Dealer Holdback

Car manufacturer's recently established dealer holdback, which is an added markup on the invoice price of a car. This added markup(typically 2-3% of MSRP added to the invoice price) is known as dealer holdback. The dealer holdback money is later given back to the dealership, usually quarterly, by the manufacturer. This allows dealerships to advertise lower prices on their cars. You may have seen dealership advertisements offering cars at invoice price. The truth is that the dealership still makes a nice amount of money from the sale of the car. Let's work out an example using Acura as the car manufacturer. Acura offers a 3% dealer holdback of the base MSRP. If you were to buy your Acura at the invoice price, and the base MSRP was $25,000, the dealership still receives $750 on the deal when they receive the dealer holdback from Acura.

Dealer holdback also lowers the sales commissions paid to the car salesman. Dealer holdback inflates the cost of the car, temporarily lowering the profit made, which takes away commission money from the salesman since salesman are paid a percentage of the profit. The dealership later receives the dealer holdback money, and the salesman does not receive any of this dealer holdback money. Below is the dealer holdback offered by each car manufacturer.

Make	Dealer Holdback
Acura	3% base MSRP
Audi	no dealer holdback
BMW	no dealer holdback
Buick	3% total MSRP
Cadillac	3% total MSRP
Chevrolet	3% total MSRP
Chrysler	3% total MSRP
Daewoo	no dealer holdback
Dodge	3% total MSRP
Ford	3% total MSRP and additional 1.25% rebate of total invoice to Blue Oval Dealers
GMC	3% total MSRP
Honda	3% base MSRP
Hummer	3% total MSRP
Hyundai	2% total invoice
Infiniti	1% base MSRP and 2% base invoice
Isuzu	3% total MSRP
Jaguar	no dealer holdback
Jeep	3% total MSRP
Kia	3% base invoice
Land Rover	no dealer holdback
Lexus	2% base MSRP
Lincoln	2% total MSRP and additonal 2.5% rebate of total invoice to certified dealers
Mazda	2% base MSRP
Mercedes Benz	3% total MSRP
Mercury	3% total MSRP
MINI	no dealer holdback
Mitsubishi	2% base MSRP
Nissan	2% and 1% total invoice
Oldsmobile	3% total MSRP
Plymouth	3% total MSRP
Pontiac	3% total MSRP
Porsche	no dealer holdback
Saab	2.2% base MSRP
Saturn	3% total MSRP
Scion	no dealer holdback
Subaru	3% total MSRP (may differ in northeast U.S.)
Suzuki	3% base MSRP and an additional 1% for floorplanning allowance
Toyota	2% base MSRP (may differ in southern U.S.)
Volkswagen	2% base MSRP
Volvo	1% base MSRP

* Total MSRP: includes the MSRP price of all options before figuring the dealer holdback.
* Base MSRP: dealer holdback is calculated without including options.
* Total Invoice: includes the invoice price of all options before figuring dealer holdback.
* Base Invoice: dealer holdback is calculated without including options.

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