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2016 Toyota Price Report: MSRP, Invoice Prices, Holdback & "Real" Dealer Cost


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Toyota Invoice price vs dealer cost w/ MSRP and Holdback
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Each Toyota price report below reveals the MSRP, invoice price, holdback, and what the dealer paid - the real dealer cost for all Toyota models. They come complete with detailed pricing data for all their optional equipment. (Details of what these terms mean are included in the price reports below and at the bottom of this page.)

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FAQ: Toyota Price Terms & Meanings



   

What is MSRP when buying a Toyota?

Toyota MSRP

When buying a car, consumers might notice a price that is listed under the heading of MSRP. This price is different than the sticker price offered by the dealer, and there is a reason for this discrepancy.

Buying a vehicle for a specific price means that the manufacturer will suggest a retail price, and the shorthand for this is called MSRP. However, this is simply a suggestion, and the actual selling price will often be different from the manufacturer’s suggested retail price, or MSRP.

There are also other ways of calculating the final price, and this includes the settled price after a negotiation with the customer. In addition, the MSRP is also called the suggested retail price for the vehicle. The manufacturer will calculate this price to account for various hidden costs while arriving at a profit margin that can withstand the negotiation process.

       

What is an Invoice Price on a new Toyota?

Toyota Invoice Price

Just like the MSRP is a suggested selling price provided by the car manufacturer, the invoice price is the amount that the dealership had to pay to acquire the car in the first place. When a car dealer purchases a vehicle from a manufacturer, the dealer will receive the vehicle with an invoice price attached. This is also sometimes called the dealer cost.

The actual price paid depends on any discounts that are applied to the transaction. This is true even if the discounts are not written down on the actual invoice.

Common discounts include consumer credits, tax and title fees, and other rebates. After all of these calculations are done, the dealer will have an invoice price, which is offered to the customer.

       

What is the difference between the invoice price and the MSRP?

The difference between the MSRP and the invoice price is roughly the amount of profit that the dealer can expect to make after selling the vehicle. Most dealers will resist selling the car at a price that is lower than the invoice price because that will cut into their expected profit margins. 

The invoice price is the amount that the dealer agrees to pay to the manufacturer upon receiving the vehicle. This price is often higher than the actual amount of money paid to the car manufacturer because of the applied discounts for the dealer. After the dealer accounts for all of the transactional costs included in obtaining the vehicle, they will issue an invoice price to the customer. This price can still be negotiated by the buyer. 

The manufacturer’s suggested retail price, or MSRP, is just a suggestion of what the dealer should charge the customer for the car. This price takes into account a variety of hidden costs, and it is just intended as a guide to give the dealer an idea of how much they need to charge to cover the costs of doing business and make a profit. The MSRP also reflects the value of any add-on costs, optional items and shipping charges. 
       

What is the dealer holdback on a new Toyota?

Toyota Holdback

When a manufacturer issues an invoice and an MSRP to a dealer, they might reduce the total amount by a specific percentage. This will usually go into effect after the vehicle is sold, and it functions as an incentive.

There are different ways to use this dealer holdback, or the percentage refunded to the dealer by the manufacturer, but the actual amount is calculated by the manufacturer. The dealer can use the holdback as a way of increasing the total amount of the loan for the vehicle. The percentage of the holdback will be taken out of the total price, which is often inflated.

The effect of the dealer holdback is that the gross amount of profit is used to determine sales commissions. This can also allow the dealer to use holdbacks to make the final price appear closer to the invoice. 

       

What is the destination fee on a new Toyota?

The destination fee on new cars is a charge that is designed to cover the delivery costs of the vehicle. The new car is typically loaded onto a truck after it is assembled at the manufacturing facility, and it is transported to the dealer. The destination fee is a charge that the dealer can add to the sticker cost of the vehicle. The buyer pays this fee regardless of the distance between the manufacturer and the dealer. The destination fee is typical higher when the vehicle is transported in a closed truck or wrapped in industrial-grade film. 
       

What is a dealer advertising fee?

The dealer advertising fee is an additional charge that the dealer can add to the invoice of a vehicle. This is a cost that the dealer generally tries to recover by charging the customer an additional amount on the sales invoice. The car manufacturers generally advertise in the area, and the cost of this advertisement benefits the dealers, so the manufacturer will try to recover some of this cost by passing it on to the dealers in the area. Dealers often try to pass these costs onto the customer, who generally tries to negotiate them down.
       

What is the Dealer Cost of a Toyota?

Dealer Cost of a Toyota

Many dealers claim to pay the amount for the vehicle as it appears on the invoice. However, most of the sales force, managers and customers are all unaware of the actual price paid by the dealer.

The manufacturer and the dealer are normally the only parties who are aware of the actual price. The invoice price is estimated to be marked up almost 50%, according to some critics of the practice, but that is just an educated guess.

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