I bought a new car yesterday. It’s a done deal, so at this point , the discussion is purely academic for me, though it might benefit someone else.

As I declared in this thread just a couple of days ago, I really don’t enjoy the car-buying process. Once the deal is done, I feel like a woman who wakes up at a frat house on Sunday morning with no memory of the previous night’s events: “this guy is being really nice to me, but I feel like I *must* have have gotten screwed somehow.”

This being the information age, I tried hard to find useful data that would help me strike a fair deal. One strategy I’ve seen a few times is to determine the dealer’s real price for the car you want, then tack on 4-5% as a fair profit for them. The challenge then becomes finding out what the dealer’s real cost is. Many sites describe the invoice price, and also the holdback - an amount the manufacturer pays *back* to the dealer after the car gets sold. This is typically 1.5-3% of MSRP. so the dealer’s cost is understood to be slightly less than invoice price.

If I try this math on the deal I made yesterday, it would seem I made out like a bandit - which leads me to believe I’m missing something.

My car - an Infiniti G37 6MT - has an invoice price of $38,852, an MSRP of $41,950, and a reported holdback of 1.5% of MSRP (so $629). So the dealer’s cost should have been $38,298, according to this algorithm. Add in 5% for dealer profit, and a fair deal should have been $40,212.

The deal I got was $38,727. This does not include a $200 documentation fee.

But wait, there’s more.

As I mentioned in the car-shipping thread, the dealer initially wanted $1000 to get the car from the east coast to here. He ultimately agreed to pay 3/4 of the shipping cost. From that thread I gather $1000 is perhaps a tad high, but not outrageous. So if we assume that’s simply a passed-through cost (he had said he would show me the shipping invoice when we close the deal), then basically he’s taking $750 out of his pocket.

So it looks like he has sold me the car itself for a hair under $37,977. That’s quite a bit less than the $40,212 suggested by the “5% profit” method I described. In fact, it’s a few hundred bucks less than the dealer’s cost. Which suggests I’m missing something in my calculation of the dealer’s cost.

Reference #1 says that on average, people paid $38,824 *including* the $905 destination fee. If you add in the destination fee to my deal, then I paid $38,882 for my car – so according to this site, I merely got an “average” deal. There’s no way an “average” deal involves buying a car at less than the dealer’s cost. So WTF?

Another reference suggests a “fair” price of $39,169 (not including destination fee), substantially less than the “5% profit” method. So according to this site, I got a really good deal, slicing nearly $1200 off of their “fair” price. This site offers similar data, at least in terms of “national average price paid.”

So what’s going on? The dealer is certainly not selling me a car for less than cost, and I didn’t have to fight like a tiger to get this deal, so he must have made a pretty good profit. What am I missing when it comes to calculating the dealer’s cost?