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HOW THE AUTO INDUSTRY HAS DISGUISED DEALER
INCENTIVE DOLLARS AS DEALER COST DOLLARS BY
MOVING THEM FROM THE MSRP/STICKER PRICE
INTO THE INVOICE PRICE FOR OVER 18 YEARS.

THIS PR0CESS STARTED WHEN THE INTERNET ARRIVED IN 1995 AND CONTINUES TODAY. AS A RESULT, THE INVOICE PRICE HAS BECOME A BLOATED IMPOSTER THAT BEARS NO RELATIONSHIP TO ANY ESTIMATE OF "DEALER COST." AND THE VISIBLE "GROSS PROFIT " DIFFERENCE BETWEEN THE INVOICE AND THE MSRP HAS BEEN CUT TO THE POINT THAT NO DEALERSHIP COULD KEEP ITS DOORS OPEN IF THE INVOICE PRICE WERE A REAL COST NUMBER.

"HOLDBACK," IS POCKET CHANGE COMPARED TO THE BONUS CHECKS DEALERS CAN EARN IN THE TRULY-SECRET INCENTIVE PROGRAMS THIS DISGUISED MONEY FUNDS — PROGRAMS THAT ARE TYPICALLY BASED ON TOTAL SALES OBJECTIVES THAT STRETCH OVER SEVERAL MONTHS AND ARE NOT VEHICLE-SPECIFIC.

THIS FACT MAKES THE INVOICE-BASED "TARGET PRICES" AND LUDICROUS, DEALER-FRIENDLY "PAY WHAT THE OTHER CLUELESS CAR SHOPPERS HAVE PAID" ADVICE THOSE ONLINE AUTO INFO SITES GIVE YOU ABOUT AS VALUABLE AS A SNOOZE BUTTON ON A SMOKE ALARM.

THAT ADVICE WILL NEVER GET YOU THE BEST PRICE AVAILABLE. (BUT IT WILL MAKE DEALERS DANCE A JIG.)

STILL SKEPTICAL? READ ON TO SEE HOW THE VISIBLE GROSS PROFIT HAS BEEN CUT BY 40% TO 73% OVER THE YEARS ON 47 POPULAR MODELS OF 23 BRANDS.

I DON'T INVENT THE NEWS. I JUST REPORT IT WHEN NO ON ELSE WILL BECAUSE THEY DON’T WANT YOU TO KNOW IT.

% GROSS PROFIT BUILT INTO THE STICKER PRICE
(MSRP — Invoice Price χ MSRP = % Markup/Gross Profit)

ACURA TL SEDAN
1994 – 15.2%
1996 – 13.2%
1998 – 10.7%
2000 – 9.8%
2003 – 8.8%
2007 – 8.3%
2008 – 8.1%
2011 – 7.2%
2012 – 6.4%

Acura TSX Sedan
1994 - 14.1%
1996 - 12.1%
1998 - 10.7%
2000 - 9.8%
2004 - 8.8%
2007 - 8.2%
2008 - 8.0%
2011 - 7.0%
2013 - 6.2%

Audi A4 Sedan
1993 - 15.2%
1995 - 12.1%
2000 - 11.1%
2002 - 9.1%
2007 - 7.4%
2013 - 7.1%

Audi A4 Avant/AllRoad
1993 - 16.4%
1998 - 11.5%
2000 - 10.6%
2002 - 9.2%
2007 - 7.4%
2013 - 7.0%

BMW 3-Series Convertible
1993 - 16.3%
1995 - 15.9%
1996 - 13.6%
1998 - 12.4%
2000 - 9.5%
2002 - 8.6%
2013 - 8.0%

BMW 5-Series Sedan
1993 - 16.2%
1998 - 12.4%
2000 - 9.7%
2002 - 8.7%
2013 - 8.0%

BMW 7-Series Sedan
1993 - 18.2%
1996 - 13.9%
1998 - 12.5%
2000 - 9.8%
2002 - 8.7%
2013 - 8.0%

