What was once a well-kept auto industry secret has been out of the bag for some time now and is considered fair game by the savvy car buyer. This secret is car dealer holdback on new cars, this car dealer holdback is also know as the secret money that car dealers receive from the auto makers when they sell a car that lowers their cost of each new car and ultimately adds to their profit. For years this secret money was not discussed and never entered into car sales negotiations, but things are different toady when it comes to buying a car.
History of Car Dealer Holdback
Many years ago car dealer hold back was set up by the automakers to help the dealerships pay their quarterly taxes, by paying out the holdback on a quarterly basis so dealers could pay their taxes in a timely manner and avoid tax liens or even losing their dealership for non payment of taxes. Years ago you could open a new car dealership on a shoestring, but things have changed dramatically over the years. Today you can’t open a new car dealership unless very easily, there are many stringent qualifications and financial responsibility is a top priority.
Car Dealer Holdback Today
New car dealerships today are well funded and professionally managed by educated owners and managers so manufactures don’t need to worry about losing dealers for tax reasons, but car dealer holdback is still around. Dealers still don’t like to talk about holdback and they will do all they can to avoid giving up that secret money to make a sale, but more and more dealers are giving some or part of that profit away to make deals.
Not all auto manufacturers have car dealer holdback, but most do as you can see from the chart below. The good news is that this secret money is fair game today and with the proper research, shopping and negotiation you can save hundreds or even a thousand dollars or more on your next new car. Take a look at the chart below for the new car that you are thinking about buying and see what kind of secret holdback money you may be able to save if you follow the advice in this car-buying guide.
Car Dealer Holdback Amounts
The car dealer holdback is a percentage of the base MSRP of the new car that the dealer receives from the automaker when they sell and register the vehicle.
of Base Price or Total Price
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