Most of the car agents will never have a fixed car selling price. The retail price is usually decided by the car dealers or agents with a certain profit margin. However, as a smart customer, it would be an advantage if you have basic information on the average retail price for the type of car that you would want to buy. Here are some of the cars shopping prices terms that you should know.
First of all, you must understand that most car manufacturers will recommend a retail price to the car dealers. This price might be different from time to time depending on the demands and availability of stocks in the factory. However, to attract more customers, most of the dealers will offer a price lower than the recommended retail price.
When car dealers want to get certain model of cars from the manufacturers, they will pay the invoice price. This price is usually fixed for all car agents. For an ideal case, the profit margin would be the difference between the recommended retail price and invoice price. Average profit margins ranges from 7% to 10% depending on type of cars.
However, most of the dealers need to pay the additional costs for advertisement, taxes, office rental and employees' salaries. Besides, interests start to accumulate when the cars were taken out from the factory and placed in the dealer's lot. Therefore, it is crucial for the dealers to plan carefully on the number of units needed for each car model. Once in a while, some dealers might be able to offer a better price if there's any rebate or incentive provided by the car manufacturers.
Now that you have known all these type of prices, you will have a better understanding on how car dealers earn. Do search for car shopping prices online to have a rough idea on the average car retail price. This would be an advantage for you to negotiate with car agents to get the best deal before purchasing.