b4i4getit

I was talking to a GM car dealer friend in Toronto about the car business and I indicated to him that I think they always make a profit. I specifically mentioned the 3 % holdback that they get from GM Canada. He indicated to me that GM has not provided holdback for years. Is he kidding me ? I find it hard to believe that GM does not. Can anybody verify this ?

family-man

From what I understand, Holdback is for advertising specific models and each dealer gets a certain amount to advertise for their specific dealer through local papers, commercials, any other types of advertising. I do think its 2-3%. Even if the dealer sells that specific model for dealer cost, they are still making a tiny bit. I usually aim for 25% off the cost of a vehicle. emailing the sales managers directly from the dealer website is the best way. A few months ago I was looking at the 2014 F150 fully loaded XLT crew, ecoboost, etc etc etc. Truck was $52,xxx I emailed about 10 dealers. almost all the sales managers came back with prices of $36,000-$37,000. 2 Dealers matched each other at $34,025 plus HST ONLY and they both said they are losing $1400 on the deal! Don't let them win, they are trained hard to milk the consumer. Feel real bad for the people who go into the dealer and pay MSRP or very close to MSRP. Markup is huge with vehicles (more expensive/more options=more profit margin). Also, walk into the dealer at the end of the month and if possible, end of quarter (end of March, June, Sept and Dec). Dealers receive bonus cheques which are fairly hefty for reaching sales quotes within their region/local competing dealers). Ohh and BTW, Royfoss, Dean Myers, Old Mill and Humberview SUCK!

RedZ4me

here's the real answer - holdback is usually 2% and is rarely used for negotiation, managers work the floor with the gap between msrp and invoice and this is usually 8-11% depending on vehicle (this does not include any rebates/incentives)

To Family man ^^^ if you try and get 25%, good for you but not possibly unless there are massive dealer incentives like F150's ' up to $11,000 rebate ' for example.

Without dealer incentives (manufacturer), 5-7% off and you're doing ok.

Dealers losing money ?? Never !! Those fancy new dealerships don't get built by 'losing money'

b4i4getit

Thanks guys for the information. But still nobody has confirmed if GM dealers in Canada get holdback or not. I would imagine if they get holdback in the US they would get it in Canada as well.

Hopefully there is a dealer on this forum that can say yes or no.

TOVetteFan

There is a 1% fee that is added to the invoice side of each new GM vehicle. This money is returned, in whole or in part, to the dealer, monthly, if they achieve specific targets in customer satisfaction, training and volume, to assist with marketing, advertising, etc...

Aside from that, there is NO specific holdback. Occasionally GM will offer additional incentives to dealers for a specific period of time, or on specific models, and this money is distributed as each dealer sees fit. This amount is usually on the order of $500 or less per car, sometimes as low as $50.

The magical "holdback" hasn't been paid in decades in Canada, which is why, unlike the US, you very rarely see cars being advertised at invoice, unless GM Canada is doing it themselves.

b4i4getit

Thanks TOVetteFan. I appreciate the answer.

cebars

Anyone wanting to listen to life what happens for a month in a dealership....trying to sell enough cars to make the bonus from the manufacturer only if a certain number of the manufacturers new vehicles are sold in that month. If no bonus, the dealership purportedly operates at a loss. This MOPAR dealership had to sell 129 cars to make the bonus. What a tough life.
http://www.thisamericanlife.org/radi...e/513/129-cars

www.carcostcanada.com will provide you with MSRP and dealer invoice prices as well as what incentives are applicable.I think it costs about $40. for 5 or 10 prices.

TOVetteFan

Car Cost Canada is right most of the time, for sure, but does make mistakes as well. And it operates as a referral system for dealers, as it steers you to dealers that will accept "Car Cost Canada" deals averaging between 3-6% above dealer invoice on most cars, although it specifically says that this is up to the dealer and not likely on high demand vehicles. For what it is worth, almost any dealer would take a 5% above invoice price on pretty much anything they sell, aside from the "hot" cars, and in my experience, most Car Cost Canada members paid their $40 to get disappointed in how much of a discount they were going to get..

Jon04CTSV

Not every manufacturer operates this way. Chrysler chooses to use the VPA program. So yes, their month is based on hitting a volume target. They will sell cars for nothing just to hit their target. A crappy way to operate if you ask me.

edgenet1

All the money is made in fixing cars and selling used cars. New cars are almost a bust unless they screw the buyer. Never forget selling those electronic rust control modules for $1,000 and they buy them for $20 and are useless. Shame on the manufactures for allowing this scam.