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How can a dealership sell a car at a price that is close to their invoice price and still make a profit?

Dealerships can sell a vehicle at a low price that is close to their actual invoice price for any of a variety of reasons:

  • The dealership may be receiving additional money back from the manufacturer in the form of a "holdback" (or "kickback") for selling a certain volume of cars.
  • There may be a factory-to-dealer rebate for the car they are selling.
  • The dealership may be making its profit from the financing of the vehicle rather than from the selling price of the vehicle.
  • The dealership may be making its profit from its Service Department rather than from its Sales Department.
Because the dealership has these alternate means of making a profit, selling a vehicle at a price that is close to their invoice price is sometimes not a problem for them.


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