Below dealer cost catch?

[midnight]

I have a question. All the car companies in my area are advertising their cars at "below dealer cost." If they are selling all their cars at below their cost then they would go out of business. How are they doing this and are they lying?

[byusteeler]

There are a couple of ways this can be done. One is factory incentives. This is where the car company gives a cash rebate often in the case of below invoice the dealer keeps the rebates. Also, there is a thing called dealer holdback this is usually 2 - 3% of the car value that the dealer receives from the manufacturer if when they meet certain quotas. There may be other ways but these are 2 I have encountered.

[JLP]

Originally Posted by midnight

I have a question. All the car companies in my area are advertising their cars at "below dealer cost." If they are selling all their cars at below their cost then they would go out of business. How are they doing this and are they lying?

There are the ways that byusteeler mentioned plus credit, credit insurance, after market add-ons, and the maintenance department. They sure aren't losing money.

It is the same way with furniture companies. From the sound of the comercials, you'd think none of them make any money.

JLP

[Tree0164]

Alot of it is marketing to get you in the door. You will hear a lot of it with the George Washington Bday sales going on. They hope to make up their money on the warranties, financing etc. Don't worry about them

[jhd815]

Whatever they are "losing" on the below dealer cost, they are making up elsewhere. They also have to pay for their advertising (locally and nationally).