Need advise
 

This may be a little off subject but I can't find an answer to this question anywhere or from anyone except possibly the dealer and they sure are not going to tell me. Question: When you are negotiating the price of a new car with the dealer and there is a $1,500 cash incentive from the factory, do you deduct the incentive from the MRSP or the invoice? I think it makes a difference because the dealer says "I want $1,000 over invoice" for the car and if the incentive has been deducted from the invoice the starting point has already been reduced by $1,500 or am I really missing something? Any advise will be greatly appreciated...Thanks Desert

In my limited experience, MSRP is the starting point for negotiations with the dealer. The incentive is a gimick to get you in the dealership. Only the dealer knows what the car actually will cost him because of the factory hold-back. Dealer invoice is not what the dealer pays. Even if you got the car "at invoice", the dealer pays less in the end. But, a car sitting on a dealer lot is costing him interest on his loan and overhead every day. It costs a lot of money to run a dealership and they can't stay in business totally on what the service department brings in. There is car negotiating advice all over the internet. $1K over invoice on a $50K Mercedes is not a huge profit percentage wise. Consider that the profit margins are on many things you buy every day are frequently 50% or more.

Thanks very much for your input, that's good information....Desert

Subtract it from what the dealer wants; it's an incentive from the factory. Understand there are "holdbacks" and other ways the dealer gets his profit. Also understand that no one gets 50% profit (regularly, on significant items) just by buying and selling.