Does anyone have specific info about holdbacks.

I'm curious to know how far below invoice I can reasonably expect a dealer to go.

 

Ford is 3%. Try carsdirect.com. There is a lot of info out there. You can get a price from a bunch of dealers in your area.

 

I would say that amount could vary from dealer to dealer. Differences in overhead as well as business philosophies could influence just how little a dealer is willing to make on a sale. If you make a serious offer, and they let you walk out, I'd say you have found the bottom.

 

Thank you Mike.

I'm in contact with carsdirect.com as we speak.

 

Depends on the area you're in, too. Around here, holdback is untouchable. A customer merely mentioning it during the barter will result in alarms & sirens, salespeople screaming "the sky is falling, the sky is falling," sales managers kicking people out of the dealership & sealing the doors... you get the picture. Then again, I know of dealerships that will actually sell below invoice, presumably absorbing it through their holdback. Unfortunately these dealers are too far away from me, and I'm not willing to drive half a day each way to save a few hundred $$$. Especially considering my local dealers give you free rentals when your vehicle is in their shop, as long as you bought it from them.

Keep in mind that dealers have yet another source of revenue in addition to the holdback. Depending on their service ratings (a result of the surveys Ford sends after you get your vehicle back from their service shop) they are also entitled to further discounts from Ford. From what I recall, the $$$ they get through this program is not huge, but it's still $$$. Higher service ratings will put them in a better kick-back category. That doesn't mean they're willing to share the savings with their customers, though!

Personally, I have purchased new cars online through carsdirect.com, as well as another site (can't remember). When it came to my F-250, though, I knew the market was soft enough for me to go local. I went to the dealership 3.5 miles from my house and said something to the effect of "I know exactly what I want and I have a print-out with the option codes & prices to make things easier. You're going to have to order it because I doubt you'll find one on your or any other dealer's lot. Before I waste your time or mine, I'm willing to pay $100 over invoice. Can you work the deal? If you can, get your order sheet out and tell me where to sign." Dennis (the salesman) walked over to his manager, came back and we ordered it.

We became friends after that, and he later got my dad an X-plan cost for his Expedition, sold my sister a gently used Focus at a great price, and even hooked me up with a connection to get a discount on my mom's BMW. There's something to be said for being an educated consumer who doesn't waste time. He told me that he has customers come in and start haggling price with him that don't know what they're doing. They go home, come back, go to 3 other dealerships, come back, and play the old game. They usually wind up paying more than guys like me who have the data on-hand from the internet. In the end, though, he's happier with educated consumers -- we make things quick & simple, without any games.

 

forgive my ignorance...what exactly is a holdback %?

J.

 

Dealers have to pay Ford the invoice price when they order a vehicle, not when they sell it. Thus, dealerships have to borrow money in order keep an inventory on their lot (flooring). Ford pays for financing and maintenance for the first 90 days a vehicle is on the dealer's lot in the form of a quarterly check called a holdback. That's 1% a month for 3 months, for a total of 3%. Weather the dealership sells the truck in 1 day or 9 months, they still get the same 3% back.

In theory, this means that a customer ordered truck has a higher profit margin to the dealership than a truck off the lot, since they don't accrue financing charges for the $$$ they borrowed to order the truck.

Each manufacturer has its own holdback levels, some have none, some have higher than Ford, some vary it by the specific model.

P.S. -- I think "Blue Oaval" certified dealers get another 1 - 1.25%

When negotiating a deal, it's best not to mention holdback unless you absolutely have to. If they start to complain about not making any $$$ on the car/truck they're selling you, that's when you can pull the Ace out of your sleeve and say, "What's the matter, 3% isn't enough for you guys? Or how 'bout that extra point you get since you're Blue Oaval certified?" Personally, I've never had to get to that level since I research the Market Value in my area and pick out what I want before I walk into the dealership. Then I name my price, hand them a sheet with my specs, and tell them yes or no -- if you don't do it, the guy down the highway will!

 

Great info haroutd...thanx

J.

 

ditto haroutd

 

haroutd,

One additional twist that you might know. If a dealer finds the vehicle that you want on another dealer's lot and that dealer agrees to send the vehicle to the other dealer so that dealer can sell the vehicle (presumably to you) who gets the holdback. Do they split it? Or what?

Chip

 

I'm pretty sure the holdback goes to the dealer who ordered it from and paid the $$$ to Ford. Ford would give the holdback to whoever paid them. Dealers usually work out their trades between themselves. The same way we consumers have to pay more for a "hot ticket" item, Ford dealers are also less willing to part with a vehicle they can sell themselves for higher profit than vehicles where their profit margin is limited based on market value. Sometimes dealers will exchange car for car, sell to each other for invoice, below invoice, above invoice... depends on the particulars of the situation. From what I understand, though, most dealers will try to work out a trade -- i.e. car for car, and if the invoice prices on the cars differ, make up the difference with cash. In that case, it doesn't matter who gets the holdback since they simply traded cars.

Normally, you're better off buying what the dealer has in their inventory or having the dealer order based on your specs from the manufacturer. Having dealer A procure a vehicle from dealer B's lot involves barter, transport of the vehicle, possibly a tow (or at least someone driving it over & having to be driven back)... you get the picture. There's overhead involved in that type of deal -- that overhead is then charged to you weather through the addition of a towing charge, or by not making you as sweet a deal as you could have gotten otherwise.

I normally buy about half a dozen vehicles a year (everyone I know seeks my help whenever they're in the market for a new car), and have run into this scenario a few times. I've seen it work out perfectly without any extra cost to the buyer. I've seen dealers try to squeeze more $$$ out of the deal because of the overhead I mentioned. I've seen dealers try to pull a "switch" where they accepted deposit $$$, had a signed sheet with exact specifications, and then got a similar (but not exact -- one or two options not as specified) vehicle from another dealer's lot. The jerks then tried to force us accept delivery on that vehicle, threatening to not refund the deposit, because they claimed we had signed for it (hello, idiot -- we signed for the green one with a sunroof, not the blue one w/o sunroof you procured!). Having paid the deposit with Amex made it very easy to say, "Hello Amex, I have a fraudulent charge!" and walk away unharmed.

I've also seen where Dealer B was so glad to get rid of a vehicle from their lot, that they happily lost a few bucks when Dealer A asked for it so they could sell to us. Dealer A was someone I had a good working relationship with, so he took the $$$ saved and gave me an even better price!

 

does a dealer have to pay hold back on an ordered vehicle ? does this vehicle become inventory and on an ordered vehicle how does the hold back come into negotiations ?

 

You need to re-read my first two posts on this. Dealers DON'T PAY A HOLDBACK. Holdback is the amout that is given to them by Ford. Most dealers in my area won't let you touch their holdback, but because we know it exists we can get them to make deals right near the invoice price instead of dealing with the sticker price. When they whine that they can't sell it to you for invoice + $100 (what I paid) because they won't make enough, that's when you pull the ace out of our sleave and mention that you know how much he's making on holdback. Then tell him if he can't close the deal with that much profit, the dealer down the road will.

But first, re-read what's already been said about this -- you are asking questions that have already been answered.