Editing for clarity:
MSRP is $52,860 (a number which already has about $12,000 of profit built in)
Rebates $5,595 (something they can do because of the huge difference between invoice and retail. Remember back in the heyday of department stores? There was never a single day that Sears wasn't having a sale. They don't have sales. They mark things way up, then bring them down to an acceptable profit margin so they can sucker you in with a flashy commercial)
Sales Price is $47,265
Freight $1,595 (This should be part of the MSRP, but I can dig it. At least they're not calling it a "destination charge" anymore. P.S.... it costs the dealer about $350 to get the car shipped in depending on location. Corporate contracts with vehicle shipping company and pays pennies compared to what you and I would pay to ship a car.)
Processing Fee $899 (This one should be renamed "shameless additional profit for no reason. This is because you're doing a cash deal. They're not getting the back door from the bank, so they fluff this number)
State and Local Taxes 43,277.32 (unavoidable)
Total License and Fees $99.50 (probably a little inflated, but not much. $40 plate, $35 registration, $25 title fee... yeah, pretty legit.)
Total amount $53,135.82
This reminds me of shopping for a truck about 15 years ago. I was moving from L.A. to Austin and I was exploring trading a car for a new pickup to tow a large enclosed trailer. The local Dodge dealer had an ad that said they had several half-ton trucks for $18,500. They were stripped down, rubber-floor V6 models, but I thought I'd check it out. With my $2500 trade, the paper they came back with had an out-the-door price of over $20,000. All of it was this kind of thing. Processing fees, destination fees, convenience fees (which wouldn't have been there if it were a finance deal. That means they were trying to recoup the kickbacks they lost by not signing with a bank.)
I have worked three different dealerships over a three year period. Never once in my entire history did a single customer come in and say "I saw an ad that says you're offering 0%," or "I heard on TV that you have a sale." The ads are just glitz. We don't have those cars. They "all sold yesterday, sorry." The rebates aren't giving you anything. The dealer's job is to get the absolute maximum amount of money out of your wallet. Period. They aren't benevolent folks who want to price things so you buy, they are shrewd business people who make you THINK you're saving money, but (as you can see) they just put it back in as a fee and then sell you on why you should pay that price. If they leave it in the MSRP, it looks negotiable. If it's listed as Frieght, it looks like a fixed fee that everyone would have to pay.
People come in sometimes because they saw an ad, and that's the absolute only reason we run the ad. We don't offer them the 0%. The first offer might be 25%. It's all buried in a jumble of numbers and we focus on "look here at your low monthly payment." It doesn't matter that it's for 60 months and you'll end up paying $30k for a car worth $10k, "just look at this number we circled in red with no details on how we got to that number."
The bottom line is that dealers arrive at their price based on the total amount of money they spent acquiring it versus the amount of money they can get for it. They paid (or owe) $42k all-in to get that Jeep there, so they put a pricetag of $53k. The way they present the numbers to you is purely psychological. Their frieght isn't $1525. It doesn't cost them $899 to process anything. They itemize it like that to make it look like your price is $47k.
I have only ever bought one car new. I've helped several people buy cars because I've been on the other side of the desk. I have done deals where I let them unzip their fly with their pie-in-the-sky numbers and then I just get out a calculator. I usually know about where invoice is and I add $1000 to that number as my counter offer. It's fun to watch them laugh. Even funner to watch them come chasing you as you walk out the door. Above all, they want to put another number on the dry erase board for the week. Once they have you in the office talking numbers, they're salivating more than you are. Now you have the power. Their big hook up until this point is to use what we call trial separations. We use phrases like "I'll have to check to see if this car already has a deposit on it. Even if this one isn't available, I can maybe find one at our other lot." We get you hooked on the car and then give you doubt about whether or not you can even have it. In truth, I would never let you test drive or even ask about an unavailable car because that is a waste of my time, but I'll let you THINK you might not be able to buy it. It adds psychological value to the car. Now you want to fight to buy it. Once you're in the numbers phase, you have the helm. They bring you insane numbers like you see above hoping it will be a mattress deal... so called for the people who just lay down at the first offer. Take away the mattress. Stand up. They want a sale and they have a number they can't go below. They have to have a profit and pay the bills. I get it. But they will squeeze every drop out of the numbers if you just hold out.
My last dealer purchase was a used truck for $6500 which I bought for $4000. The one before that was a used truck for $7999 that I bought for $4000 flat. I got a trailer from a dealer that was listed at $13,900 and I paid $8900. The new car I bought was a rare 96 Impala SS. I spent three days negotiating that one, the manager was so impressed that he offered me a job, and once I was working there I saw the paperwork showing that they made $210 over invoice on the deal (not including holdback which was probably another $2000).
I like to think I'm a pretty good negotiator, but I've also only bought one vehicle during the pandemic so I can't speak to how well these techniques work right now