Buick LaCrosse
1993 - 12.5%
1995 - 10.5%
2000 - 8.5%
2007 - 5.5%
2013 - 4.0%

Buick Regal
1993 - 12.5%
1996 - 8.5%
2013 - 4.0%

Cadillac DTS/XTS
1993 - 13.5%
1995 - 8.5%
2000 – 8.2%
2007 - 6.5%
2013 - 5.5%

Chevrolet Corvette
1993 - 14.5%
1998 - 12.5%
2007 - 10.5%
2013 - 6.5%

Chevrolet Impala
1993 - 12.5%
1995 - 9.5%
1998 - 8.5%
2007 - 5.5%
2013 - 4.0%

Chrysler 300
1993 - 12.7%
1995 - 10.0%
2000 - 8.8%
2003 - 8.3%
2005 - 7.4%
2007 - 7.0%
2011 - 5.0%
2013 - 4.6%

Chrysler Town & Country
1993 - 10.4%
1994 - 9.6%
2002 - 8.9%
2011 - 6.0%
2013 - 5.2%

Dodge Charger
1993 - 12.9%
1995 - 10.1%
1998 - 8.7%
2004 - 7.5%
2007 - 6.9%
2013 - 4.5%

Dodge Grand Caravan
1994 - 10.0%
2002 - 9.0%
2005 - 8.5%
2011 - 5.4%
2013 - 4.8%

Ford Explorer
1993 - 11.4%
1996 - 10.3%
2003 - 9.6%
2008 - 7.2%
2011 - 7.0%
2013 - 6.8%

Ford Mustang
1993 - 10.4%
1995 - 10.0%
1996 - 9.1%
2002 - 8.5%
2011 - 8.1%
2013 - 7.7%

Honda Accord
1993 - 16.0%
1995 - 11.6%
2000 - 11.1%
2002 - 10.0%
2011 - 9.4%
2012 - 8.6%
2013 - 8.5%

Honda Civic
1993 - 15.0%
1995 – 10.3%
2000 – 9.7%
2002 – 8.6%
2011 – 8.0%
2013 – 7.1%

Hyundai Accent
1993 - 9.8%
1998 - 7.4%
2000 - 6.4%
2013 - 2.9%

Hyundai Elantra
1993 - 11.7%
1998 - 10.4%
2000 - 8.0%
2007 - 7.5%
2013 - 4.2%

Hyundai Sonata
1993 - 12.3%
1998 - 11.9%
2000 - 10.8%
2002 - 9.8%
2013 - 6.5%

Infiniti G Sedan
1993 - 20.0%
1995 - 16.0%
1996 - 15.2%
2003 - 9.4%
2007 - 8.0%
2011 - 7.7%
2013 - 7.4%

Jaguar XJ Sedan
1995 - 18.4%
1996 - 15.9%
1998 - 12.6%
2007 - 8.9%
2013 - 8.0%

Jeep Grand Cherokee
1993 - 9.9%
2002 - 8.8%
2011 - 6.0%
2013 - 5.1%

Jeep Wrangler 2-door
1993 - 9.1%
2007 - 8.8%
2011 - 5.9%
2013 - 5.8%

Lexus ES Sedan
1994 - 18.0%
1995 - 17.0%
1996 - 15.0%
1998 - 13.1%
2002 - 11.3%
2008 - 10.3%
2011 - 9.3%
2013 - 6.3%

Note: Lexus also eliminated holdback on all its vehicles in Feb ’12
to squirrel away more profit dollars that you could previously identify.

