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.

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