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Discussion Starter #1
Here is a Toyota Tundra invoice I received
http://www.hanik.com/crewmax-4x4-invoice.pdf

I would like some clarification, there seems to be a few different stories floating around

TDA - From what I understand, depends on region, but in my region, Colorado, this is a real fee charged to the dealership, and is not refunded.

Dealer holdback $656-

Story 1 - The dealer actually paid the amount $656 when he bought the car. If I pay this fee, he's breaking even. When the car is sold, and then on a date later he will then get $656 back from Toyota

Story 2 - The dealer added this line item, and will try to double dip. If i pay this fee, the dealer actually makes $1312 on the car.

Financial Reserve $328 -

I see the same stories as above. Is he making $328 or $656 if I pay this fee.

That's the clarification I'm looking for. I have absolutely no problem the dealership making a profit of $656+$328 for a completely hassle free purchase. However, I need to understand if these line items amount to that profit, or double that.

I've researched this extensively, unfortunately the forums are diluted with posts where the poster thinks he knows exactly what they are talking about, but it doesn't seem to be the case when you actually re-read the post.

Clarification please, only post if you have confirmed information, that way, future researchers don't have to filter through theories. Thanks in advance!!

best
Filip
 

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Just pay MSRP and stop worrying.

If you want to figure all of that out buy a dealership.
 

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Cant answer your specific questions, but can say you want to be below MSRP (above post= erroneous info).

Try to determine how long the truck has been on the lot. The longer the better. Deals should be avail late in the month and late in the year (like now). Dont be afraid to walk away.

Good Luck and keep us posted.
 

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Discussion Starter #4
Just pay MSRP and stop worrying.

If you want to figure all of that out buy a dealership.
That's not the case, this isn't magic. We all know how every other business operates, why should this be such a mystery.

I'm happy for the dealer to get his holdback, I just need to know if he is getting it from the manufacturer and me, in which case, its a bs fee. But if he actually paid it, then I will pay him, and when the manufacturer pays him, he makes that profit.

I'm not against dealers making a profit, they have to stay in business too.
What I'm against would be the sales person telling me a lie, and running an unethical business.

best
Filip
 

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Not sure about all of this. I have heard about "hold back" in the past and believed this was incentive from the manufacturer to the dealer for sale of the vehicle. This is a quote from wikipedia "Profit margins on automobile sales are low. A new car dealer may mark up a car by less than two percent over the manufacturer's invoice cost, and typically the car dealer borrows from the manufacturer for inventory and pays interest (called flooring or floorplanning). On the other hand, some manufacturers pay "hold-back" to improve the fiscal stability of dealers. Typically this is around 1% to 2% of the vehicles' wholesale price to the dealer. Hold-back is usually not a negotiable part of the price a consumer would pay for the vehicle. Hold back is designed to offset the cost the new car dealer has for paying interest on the money being borrowing to keep the car in inventory."
 

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Found another one from carbuyingtips.com "Factory Holdback
US auto makers pay dealers a "factory holdback" of 3% MSRP on every car sold. Mercedes pays 3%, Lexus is 2%, but Edmunds claims Lexus has no holdback. BMW, Japanese imports, etc., pay 2% quarterly to the dealership. It's called holdback, because the factory holds back money from the dealer until they sell the car. This is accounted for by charging the dealer for holdback on the invoice, paying them back when the car is sold. On a $30,000 car, the holdback is $900. This appears to you and me as though the dealer paid $900 more for the car than he did. This is done by the factory as a means to compensate dealers for interest on loans that they take out to buy the cars from the factory, and also to provide a little bit of profit to the dealer. The holdback is included in every invoice price. This is how dealers can sell you a car at invoice, because the factory refunds them the holdback once the car is sold. They can sell you a $30,000 car at invoice and have a $900 positive cash flow. Many people don't know holdback exists, including many car salesman, as this goes directly to the dealer, and it effectively reduces the dealer's cost of the car. Many dealers deny it exists, or tell the customer it's a dealer expense, and try to add it on to the contract make the customer "pay" for it. It's the factory's expense once the car is sold. Now the dealer is double collecting. If any dealer tries to itemize you separately for holdback, leave immediately, you'll surely be subject to many more unscrupulous tricks. Don't let a dealer tell you there's no holdback, it's the business plan that the whole industry is structured to. Denial is a popular trick used by dealers in Hawaii. But many good car dealers list holdback on their web sites."

Basically says don't pay the hold back because the dealer is being payed 2 times for it.

