Sharp, aggressive shoppers will be further empowered by a full understanding of what's at stake at the front end, the back end and the trade-in of a new-car deal.
The front end is the difference between the wholesale and the retail price – what the dealer pays for a vehicle and what you pay. This information helps you negotiate up from the invoice price rather than down from the sticker.
In theory, finding complete or near-complete pricing information is easy. Plenty of pricing services offer dealer invoice pricing online – carcostcanada.com, Unhaggle.com, APA.ca – and the reports often, if not always, include details about factory-to-dealer incentives, as well as information on dealer incentives.
But there is an important third leg to the dealer cost stool: dealer holdback. This is a portion of the factory invoice collected by some car makers, which is refunded periodically to dealers as a sales incentive. How often the holdback comes into play varies from manufacturer to manufacturer and region to region. Don't expect dealers or car makers to share this information.
But don't think that car sellers regularly have thousands in their back pockets to sweeten every deal. The dealer margin on a sale generally runs to 4 to 7 per cent of the MSRP. On premium vehicles, the margin can be higher, but it can also be minuscule on an entry-level ride. Dealers need to cover sales commissions and their fixed overhead costs with that margin, then perhaps turn a final net profit on the sale.
Dealers also make money on add-ons – rust-proofing, extended warranty protection, financing, life and disability insurance, fabric protection and all the other things called "the back end." You'll need to decide whether you want additional warranty coverage on a vehicle with a multi-year bumper-to-bumper warranty. You should also consider the fact that dealers can often give deliver lower financing rates than banks and credit unions.
Finally, the trade-in. Ideally, you'll negotiate this transaction separately from the new-vehicle purchase. Naturally, the salesperson wants to pay bottom dollar for a used car he can sell later at top dollar. Don't confuse the two deals by combining them into one.
Take the time to research every deal, using the power of the Internet and other sources. As a starter intended to help you along, here are important details about four interesting deals.
Deals of the Week consulted with unhaggle.com, Car Help Canada, carcostcanada.com, and other sources on these offers. Pricing information here is subject to change and dealer discounts vary, so consult your dealer for all the final details, including expiry dates for all offers.
2015 Audi A6
(Sedan quattro 3.0L TDI Progressive)
- MSRP: $64,800
- Freight, dealer prep, air conditioning tax: $2,230
- Dealer discount (estimated): $3,378
- Factory discount: $2,500 (manufacturer incentive)
- Factory discount: $1,500 (loyalty incentive)
- Taxable subtotal: $59,652
- Total price with 13 per cent HST: $67,406.76
All incentives are available with 1.9 per cent financing for 48 or 60 months, a 2.9 per cent finance rate for 84 months, or a 2.9 per cent lease rate for 48 months.
2015 Mercedes-Benz E300
- MSRP: $60,500
- Freight, dealer prep, fees and air conditioning tax: $2,210
- Dealer discount (estimated): $2,445
- Factory discount: $2,000 (manufacturer incentive)
- Taxable subtotal: $58,265
- Total price with 13 per cent HST: $65,839.45
All incentives are available with a 1.9 per cent finance rate for 48 or 60 months, or a 2.9 per cent lease rate for 39 or 45 months. A loyalty rate reduction of 0.5 per cent is available with finance and lease rates.
2015 Nissan Altima
(Sedan V4 CVT 2.5 SL)
- MSRP: $29,048
- Freight, dealer prep, AC tax: $1,830
- Dealer discount (estimated): $1,581
- Factory discount: $1,750 (manufacturer incentive)
- Taxable subtotal: $27,547
- Total price with 13 per cent HST: $31,128.11
A $2,000 factory incentive is available with 1.9 per cent financing for 48 months, 2.49 per cent for 60 months, 2.99 per cent for 84 months; or, a 2.49 per cent lease rate for 48 or 60 months. A 1 per cent loyalty reduction rate is available with finance and lease rates.
2015 Subaru BRZ
(Coupe Automatic Sport-tech)
- MSRP: $30,595
- Freight, PDI, AC tax: $1,785
- Dealer discount (estimated): $1,416
- Factory discount: $500 (manufacturer incentive)
- Taxable subtotal: $30,464
- Total price with 13 per cent HST: $34,424.32
Factory incentives are available with a 2.9 per cent finance rate for 48 or 60 months, or a 2.9 per cent lease rate for 48 months.
Pricing information source: unhaggle.com and carcostcanada.com. Calculations based on Ontario customers. Please note that while the information above is accurate at the time of publication, incentives are given at the discretion of individual dealers, and may be changed or discontinued at any time. Where noted, "dealer discounts" are negotiated with the customer on a case-by-case basis. Unhaggle Savings are actual discounts received by Unhaggle customers.