell price, dealers are MAKING MONEY. Otherwise there wouldn't be so many of them in the same area!

 

I've seen that posted a lot here, and I cannot disagree with the premise. But a lot of the time that's just not possible. As has been pointed out many times here too is that car sales is a high turnover field. Few guys and gals make a career in the field, much less at the same dealership.

As for me, I would love to deal with the same guy over and over, but I'm rarely in the same location more than a couple years and I don't change trucks like I change my running shoes, so "relationship building" ain't in the cards. I go where I get the absolute best deal, assuming the deal (yes, I look at the entire deal... doc fees, destination, etc.) is good enough to warrant the travel and my time. Not every dealer in the nation can sell for the same price, and I find the ones who give the best overall deals, which like I said, is more than just the price. But a $300 one-way plane ticket, or a tank of gas and a 6-hour road trip is often worth the deal I'm looking for. In my world, saving $10-13k on a truck is enough to put up with a little less customer service, but I've found most sales folks are nice guys and gals who appreciate the business and give the same service regardless of the deal you're getting.

Of note, I'm not talking Ford-specific at all. YMMV, as always.

 

Invoice is the figure that everyone calls invoice. That does NOT mean there isn't other money at play, but invoice is invoice, and that is the number you can take to the bank, we certainly do! We pay interest in the invoice figure of everyone vehicle on our floorplan. There's your definition.

You're correct, however, you can't achieve the low profit per unit figure they show without the numbers generally talked about being correct. 2.7% of $40k is about $1000. That lines up pretty well with people paying invoice or close to invoice on a majority of units.

Conspiracy theorist on the car industry haven't considered the big picture in the least. You're proposing that a nation wide group of individuals, mostly college drop outs, who work for companies striving for profit and market share, who compete side by side against each other, while working for difference companies, all get together for this great big secret war on the consumer? You reach for hearsay sources from pre-internet days to justify your arguments. Did Dan Brown write that one for you? You either believe dealerships file falsely on their financial statements or that running a dealership really cost so much that the business model as presented is unsustainable yet feel morally superior to say they rip you off? Even if you believe the latter, you're acknowledging that the margins with all the secret money are really not all that good and there are probably better stocks to invest in. I see it as a pretty binary situation. Either I'm right and dealerships deserve a little respect for making it work, or you're right and they are really barely making it as it is, so there is still no more room to work.

It hits a nerve because it's stupid and not based in any sort of logic or reason, and certainly doesn't make buying a truck a better experience for anyone for you to be preaching it. Yes I have better things to do, but leaving such illogical non-sense unanswered helps it to spread.

When you sell a car at A plan, in order to get paid back by Ford, you must submit the customers A plan pin and verify it. Then you can claim an A plan commission, which as said is holdback and advertising fees. When you run the rebates you select the sales type "A Plan" and after the eligible rebates are listed you'll see "A - plan Commission" this is that figure, and without it you would have just burn your holdback to reach A plan price, and the advertising fees are already part of the invoice price. This is why I get paid about the same on A plan vs selling to you at invoice. It's the same with fleet. If I sell a truck to the state of Pennsylvania, they get nearly $9000 off from Ford. It's not called a rebate, and a fleet incentive. They don't get rebates on top of that, but lets be honest, their is never $9k in rebates. Then I also get a Fleet invoice, which is also without advertising fees. So the only "funny business" happening here is entirely on Fords profit margins, not the dealers. If I get an extra fleet truck I can sell it to you, but I have to figure out what the retail invoice is gonna cost, because Ford is going to charge me back the difference between fleet and retail invoice. But while the vehicle sat on my lot I only had to pay fleet for it. Reasonably, Ford does not like too many of these mistakes sitting around, because it's skirting the system if done intentionally.

 

yep, sounds good except that skirts the real answer. Sure, a pin is required if using A plan.
Any dealer can sell to any customer at A Plan price without submitting a pin and still make thousands on the deal. Just don't call it A plan
And before you say depends on the MSRP, got it, you know we aren't talking about a Ford Focus here.

Answer this simple question, do you use Truecar as "invoice" price?

 

I use invoice as invoice. I find TrueCars posted invoice to be right on or so close to invoice that it is the same. TrueCar prices are set by the individual dealerships so I can not give a straight answer as to call that invoice, but it is set up as an offset either above or below invoice. I know where we are, there are 5 dealers all about 30 minutes or less away. Prior to ending the volume growth bonus I know we listed Super Duty trucks at -$400 offset from invoice. I do think they backed it down some since that bonus went away, but we still advertise under invoice on TrueCar. MSRP does matter because you can get a MSRP 4x4 around $40k or over $80k, so while it's not a focus, the figures do more than double throughout the range. Since I know we are honestly talking about small margins, the differences as a percentage is significant to me between low end and high end.

If any customer could just walk in and get A plan, why in the world would someone who WORKS AT FORD accept it as a deal?

Occasional A plan priced deals can happen, but it would be on old stock units though push pull, or if you have a friend who owns the place and takes a hit to make sure no one beats the "I've got a friend" price. We can sell them at a loss, and make it up on the back end too, some dealerships are set up around this notion though fees, high markups in products, etc. You might find a better deal at one of these if you play the cards right, but then you're supporting the more slimy side of the industry that most people seem interested in ending.