Also saw that TDA is "Toyota Dealer Advertising" fee. Opinions differ on this and some dealers apparently won't give it up. See this website New Car Buying Tips: Dealer fees, haggling tips, scams to avoid. It talks more about TDA and other fees.
 

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Discussion Starter #7
This is accounted for by charging the dealer for holdback on the invoice, paying them back when the car is sold.
This is exactly the question I asked. If the dealer actually paid the $656 and $328, and not just add it in there. I'm totally fine paying invoice.
If the dealer did not pay it, but just added the line items since the holdback is somehow baked into another sum, then it would be wrong.

The sales person, explained that the dealer did pay those two items, the invoice cost is what the dealer paid for it. If I pay full invoice, the dealer would make $656+$328 + manufacturer incentives. And I think that's ok. That is roughly $1000 on a $35000 vehicle, that's a pretty slim margin.

The holdback is included in every invoice price.
AAh, and here it gets tricky again. What invoice would that be. See the link I sent, where its a separate line item, is it that line item or is it baked into the base somehow?

So if the sales person is honest, this is a fair deal. I'd be happy to pay for those items.

Basically says don't pay the hold back because the dealer is being payed 2 times for it.
Yes, but I am asking specifically about Toyota here, other car manufacturers may do it slightly different. The question is, for Toyota, don't care for other brands, are you paying or are you not paying twice for it.

Re: TDA, many other threads, including Toyota dealers have commented on this fee, it's charged to the dealer and not refunded. Slightly different than some other manufacturers.

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Filip
 

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This is exactly the question I asked. If the dealer actually paid the $656 and $328, and not just add it in there. I'm totally fine paying invoice.
If the dealer did not pay it, but just added the line items since the holdback is somehow baked into another sum, then it would be wrong.

The sales person, explained that the dealer did pay those two items, the invoice cost is what the dealer paid for it. If I pay full invoice, the dealer would make $656+$328 + manufacturer incentives. And I think that's ok. That is roughly $1000 on a $35000 vehicle, that's a pretty slim margin.



AAh, and here it gets tricky again. What invoice would that be. See the link I sent, where its a separate line item, is it that line item or is it baked into the base somehow?

So if the sales person is honest, this is a fair deal. I'd be happy to pay for those items.


Yes, but I am asking specifically about Toyota here, other car manufacturers may do it slightly different. The question is, for Toyota, don't care for other brands, are you paying or are you not paying twice for it.

Re: TDA, many other threads, including Toyota dealers have commented on this fee, it's charged to the dealer and not refunded. Slightly different than some other manufacturers.

best
Filip

Well for not knowing much about it, you seem to have it down and already made up your mind. As far as specific hold-back for Toyota the quote from the website said Lexus is 2% and that isn't a US manufacturer. And as far as advertising cost as a separate "line item" seems like BS to me. This is part of their cost for doing business and should be included in the base price. So, if you are paying dealer holdback($656)+they are getting dealer holdback from Toyota($656)+advertising fee($726)+wholesale financial fee($328) they have the potential to be making $2,366? I guess what it boils down to is are you willing to pay what they are asking? I didn't check their invoice on my '08, just checked invoice online(nadaguides.com). On my truck, sticker was about 35,000, their advertised price was about 31,000, then Toyota had a $5000 rebate at the time so brought the price down to 26,000. Looks like they are asking you to pay 38,000 - $1500(rebate). Good luck on your purchase.
 

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Discussion Starter #9
hi ktaulbee,

That's the big question I want answered. Is the separate line item in fact paid by the dealership or is it included in the price?

That's the only remaining question I have

As for TDA, plenty of threads out there state that its a non refundable charge in Toyota's case.

So the two line items we talk about are
- Dealer holdback
- Wholesale Financial Reserve

Are they paid by the Toyota dealer to Toyota as stated by the invoice? (to be refunded at a later date)

Seems as no one really knows the answer in Toyota's case, in which case, we still don't know the true price of the vehicle

Now my theory is that those line items are actually paid by the dealer who then gets a refund when the vehicle is sold. If dealer holdback is a 2% of MSRP, it would be hard to bake it into the base price, cause then you would arrive at a fluctuating base price.

best
Filip
 

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Discussion Starter #10
The more I research, the more it seems to clarify, and I do have a definite answer for you

Here is a link
http://www.tundrasolutions.com/forums/pricing-and-dealers/35630-true-invoice-cost/
http://www.tundrasolutions.com/forums/pricing-and-dealers/129293-unknown-dealer-charges/

Search the forums for username: Cliffy1
A user who works at a toyota dealership, very informed, also very helpful individual. I called him so that other folks don't have to bug him like I did

Here is the true answer, once and for all.

