Vehicle Invoices and Pricing

Question 1

Questions

Answer 1

Answers

Question 2

2.1.1 What is the Advertising cost on a vehicle invoice? (p.12)

Answer 2

1 % of MSRP or Flat Dollar amount set by Factory

Question 3

2.1.2 Define the term Bid Assistance. (p.12)

Answer 3

Additional negotiated rebates that may replace or be in addition to Nation Fleet Rebates

Question 4

2.1.3 What is the Dealer Invoice price and how is it calculated? (p.12)

Answer 4

AKA Factory Invoice - Amount the dealer pays the manufacturer for a specific vehicle

Question 5

2.1.4 What are Factory to Dealer incentives? (p.12)

Answer 5

$ paid to Dealer by the Manufaturer to sell specific models

Question 6

2.1.5 What is meant by the term financing on a Dealer invoice? (p. 12)

Answer 6

AKA Floor Plan - Flat dollar amount that is included in the factory invoice.

Question 7

2.1.6 What are Fleet incentives and who funds them? (p.13)

Answer 7

$ given by Manufacturer to Fleet as added incentive - Usually 100% funded by Factory

Question 8

2.1.7 What is Factory Holdback? (p.13)

Answer 8

$ paid to Dealer by Manufacturer by the Factory after the car has been sold. ( Usually quarterly ) / Usually between 2% and 3%

Question 9

2.1.8 Define the term MSRP. (p.13)

Answer 9

The retail selling price of the vehicle as determined by the manufacturer, printed on the label (the Monroney Label) on the window

Question 10

2.1.9 What is triple net invoice? (p.13)

Answer 10

Manufacturer-to-dealer invoice price less holdback less advertising & financing.

Question 11

2.2.1 What is the most important document in a vehicle purchase? (p.13)

Answer 11

Factory Invoice : The price the dealer pays the manufacturer for the vehicle. This is not generally their net cost, which is influenced by the holdback and any factory to dealer incentives

Question 12

2.2.2 What information do you need to know in order to get the lowest possible price for a vehicle? (p.13)

Answer 12

Dealer Cost

Question 13

2.2.3 What is a good starting price to use for negotiating with a vehicle supplier? (p.13)

Answer 13

invoice price

Question 14

2.2.4 What type of information is contained on a standard factory invoice? (p.13)

Answer 14

1. Price
2. Features
3. Details on purchase and Delivery
4. 2 colums to compare MSRP and Factory Invoce Price
5. Near the end of the invoice there may be a section detailing the invoice total, holdback, incentive programs and cost categories

Question 15

2.2.5 What is the most important strategy to use when considering multiple vehicles? (p.14)

Answer 15

Be consistent in how you evaluate each invoice, and to use the same starting point for each negotiation.

Question 16

2.2.6 What is the Formulae for Triple Net? (p.14)

Answer 16

Manufacturer-to-dealer invoice – Holdback – Advertising – Financing = Triple Net Cost

Question 17

2.3.1 How can Fleet sales benefit a car dealer? (p.22)

Answer 17

1. It is often in the dealer’s best interest to sell vehicles to a fleet for a much lower price than to sell the vehicles individually.
2. Typically, it takes dealers months to sell the same number of vehicles that it would sell to an organization at one time through a fleet
   purchase
3. If the dealer sells vehicles to a fleet, the potential also exists that the dealer will be able to sell the organization a contract to service
   the fleet, which brings in more income for the dealer.

Question 18

2.3.10 What warranty considerations does the Fleet manager have to keep in mind during the purchasing process? (p.26)

Answer 18

1. Typically Non-negotialble
2. There is often no consistency and the formatting and offerings will change based on the vehicle model, year, and manufacturer.

