You visit a Ford dealership to buy a new Ford F150, and they show you the invoice price from the manufacturer while negotiating to convince you for the deal.
It is essential to know the actual dealer cost in such situations to understand all price components completely.
What is Dealer Cost on a New Ford F150? On average, dealer cost on a new Ford F150 is between $32,500 to $65,000 depending on the trim levels. However, dealers get incentives from the manufacturer, holdback fee and other rebates from the government that decreases the overall cost of the Ford F150.
Dealer cost for 2021 Ford F150
2021 Ford F150 is available in various engine, body, and trim level configurations. Moreover, its actual price in your area can also vary according to its demand.
Here is a table showing the approximate value of various components of the dealer invoice for this latest model for usually available options.
|XL Regular cab
|XLT Regular cab
|King Ranch SuperCrew
Components of a dealer cost
Manufacturer invoice price and actual dealer cost are two different things.
The invoice price is higher than the amount dealer has to pay for the vehicle as it contains various charges that the dealer earns back after the sale of every vehicle.
By understanding multiple terms and components that are part of the invoice price, you will get a clear picture of the amount you pay to the dealer for the new Ford F150 model.
Dealer Invoice price
It is the invoice that the dealer gets from the manufacturer, including all cost factors.
Therefore, if you visit a dealer and he shows you the invoice from the manufacturer, then don’t rely on it as it does not reflect the actual cost.
It contains components like holdback charges, rebates, and other incentives from manufacturers to increase the sales of their vehicles.
Ford adopts a similar strategy to other auto manufacturers to increase their sales. In short, the dealer has to pay less than the price mentioned in the invoice.
You should search for the specific model of Ford F150 to know the actual cost. It will help you to negotiate and bargain at the most economical price for you.
If the demand for a particular vehicle like F150 is higher, the manufacturer intentionally increases the price on the invoice.
Dealer initially pays more to show customers the increased cost and gets back that money from the manufacturer after a specific time.
This amount is called holdback. You will find this component more often in popular and latest trucks when demand exceeds the supply. It is a strategy to benefit from the demand-supply gap.
Sometimes, even dealers don’t have to pay the amount, and they get back a fixed percentage of usually 3-4% on the retail or invoice price from the manufacturer.
Moreover, sometimes, holdback can be associated with a specific time frame from the manufacturer. For example, the holdback criteria are 2-3 months.
If the dealer sells a car within this time frame after the delivery, he will get the holdback fee even after selling the vehicle at invoice price. After 2-3 months, he will not get any incentive or amount back on selling new trucks.
Ford offers various incentives to its dealers to motivate them to increase the sales of their vehicles. Therefore, besides the actual price and holdback fee, they will also charge you some extra amount as part of those deals.
To benefit from such offers, you should know the actual cost. It will help you to purchase the Ford F150 below the invoice price.
Moreover, it will be economical for you to look for a pickup truck that has been in the showroom for more than 3-4 months.
Dealers will be willing to sell it at a discounted price to make room for newer vehicles. In addition, it allows them to earn extra cash in terms of holdback and other incentives on sales of the latest models.
Advertisement charges from manufacturer
Manufacturers run ad campaigns throughout the country in various US states to promote their vehicles or launch the latest models.
These campaigns cost them extra money besides the actual production cost of automobiles. Therefore, they include those amounts in the dealer invoice that ultimately the customer has to pay.
Each manufacturer has its own fixed rate for advertisement fees. So, for example, while buying Ford F150, you will find it in the Ford Dealers Advertising Fund invoice.
It can vary from $800-$1000 according to the pickup truck’s specific model and trim level.
Few dealers can even try to charge you additional ad charges for their campaigns. So you should look for that and try to negotiate for waiving off such extra amounts.
Moreover, these are not legitimate, and you can press them hard to lower the price by omitting such components of the invoice that they spend to run their business.
Destination fee/transportation charges
Another component of dealer invoices is the destination fee that the manufacturer charges them for delivering and handling its vehicles from the factory to the dealership. But, again, its rate depends on the type and size of the vehicle.
Larger ones, including SUVs and pickup trucks, cost more to transport because they can accommodate fewer of them on a single transporter.
Moreover, it can also vary according to the region. For example, transportation in snowy and hilly areas will also be difficult and expensive.
However, the manufacturer averages out the overall destination fee, include it in the dealer invoice and then passes it on to the customers. Therefore, you should know that the manufacturing cost of Ford F150 is always less, but other expenses make a vehicle costly.
If a dealer tries to add transportation charges besides the destination fee from the manufacturer in your invoice, you should negotiate and ask for those separate charges.
They have different gimmicks to make as much money they can from customers. However, by doing online research and being aware of various cost components of the invoice, you can buy a vehicle lower than the manufacturer’s invoice price for dealers.
To promote a newer model or increase sales of a particular model, Ford offers various incentives and rebates to its customers.
As a result, dealers will pay less than the invoice after subtracting such incentives and rebates from the total cost.
For example, Ford has announced a refund of $450-$550 for all trim levels of the 2021 F150. In addition, if you finance with a Ford credit facility, you will get an additional discount of $950-$1050 on purchasing a new pickup truck.
These offers can also extend up to particular trim levels to promote its sales.
For example, Ford gives a rebate of $1400-$1600 to purchase the XLT variant of F150 to increase the number of vehicles sold.
Therefore, you should be aware of such offers and ask dealers to reduce the cost by subtracting the rebates or incentives announced by the manufacturer.
Most of such rebates are available if you arrange the financing option for the vehicle by yourself through a bank or pay cash amount.
Therefore, you should ask the dealer for a quote before finalizing the deal to have a clear picture of price components and available discounts.
The on-the-road price includes all cost components that you have to pay before taking the vehicle on the road.
Therefore, part of the invoice will be the sales tax, registration fee, documentation charges, and other road taxes for the first year.
However, it will help you take the vehicle on the road as soon as you buy it to prevent legal complications.
How to calculate the actual dealer cost of the Ford F150?
Various components of dealer cost of Ford F150 determines its total and actual cost that he pays to the manufacturer.
To calculate the total cost, you have to add the base price of F150, invoice price for additional options/trim level package, and destination charges and subtract the holdback fee.
Then, to assess the expense that he pays to the manufacturer, deduct the rebates from the total cost and add other licensing and registration charges that they call on-the-road price of the vehicle.
What is the difference between MSRP and the dealer invoice?
Manufacturer Suggested Retail Price (MSRP) is the price that manufacturers recommend for their vehicles to dealers.
On the other hand, the dealer invoice price is the actual cost that the dealer pays to the manufacturer.
Both are different, and MSRP is an average value according to the manufacturer’s demand, supply, and incentives.
At the same time, dealer costs can be less than the suggested price. You will find MSRP displayed on a sticker on the vehicle along with its available features, and often it is called sticker price.
The actual cost of the pickup truck that you have to pay can be between the MSRP and dealer invoice price by making negotiations.