Look at the invoice :

http://www.hanik.com/crewmax-4x4-invoice.pdf

Line items:
Destination charge: $950
TDA: $726
Dealer holdback: $656
Wholesale Financial Reserve: $328

Let's clarify them once and for all:

1. Destination charge: $950
everyone must pay for this. Even if you are a neighbor to the factory. It's a federal law that everyone pays the same on the same kind model during the same time period (this cost has gone up since 2007)

2. TDA - Toyota Dealer Advertising: $726
This is a true dealer cost, the dealer pays this to Toyota for advertisement and is NOT refunded the fee when the vehicle is sold

3. Dealer holdback: $656
When the dealer buys the vehicle from Toyota, the dealer DOES pay the line item on the invoice he shows you. When the dealer sells the vehicle he gets refunded this fee

4. Wholesale financial reserve: $328
When the dealer buys the vehicle from Toyota, the dealer DOES pay the line item on the invoice he shows you. When the dealer sells the vehicle he gets refunded this fee

So if you pay these fees, you're simply ensuring that the dealer makes $328+$656 on the vehicle. Guaranteed. Nothing wrong with this.

So why all the confusion, and sites like carbuyingtips.com saying never pay these fees? The confusion is cause all car manufacturers do it slightly differently. Also website do it differently too, if you go to edmunds.com, they usually include these fees in the base price of the vehicle, while when you look at the Toyota invoice, its split out as separate line items.


Go to edmunds.com and look at invoice for a
Toyota Tundra - Tundra Grade - 4WD - Flex Fuel - 5.7liter
Edmund price: $30,299
My invoice: $29041.00

My invoice + WFR + DH = 29041+656+328 = $30025

So the numbers are not too far apart.

I think it's been demystified, I'm happy to have brought closure to this. I always want to have all the facts straight.

If you find more info, let me know
 

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That's not the case, this isn't magic. We all know how every other business operates, why should this be such a mystery.

I'm happy for the dealer to get his holdback, I just need to know if he is getting it from the manufacturer and me, in which case, its a bs fee. But if he actually paid it, then I will pay him, and when the manufacturer pays him, he makes that profit.

I'm not against dealers making a profit, they have to stay in business too.
What I'm against would be the sales person telling me a lie, and running an unethical business.

best
Filip
Do we know how other businesses operate? Really? Could you explain to me a casino's business model in detailed technical terms? The basics of how a retail outlet operates behind the scenes?

In my opinion it is somewhat petty to be worried about whether the dealer is making 300 vs. 600 vs. 1300. Who cares? You're paying over 30-40K for a vehicle and worried about a few hundred dollars' difference in his profit on the deal? Is it your place to decide what he is allowed to make? How nice of you that you don't him making few hundred dollars on the deal as long as it's not what you consider an unacceptable amount.

Pay a price that is acceptable to you and fits in with your financial situation, or else move on to a different vehicle or dealership. I have never tried to figure these things out when buying a vehicle, I just pretty much do invoice deals with fair market value or better for my trade and then leave it at that. If their price is too high I get up to leave. I go to another dealership or, if a few hundred dollars really seems like it might break the bank, I look for a truck that's more in my price range. I usually will say up front, I could care less what fees I get charged and I won't look at every single little line item of the deal, the OTD amount including finance charges being acceptable is all I care about. I could care less how it's structured. This gets me where I want to be faster than when I start talking about things like holdback.

You, like most buyers, do this type of deal every 5 or more years. Your local dealer does this every day. I don't care how good of a wheeler/dealer you think you are or what anyone tells you, he will not make any less money on this deal than he wants to and no matter how hard you try, you're probably not going to know about every single cent he makes on this deal. You are wasting time turning what could be a pleasurable experience into fruitless bean counting.
 

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Discussion Starter #12
Thanks for your post, but you're off track again.
<QUOTE>
Do we know how other businesses operate? Really? Could you explain to me a casino's business model in detailed technical terms? The basics of how a retail outlet operates behind the scenes?[/QUOTE]

Those are easy, but not relevant to the discussion. Your friend google can help you.