Question 19

2.3.2 What are some of the vehicle manufacturer’s requirements for Fleet pricing? (p.22)

Answer 19

1. For some manufacturers, a requirement for fleet pricing is to NAFA’s Asset Management purchase five or more vehicles
2. For others the requirement may be larger, such as a minimum of 10 vehicles
3. It is possible that the requirement is specified on a term basis such as leasing 15 vehicles one year as well as purchasing/leasing 5 new vehicles each year

Question 20

2.3.3 What are some of the advantages of purchasing vehicles in bulk? (p.24)

Answer 20

1. Price
2. Additionally, organizations can generally negotiate good deals through the dealership on servicing their new fleet of vehicles
3. Top price on a trade-in

Question 21

2.3.4 Why would an organization want standard vehicle specifications? (p.25)

Answer 21

The idea is to develop core specs for vehicles while still allowing for slight variations for factors such as geographical location, terrain, etc.

Question 22

2.3.5 What are the best practices for lowering costs using standard vehicle specifications? (p.25)

Answer 22

1. Centralize fleet management.
2. Distinguish “needs” from “wants”. ( seats / 2-wheel vs 4wheel drive / Gasoline / Sandard length pickup box
3. Conduct annual specification reviews. - FM need to determine what is needed currently and in the future instead of relying on what has been done in the past
4. Develop standards based on vehicle role and location.

Question 23

2.3.6 Why is it important to centralize Fleet Management? (p.25)

Answer 23

Organizations need to allow only the leader of the organization to be the decision maker when purchasing vehicles

Question 24

2.3.7 What are potential areas to save costs when identifying needs and wants? (p.25)

Answer 24

• Cloth or vinyl seats instead of leather
• Bench seats instead of buckets
• Two-wheel instead of four-wheel drive
• Gasoline instead of diesel
• Four-cylinder engine instead of six or eight cylinders
• Standard length pickup box instead of extended

Question 25

2.3.8 Describe the two categories of pricing incentives. (p.25)

Answer 25

National Fleet Incentives and Competitive Pricing Assistance (CPAs)

Question 26

2.3.9 What is a good indicator of the true vehicle cost? (p.26)

Answer 26

Total Cost of Ownership (TCO

Question 27

2.4.1 Who can a Fleet manager contact at the dealership for information on the manufacturers Fleet programs? (p.26)

Answer 27

Commercial or Government sales person

Question 28

2.4.2 What does a Fleet manager need in order to receive Fleet discounts? (p.26)

Answer 28

Fleet identification number

Question 29

2.4.3 What is a volume rebate and how can the Fleet manager obtain it? (p.26)

Answer 29

If you are buying more than one vehicle, ask if there is a volume rebate available.
- The factory may give you a discount for purchasing multiple units at once

Question 30

2.5.1 List the advantages of ordering vehicles from the factory. (p.27)

Answer 30

• Personalized customization
• Can specify the vehicle to fit specific needs
• Better pricing offered by the dealer
• Opportunities to add or delete options that are not available in a retail sale

Question 31

2.5.2 What are some of the disadvantages of ordering vehicles from the factory? (p.27)

Answer 31

• Longer wait times
• Incentives may be lost during waiting periods
• Production windows may close unexpectedly and the Factory may reject order
• Some options or popular models may not be available for Fleet orders

Question 32

2.5.3 Why might ordering from the factory be cheaper than ordering from stock? (p.28)

Answer 32

1. When a dealer places a fleet order to the factory, the dealer does not have to worry about the vehicle sitting on the lot or trying to find a buyer

Question 33

2.5.4 What might make ordering from the dealership cheaper? (p.28)

Answer 33

Dealer incentives such as limited time warranties may also expire while your vehicle is being built in the factory. The expiration of these short term incentives is another way that ordering directly from the factory may be more expensive

Question 34

2.6.1 What is the basic rue for negotiating vehicle price? (p.28)

Answer 34

1. Ensuring you use the same terms and the same starting point as the dealer

Question 35

2.6.2 What should the Fleet manager do in order to get the best price? (p.28)

Answer 35

2. To get the best price you should consolidate volume whenever possible

Question 36

2.6.3 What are the two approaches to negotiating? (p.28)

Answer 36

1. Start at Dealer Invoice and work down
2. Start at Triple Net Invoice and work up

Question 37

2.6.4 What is an alternative to negotiating vehicle prices? (p.28)

Answer 37

Bidding