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A local dealership is advertising a new car for $16,888. The car's invoice is $20,190. How can they sell a car at over $3,000 below the invoice price?

A dealership may advertise a car at below-invoice-prices under several possible circumstances:

  • They are willing to take a loss on one particular car (called a "loss leader") in order to bring in new business.
  • There is a factory-to-dealer incentive (a rebate from the manufacturer to the dealership) so that they actually have more profit available than just the invoice.
  • The advertised car is a "demonstrator" or "program" car that may be slightly "used" so they need to get rid of it.
  • The dealership knows that it will make its profit from the financing of the vehicle.


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