In my opinion it is somewhat petty to be worried about whether the dealer is making 300 vs. 600 vs. 1300. Who cares? You're paying over 30-40K for a vehicle and worried about a few hundred dollars' difference in his profit on the deal? Is it your place to decide what he is allowed to make? How nice of you that you don't him making few hundred dollars on the deal as long as it's not what you consider an unacceptable amount.
Don't start the with the "feeling sorry for the dealer" jargon. We've all seen the amount of unethical business measures dealers used to use, including duplicate invoices in the 80's. This is why sites like carbuyingtips.com started out, by laying it out all. However, even that site doesn't have all the fact, specifically when it comes to Toyota invoices. So there needs to be a middle ground with real facts, not the dealers side of the story, not the carbuyingtips.com side of the story, but true facts.

You're clearly not familiar with anti trust policies and so forth. This is exactly what dealers have been exercising for many years. We're just leveling the ball field here, there is nothing wrong with that, in fact, it's the buyers right.

And that's why I started the thread, I even specifically mentioned, that if you don't know, don't bother posting, but the trolls always creep up.

I did my research, I posted the results and the thread has been resolved.
I POSTED FACTS. Not sure what point you're trying to make, but I'm not getting it.

Thanks and have a nice holiday, since the thread has all the facts it needs I wont be back in this thread. Thanks to those who chimed in.
 

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Thanks for your post, but you're off track again.
<QUOTE>
Do we know how other businesses operate? Really? Could you explain to me a casino's business model in detailed technical terms? The basics of how a retail outlet operates behind the scenes?
Those are easy, but not relevant to the discussion. Your friend google can help you.



Don't start the with the "feeling sorry for the dealer" jargon. We've all seen the amount of unethical business measures dealers used to use, including duplicate invoices in the 80's. This is why sites like carbuyingtips.com started out, by laying it out all. However, even that site doesn't have all the fact, specifically when it comes to Toyota invoices. So there needs to be a middle ground with real facts, not the dealers side of the story, not the carbuyingtips.com side of the story, but true facts.

You're clearly not familiar with anti trust policies and so forth. This is exactly what dealers have been exercising for many years. We're just leveling the ball field here, there is nothing wrong with that, in fact, it's the buyers right.

And that's why I started the thread, I even specifically mentioned, that if you don't know, don't bother posting, but the trolls always creep up.

I did my research, I posted the results and the thread has been resolved.
I POSTED FACTS. Not sure what point you're trying to make, but I'm not getting it.

Thanks and have a nice holiday, since the thread has all the facts it needs I wont be back in this thread. Thanks to those who chimed in.[/QUOTE}


Just saying. You claim to know how every other retail op. works so it should be the same with car dealerships. I have no interest in looking it up in google. I wanted to hear from you because apparantly you know.

It has nothing to do with sympathy from dealers or a fair shake for me. I just have no interest in trying to dictate the dealer's profit. I can only control what I can control, which is paying the price I want. Why should I care how much money he makes or where it comes from. This stuff was actually put out there by the car industry to try to convince the customer base they were making it easier for them to get a fair shake on car deals.

By the way, the context in which you use the term 'anti-trust' indicates you do not even completely understand the meaning of the term.
 

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Discussion Starter #14
Since the thread clearly aims to only define one thing, and it has successfully done so, one must read this before considering another posting

Troll (Internet) - Wikipedia, the free encyclopedia

In Internet slang, a troll is someone who posts controversial, inflammatory, extraneous, or off-topic messages in an online community, such as an online discussion forum, chat room or blog, with the primary intent of provoking other users into an emotional response[1] or of otherwise disrupting normal on-topic discussion
http://en.wikipedia.org/wiki/Internet_trolls#cite_note-IUKB_def-1
 

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Since the thread clearly aims to only define one thing, and it has successfully done so, one must read this before considering another posting

Troll (Internet) - Wikipedia, the free encyclopedia

http://en.wikipedia.org/wiki/Internet_trolls#cite_note-IUKB_def-1
Thought you were done with this tread. Happy holidays to you. Im curious to find out about your deal, when the papers are signed post back and let us know down to the penny how much profit you decided to give the dealer permission to make. Personally I think it should be $569.87, not a penny more. If he tries to make 570 even off you you should walk.
 

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Toyota's holdback is 2% of the base MSRP excluding destination and any accessories or options. In the Southeast Toyota region, the holdback is 2% of the total invoice price.

Toyota also has a wholesale financial reserve that is 1% of the base MSRP.

So holdback is 3% of the base MSRP (excluding the Southeast Toyota region which is adjusted per the holdback mentioned above).

Good luck on your purchases.
 

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Pay a price that is acceptable to you and fits in with your financial situation, or else move on to a different vehicle or dealership.
Well said. :tu:
 

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wow, lots of extra words here

yes the dealers pays it, Yes he gets it back in most cases if he sells the car in their own stock
 
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