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So there's $3.5k difference that stealership puts in his pocket just because you can't buy a Toyota directly from manufacturer. For each car. Plus $1.2k holdback. Remind me exactly what they do for that $3.5k? Oh yes, they take off plastic wrap when car arrives and then charge you $3.5k for that. Oh wait, maybe then at least license, plates and registration is included - they gotta be doing something for that money, besides just trying to bend you over right? Nope, license, plates and registration is extra. Of course. On top of that they will gladly scam you with gap insurance, "extra" warranty on car sealant and numerous other "must have" things and contracts.
I wish Tesla would make a $45k 3-row Model Y so that I can forget about stealerships altogether.
 

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I'll preface this by saying I have nothing to back up my claims, and the following relies strictly on what I believe to be common sense.

This whole idea that dealers would openly or even discreetly reveal their "dealer price" (aka "invoice price") to consumers is complete rubbish. First, if I walk into any retail store, should I have any expectation of being told what the retail store owner's ACTUAL mark up is on the products she sells? Of course, not. After all, why on Earth would the store owner reveal this information to me? It would completely destroy her position to negotiate.

Second, dealerships routinely sell their cars very close to (within a few hundred dollars) their alleged invoice price, and quite often sell them thousands below said invoice price. I'm going to guess and say it takes an awful lot of money to run a dealership. We're talking about renting or buying a large piece of land, staffing dozens (in some cases over a 100) of personnel--from sales, accounting, executive, to janitors--and paying for all the other overhead (except on a much larger scale), such as insurance, utilities, etc. On top of this, there needs to be money, a lot of it too, left over in profit to justify the owners' enormous investment. I'm sorry but the thought that dealers often only make about $1k in profit per car, and some cases "lose money" when selling a car is nonsense. If that were the case, these dealers would be belly up in months. But that is not the case. So where is the money coming from?

It's coming from substantially higher profit margins than what documents like these show. if I had to guess, I'd say in the 20% range for the car and much, much higher (75%) for add-ons, like wheel locks.These "dealer invoice" papers are nothing but a predictable ruse to convince buyers they're getting a "fair" price and that there's no more room left to negotiate. Hell, in some cases they're getting a steal by paying less than what the idiot dealer pays, right?

No. This is all smoke and mirrors.
 

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I'll preface this by saying I have nothing to back up my claims, and the following relies strictly on what I believe to be common sense.

This whole idea that dealers would openly or even discreetly reveal their "dealer price" (aka "invoice price") to consumers is complete rubbish. First, if I walk into any retail store, should I have any expectation of being told what the retail store owner's ACTUAL mark up is on the products she sells? Of course, not. After all, why on Earth would the store owner reveal this information to me? It would completely destroy her position to negotiate.

Second, dealerships routinely sell their cars very close to (within a few hundred dollars) their alleged invoice price, and quite often sell them thousands below said invoice price. I'm going to guess and say it takes an awful lot of money to run a dealership. We're talking about renting or buying a large piece of land, staffing dozens (in some cases over a 100) of personnel--from sales, accounting, executive, to janitors--and paying for all the other overhead (except on a much larger scale), such as insurance, utilities, etc. On top of this, there needs to be money, a lot of it too, left over in profit to justify the owners' enormous investment. I'm sorry but the thought that dealers often only make about $1k in profit per car, and some cases "lose money" when selling a car is nonsense. If that were the case, these dealers would be belly up in months. But that is not the case. So where is the money coming from?

It's coming from substantially higher profit margins than what documents like these show. if I had to guess, I'd say in the 20% range for the car and much, much higher (75%) for add-ons, like wheel locks.These "dealer invoice" papers are nothing but a predictable ruse to convince buyers they're getting a "fair" price and that there's no more room left to negotiate. Hell, in some cases they're getting a steal by paying less than what the idiot dealer pays, right?

No. This is all smoke and mirrors.
agreed. the dealer kickbacks from manufacturer is substantial once they sell X amount of vehicles. it is no where near the true cost.
 