Lexus GS Sedan
1994 -18.0%
1995 - 17.0%
1996 - 15.0%
1998 - 14.1%
2007 - 13.0%
2008 - 12.0%
2011 - 11.0%
2013 - 7.0%

Lexus LS Sedan

1994 - 20.0%
1995 - 18.0%
1996 - 16.0%
1998 - 15.2%
2002 - 13.0%
2008 - 12.0%
2011 - 11.0%
2013 - 8.0%

Lexus RX SUV
2000 - 13.1%
2002 - 12.0%
2004 - 11.5%
2011 - 9.5%
2012 - 6.5%

Lincoln Town Car
1993 - 15.3%
1995 - 13.0%
1996 - 12.0%
1998 - 9.0%
2003 - 8.6%
2011 - 6.2%

Mazda3 Sedan
1993 - 9.9%
1995 - 8.9%
2000 - 7.5%
2011 - 6.4%
2013 - 4.4%

Mazda6 Sedan
1993 - 12.9%
1995 - 10.9%
1998 - 10.0%
2000 - 8.8%
2002 - 7.8%
2011 - 7.6%
2013 - 5.6%

Mercedes C-Class Sedan
1993 - 17.0%
1995 - 15.0%
1998 - 13.0%
2000 - 2013 - 7.0%.

Mercedes E-Class Sedan
1993 - 17.0%
1996 - 13.0%
2000 - 2013 - 7.0%.

Nissan Maxima
1993 - 13.3%
1995 - 12.5%
1996 - 11.0%
2000 - 10.1%
2004 - 8.6%
2013 - 8.4%

Nissan Sentra
1993 - 11.8%
1995 - 10.8%
1996 - 9.4%
2000 - 8.6%
2013 - 6.7%

Subaru Legacy Sedan
1993 - 12.1%
1995 - 10.5%
2000 - 9.4%
2007 - 7.2%
2011 - 6.8%
2013 - 6.2%

Subaru Outback Wagon
1993 - 12.1%
1995 - 10.5%
2000 - 9.4%
2007 - 7.2%
2013 - 6.4%

Toyota Camry
1993 - 16.0%
1995 - 13.3%
1998 - 12.5%
2002 - 11.0%
2008 - 10.8%
2013 - 9.0%

Toyota Corolla
1993 - 14.0%
1995 - 12.3%
1998 - 11.4%
2003 - 9.5%
2013 - 7.3%

Toyota 4Runner
1993 - 15.5%
1996 - 13.2%
1998 - 12.5%
2003 - 10.7%
2008 - 9.7%
2013 - 8.0%

VW Jetta Sedan
1994 - 9.6%
1995 - 7.7%
2000 - 9.0%
2002 - 8.8%
2007 - 6.6%
2008 - 5.4%
2013 - 4.0%

VW Passat
1993 - 11.8%
1995 - 10.0%
2000 - 8.1%
2007 - 7.3%
2008 - 6.4%
2013 - 4.1%

Volvo S80 Sedan
1994 - 14.0%
1995 - 9.5%
1996 - 8.6%
1998 - 8.4%
2000 - 8.2%
2002 thru 2013 - 6.0%

Volvo XC70
1994 - 13.6%
1995 - 9.1%
1996 - 8.3%
1998 - 8.1%
2000 - 7.4%
2002 thru 2013 - 6.0%


I presented this exhibit to senior execs of Kelley Blue Book, Cars.com, Edmunds, TrueCar and Consumer Reports in a USA TODAY roundtable discussion on November 27, 2012. You could have heard a pin drop as they read it. No one there was aware of this 18-year total reconstruction of the invoice-MSRP relationship! They all left the meeting with this info, but they've been silent about it ever since.

They're all threatened by The Truth. This revelation dramatically alters the smart way to negotiate the price of a new vehicle. And it makes all the information and advice you're getting from them bone-stupid. But they all (including Consumer Reports) take money that comes from car dealers, so they can't tell the truth.

The Fighting Chance information package, described on our home page, outlines everything you should do in this totally-changed retail environment to get the best deal available. And we'll be here to answer your questions as you go through the process.

I look forward to helping you accomplish that.

James Bragg


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