Cash Back ?

[DrVeneer]

Looking at getting an 04 GMC Yukon XL. When negotiating the price, does the cah back offer come off the best price or does the dealer take that off the top to get to the best price. Told I could order one for $200 over invoice. Do I still get the cash back on top of that?

[seadoons]

Hello and welcome to the board! Stick around - lots of good information here. As far as the cash back offer goes, I don't know what you don't know and do know, so I will try to explain it all. There are two kinds of incentives:

 

1. Factory Incentives

2. Dealer Incentives

 

Usually the cash back offer is a factory incentive, meaning it does not cost the dealership anything to give that incentive to you. The factory pays the dealership back for taking off the factory incentives.

 

The invoice price is what the dealer pays for the vehicle (minus the holdback)

The "holdback" is a small percentage of the factory to dealer selling price that the factory holds on to until the dealer sells the car, and then the factory pays the dealer that money. So here is an example:

 

2004 Yukon: $40,000

Invoice Price: $35,000

Invoice Price minus holdback: $34,500

 

If you are paying $200 over the invoice, you pay $35,200. The dealer's profit is the $200 AND the $500 holdback that the factory will send to them after selling you the car. The holdback part is a way for the dealer to make a profit so long as the car is sold at the "invoice" price. You will never pay the "invoice minus holdback" price...they will only go as low as the "invoice" price.

 

All of the above pricing has to do with dealer prices/incenitves and has nothing to do with factory incentives. If you work out a deal to pay $200 over invoice, you are paying $35,200 - the dealer is making a $700 profit ($500 holdback and $200 over invoice).

 

It seems to me that the factory incentives could be taken off that price, meaning you would pay $33,200. Although this selling price would be less than what the dealer paid for it, the dealer would get the $2000 back from the factory AND still make it's $700 profit. If they tell you that the price of $35,200 includes the cash back offer, they are going to make a $2,700 profit (cash back plus the $700).

 

Tell them you will pay $200 over invoice MINUS the "factory" $2,000 cash back offer.

 

Please note that the factory incentives have expiration dates and only apply the day you take delivery of the vehicle. If you are planning on ordering a Yukon, the current cash back offer might not be in effect. On the flip side of the coin, there could be a better offer when you take delivery.

 

Sorry for the long post - I have spent much time researching this in my life and am very passionate about getting every dollar I can.

[justinerau]

Just to confirm the previous post IS correct. I am a internet/fleet manager of a chevrolet store. ALWAYS negotiate price!!! Word to the wise.....when purchasing a vehicle, ALWAYS go to the store and ask for the FLEET DEPT. Fleet managers are designed to move product quickly and hassle free; prices are usually a few hundred dollars above invoice depending on the vehicle. You still are giving any and all incentives on top of the price as well.

[Mr Mojo]

I bought mine for $400 under invoice with teh GM Supplier discount and $3000 cashback and my GM Card and a couple other small rebates. Don't know if I was supposed to get the $3000 off after the $400 below or if it was already taken off, but my truck was $21,669 before taxes and the sticker was $29,200.