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Thanks! LOL... I had a dealer tell me that $2600 below MSRP on a Platinum was only $500 over invoice. I knew that was BS and it was more like $4,000 between MSRP and invoice. They even showed me a printout from some BS Web site I never heard of as "proof". That point was moot anyway, as we were debating the value of my trade-in and not the price of the new car.

I haven't seen the actual numbers for holdback and TDA in a while. I wonder if that's consistent across the country or varies by region.
 

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I have a better question though.
WHY buying direct from manufacturer was made illegal?
Spare me Tesla, please.
Money. It's always money. Essentially it's a way to put peoples money into pockets of stealerships. Similar to when you buy some laptop - you get bunch of bloatware that comes with it and often hinders laptop performance and what not. Except with laptops you at least have the option to uninstall and delete bloatware. With stealerships - you don't get that option. (and as you said I spared you from T haha)
 

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I get it, it's money. But why a manufacturer - a business - become an altruist suddenly and share its profit with a dealer? Manufacturer does not know dealer few thousand miles across an ocean and could care less. Also, cars USED to be sold by their makers.
Then, suddenly, it became illegal and dealerships were forced upon manufacturers. I shall never believe it is some sort of hardship on Toyota, or else, to open direct order store. Tesla does and does fine. Even was sued for it. So it is not something like "we, manufacturers, are not good at dealing with sales, so let us outsource sales to people we don't know, so that they can make money".
This does not make much sense.
What does make sense is that those who lobbied that law, pitched business to those who they wanted to have that business. Those, they know, and want to have a decent sort of income without actual physical work. Same pitching good business to same.
Besides, it gave more business to banks as, not banks are financing not just manufacturer but, also, dealer. I can see that happen.
 

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I get it, it's money. But why a manufacturer - a business - become an altruist suddenly and share its profit with a dealer? Manufacturer does not know dealer few thousand miles across an ocean and could care less. Also, cars USED to be sold by their makers.
Then, suddenly, it became illegal and dealerships were forced upon manufacturers. I shall never believe it is some sort of hardship on Toyota, or else, to open direct order store. Tesla does and does fine. Even was sued for it. So it is not something like "we, manufacturers, are not good at dealing with sales, so let us outsource sales to people we don't know, so that they can make money".
This does not make much sense.
What does make sense is that those who lobbied that law, pitched business to those who they wanted to have that business. Those, they know, and want to have a decent sort of income without actual physical work. Same pitching good business to same.
Besides, it gave more business to banks as, not banks are financing not just manufacturer but, also, dealer. I can see that happen.
State laws were enacted many years ago in virtually every state that prohibit auto manufacturers from owning dealerships. This was to allow local business owners to reap the profits of selling autos, instead of an auto company headquartered in Detroit or some other far away location. There are no federal laws dealing with this.

It probably was not a coincidence that in the early days, many auto dealerships were granted to politicians, and the manufacturer controlled how many and where the dealerships were located. This was started back when the Big 3 in Detroit controlled the US auto market.

Tesla got exemptions in some states (not all), but even then they are usually limited to how many dealerships they can own in each state.
 

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Franchise laws aren’t going anywhere soon, but if they did, and Toyota eliminated the dealership network and sold direct to consumers (like Tesla), would it allow them to sell at MSRP (also like Tesla) and would consumers push back because everyone is so ingrained on negotiating to a number below MSRP? This seems to be what happened to all those attempts to “simplify” the car sales experience and move to a non-negotiable, single price point for all customers (Saturn, Scion come to mind).
 

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Franchise laws aren’t going anywhere soon, but if they did, and Toyota eliminated the dealership network and sold direct to consumers (like Tesla), would it allow them to sell at MSRP (also like Tesla) and would consumers push back because everyone is so ingrained on negotiating to a number below MSRP? This seems to be what happened to all those attempts to “simplify” the car sales experience and move to a non-negotiable, single price point for all customers (Saturn, Scion come to mind).
Being able to sell direct to customers is one thing. Eliminating 1200 existing dealers is quite another. I realize that this is a hypothetical, but not sure it is legally possible to eliminate existing network without dealer approval (I believe it requires 90% of dealers to agree in most states). Toyota would have to make them an offer they couldn't refuse, which would be extremely expensive, and not sure what the benefit would be. It takes money to run a dealership, regardless of who owns it.
 

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Being able to sell direct to customers is one thing. Eliminating 1200 existing dealers is quite another. I realize that this is a hypothetical, but not sure it is legally possible to eliminate existing network without dealer approval (I believe it requires 90% of dealers to agree in most states). Toyota would have to make them an offer they couldn't refuse, which would be extremely expensive, and not sure what the benefit would be. It takes money to run a dealership, regardless of who owns it.
I agree and I do understand that. Just hypothetically speaking, if I was in charge, I would not eliminate 1200 dealerships, but I would retrain or refocus their sales team to online sales with emphases on making it more clear for the buyer and more pleasant experience to try to for once change stealership stereotypes. It would take time, but Toyota did it with reliability image, so this should be also possible. In addition, I would also expand repair and service business by again making it more clear and lower stress than what it is now. Currently due to a sky high amount of scams going on in service bays people tend to avoid dealerships by any cost. That could be once again changed and there is no reason why local autoshops should get Toyota customers business if that could eb done right at dealership - but of course whole concept of scamming customer must be changed.
It goes without saying that this utopia is never going to work. Way too many people are already in that scamming business and it's like drug addiction - once you tried it, it's very hard to come back from scamming customers.
 

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Being able to sell direct to customers is one thing. Eliminating 1200 existing dealers is quite another. I realize that this is a hypothetical, but not sure it is legally possible to eliminate existing network without dealer approval (I believe it requires 90% of dealers to agree in most states). Toyota would have to make them an offer they couldn't refuse, which would be extremely expensive, and not sure what the benefit would be. It takes money to run a dealership, regardless of who owns it.
I wasn’t suggesting that it would feasible or even legal (contractually) to do it. My question was more around the impact it would have on the way pricing works and how we (the consumers) would react.

Personally, I don’t think it would drive down prices. It would allow the manufacturer to set and more closely control an MSRP that closer aligns with the actual selling price. As you mentioned, there is cost involved in running a retail organization, regardless of who owns it. There’d probably be some efficiencies in reducing the number of redundant dealerships in an area, but that also would mean eliminating the same-brand competition that exists today.

You can see how ingrained the idea of MSRP and negotiating car pricing is here in the forum: When will there be discounts off of MSRP, for both the Highlander and the Telluride/Palisade? How long before we can negotiate better discounts? Or statements like refusing to pay MSRP out of principle and not because of the vehicle, where paying a $45K MSRP is outrageous but getting $5K off a $50 MSRP is a good deal.

Edited to add:

Also, having experienced some dubious sales tactics at my local Tesla store, buying direct from the manufacturer isn’t a guarantee that the experience will be any better than a dealer.

Long story short, I went in to test drive a Model 3. While collecting my information for the test drive (normal behavior), the salesperson asked for my credit card (not normal test drive behavior). Why? To reserve my Model 3 from the next shipment and if I didn’t want it, I could always return it. He tried twice to weave it into the discussion — “let’s just get that order started.“ The hard sell really soured me on buying a Tesla.
 

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Just to bring some clarity, this "dealer price" is actually just invoice price, which is publicly available info. Thanks for posting tho. The "gold info" which dealers keep close to heart is actually alot of backend information which we rarely get a glimpse of. This would be dealer cost, backend incentives, finance reserve, etc etc.
 

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Attached picture says it all for Limited Model with upgraded screen size and 360 view
View attachment 290195 View attachment 290195
Awesome share, thank you! I'm close to buying a 2020 Highlander platinum AWD, and am just starting to see invoice pricing (per either Edmunds or Truecars, I'm seeing almost 8% flat lower than MSRP, which is pretty close to the 7.2% difference you have here), but have been operating under the assumption that dealer holdback is roughly 2%, when it looks closer to 3% or more.
 

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You guys serious, 4K on a 50K vehicle that is less than 10% profit, look at the profit retailers make , they often have 30% off sales and max out at 70% off which tells me that 70% off is break even on wholesale! Imagine if that invoice vehicle of 45K was 100K at the dealer lol, that is why dealers make all their money on service and used vehicles.
 
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